Evolution of consumer bankruptcy in Poland: A chance for a new life for insolvent debtors?

Abstract

AbstractThis article discusses the issue of the evolution of consumer bankruptcy in Poland which was introduced into Polish law in 2009. The authors explain why the legislator abstained from introducing consumer bankruptcy along with a huge reform of insolvency framework in 2003. They present different approaches of the legislator towards consumer bankruptcy – from a very restrictive one which excluded most consumers from bankruptcy proceedings to a liberal one that allows dishonest debtors to benefit from debt relief. Moreover, the influence of legislation regarding consumer bankruptcy on the effectiveness of insolvency courts is discussed. Each of the approaches caused certain problems in practice. Liberalization of the rules on consumer bankruptcy led to an increasing number of consumer bankruptcy cases which could be barely processed by insolvency courts to the detriment of commercial bankruptcies and restructurings. The authors present the latest change of the law regarding consumer insolvency which – due to its novelty – has not received enough attention yet. They also provide a preliminary assessment of the new rules, which they consider imperfect.