The Hidden Life of Consumer Bankruptcy Reform: Danger Signs for the New U.S. Law from Unexpected Parallels in the Netherlands

Abstract

This Article takes advantage of a rare double opportunity to break new ground in commercial, consumer, and comparative law. First, it offers one of the first detailed analyses of key elements of the new U.S. consumer bankruptcy reform law, which will go into effect on October 17, 2005. Second, this Article offers a unique perspective on the new law in light of a curious and surprising discovery: It turns out that the U.S. consumer bankruptcy system as reformed will resemble in many critical respects the consumer bankruptcy system in place for the past six years in the Netherlands. As a result of this serendipitous U.S.-Dutch convergence, years of experience under the Dutch consumer debt relief system can serve as a sort of crystal ball, providing a rare glimpse into the future of the new U.S. system. This Article describes both the law in books as well as the law in action as it has developed in the Netherlands in recent years. The Dutch law on the ground has diverged in significant ways from legislative expectations, and such divergences might well be repeated - for better or worse - in the United States in coming years. In particular, several key similarities and distinctions between the Dutch and U.S. systems reveal latent weaknesses and portend an impending breakdown in the credit counseling and means testing parts of our new system. A comparative view of recent Dutch developments offers not only cause for concern for coming problems, however, but also hope for some effective solutions.