Over-indebtedness Of Consumers Research Articles

The Theory and Countermeasure of Deflation

The Theory and Countermeasure of Deflation

The over-indebtedness of European consumers: time for a ‘fresh-start’ of the EU policy and legal agenda?

The paper examines the over-indebtedness of European consumers in the wake of the economic crisis through the lenses of the latest findings over its nature and causes. It analyses the current policies and law of the EU in the area, questioning their effectiveness and suitability to address a complex multi-dimensional problem that impacts dearly on the lives of those who are affected and carries great social and economic costs for the EU. The private law relationship between lenders and borrowers is contextualised with the study of responsible lending and borrowing policies and their transposition into EU law under the Consumer Credit Directive and the Mortgage Credit Directive. The latest cases involving over-indebtedness are considered. The paper ends by advancing the critique that responsible lending and borrowing are inadequate and insufficient if the problem is to be taken seriously. Instead, it is argued that the time is ripe for hard EU law integrating personal insolvency law with responsible lending and borrowing measures, with the caveats of the political – more than the legal – difficulties of such a proposition, as well as the devils that will lie in the details of its design.

The Over-Indebtedness of European Consumers A View from Six Countries

Six years into the global economic and financial crisis, many European countries have suffered profound economic, political, and social repercussions. Governmental and constitutional crises, high levels of public debt, the adoption of austerity measures, unprecedented levels of unemployment, and the spreading of poverty have marked many European societies. While the EU is in the process of re-examining the whole design of the banking system with far-reaching political and institutional consequences, the impact of the economic crisis on indebted consumers, and specifically those with mortgages, has been much less discussed. The Working Paper presents the result of a research on the effects of the financial and EURO crisis in six European countries within and outside the Eurozone (Greece, Hungary, Iceland, Portugal, Romania, and Spain) having in common that they received international bailout loans under the condition of implementing intrusive austerity measures. In those countries consumers are still facing increasing levels of (over-)indebtedness and struggle with the effects of the crisis, both in financial and social terms. In this light, the studies pay attention to both the social reality and the legal change which is undergoing as triggered by legislative reforms and judicial decisions. The studies also lay open the shortcomings of a EU consumer policy which is largely based on the image of the reasonably circumspect consumer who is supposed to be autonomous, self-reliant, and reasonably well informed. In this regard, the EU suffers from a clear internal market bias that promotes and requires easy access to consumer and mortgage credit, without paying sufficient attention to the possible drawbacks in terms of social exclusion.

Erratum to: The Regulation of Over-Indebtedness of Consumers in Europe Special issue on Volume 35, Issue 4, pp. 417–419

Erratum to: The Regulation of Over-Indebtedness of Consumers in Europe Special issue on Volume 35, Issue 4, pp. 417–419

Consumer Insolvency in the European Legal Context

Consumer credit, as an important aspect of the free movement of capital, has for a long time now been subject to European Union regulations. However, one important aspect of consumer credit, over-indebtedness, has not been acknowledged in the Consumer Credit directives of 1978 and 2009, nor is there any other European Union law instrument that addresses over-indebtedness or insolvency of consumers. The only European-level document addressing the problem of over-indebtedness of ordinary people is the Council of Europe Recommendation of 2007. In European Union law, over-indebtedness can and should be approached from several angles. The Insolvency Regulation (2000) does not directly address situations facing the consumer debtor and leaves it up to the discretion of the Member States to include or exclude insolvency proceedings for consumer debtors regarding the scope of the Regulation. There can be little doubt that the European Union has a legal basis for action in this field, and it has also used its competence in a number of related issues, such as general insolvency law and enforcement of judgments. Case C-461/11, in which Advocate General delivered her opinion on Sept 13th, 2012 shows that national insolvency procedures for natural persons may constitute a restriction on the freedom of movement. This article argues that, even in the absence of a European Union law instrument, the Member States should recognize debt adjustment judgments made in another Member State and that there is a need for a regulation in the European Union law in this field.

The Regulation of Over-Indebtedness of Consumers in Europe

The economic crisis has fueled the debate on regulated state insolvencies. While debt relief is being considered for some states, citizens in some cases live their whole lives in debt. In some countries like Bulgaria, Italy, Croatia, Lithuania, and Poland, there are no consumer bankruptcy procedures which provide for an exemption from residual debt. In Spain, private debtors are entitled to debt relief on a maximum of only 50% of their debt and in other countries long periods of differing lengths are needed until complete exemption from remaining debt is granted. The length of time that information in which the publication of consumer bankruptcy notifications in public or private registers can be published also varies. There are thus no uniform regulations on how private individuals can make a clean financial start in Europe, and debtors and creditors have different opportunities. The differences in the level of protection entices insolvency tourism, which, however, is open only to those consumers who have remaining resources and who are capable of engaging in the organization of transborder debt relief. Poorer consumers are dependent on their national insolvency regime, if indeed there is any. The European legislator has done next to nothing to get to grips with over-indebtedness from a European perspective. So far, the European approach is limited to opening up consumer credit markets. The whole EU rhetoric is very much based on the idea that consumer credit is a source of income which could and should be used. The official documents might be read so as to entice consumers and credit institutions in particular in countries with a low total number of credits to engage in credit transactions. The dark side of consumer credit, i.e., delayed payments, the percentage of interest rates, compound interests, indebtedness, over-indebtedness, or insolvency, has not gained much attention at the EU level. To be sure, there are policy recommendations to fight social exclusion, and there are also more specific recommendations related to consumer over-indebtedness. However, none of these initiatives has led to concrete regulatory steps aimed at closing the gap between intensive regulatory attempts to open up the credit market and the social consequences in circumstances where the consumer is unable to satisfy a creditor. This is all the more J Consum Policy (2012) 35:417–419 DOI 10.1007/s10603-012-9213-x

A venda casada e o superendividamento decorrente do consumo emocional

O presente artigo tem por objetivo analisar o superendividamento dos consumidores agravado pela pratica da venda casada e a aplicacao deste instituto como mecanismo de recuperacao de dignidade do consumidor e reinsercao ao mercado de consumo, discorrendo sobre o principio geral da boa-fe e o dever de informacao.

Overindebtedness and Overlegalization: Consumer Bankruptcy as a Field for Alternative Dispute Resolution

In the advisory report to the European Commission (Huls et al., 1994), the conclusion was reached that the optimal European solution for overindebtedness of consumers is a combination of legal change and a strengthening of the work of social debt counsellors. It was argued that the two spheres, the legal and the social, should be linked in order to create a constructive coalition. Europe has learned from the USA how to introduce the concept "discharge of debts" into their legislation (Huls, 1992). The USA may learn from Europe how debt coun- sellors can play a more vital part in tackling the debt problem of consumers. This paper explores the possibilities for expanding the domain of non-legal actors in this field by looking at legal aid discussions in general, and more specifically at the new Alternative Dispute Resolution (ADR) trend that is developing both in the USA and Europe. In the first section of the paper, the importance of an adequate definition of the problem is stressed. The following section summarizes the model proposed in Huls et al. (1994). It is followed by a plea for professional and independent debt counselling, a prerequisite for dejuridification of the debt problem, and for a coupling of debt problems to legal aid discussions. This leads to the conclusion that a strong case can be made for debt counselling as a form of ADR. WHICH SOLUTION FOR WHOSE PROBLEM? The rise in overindebtedness has coincided with the rise in consumer credit. In Europe today, overindebtedness is found more frequently than a number of years ago. For various reasons, many consumers are not able to pay back their debts. Such financial entrapment is not restricted to specific social or economic groups, but can happen to almost anyone. Four different groups of overcommitted debtors can be distin- guished. The first group runs into temporary misfortune (i.e., unemployment, divorce, illness, and so on). A second group consists of people who unconsciously become overcommitted. They make use of widely available forms of credit, without realizing that they might not be able to repay in the future. The third group are the "poor" who have to take credit in order to attain a reasonable standard of

Towards a European approach to overindebtedness of consumers

This article summarizes the findings of a study conducted under the supervision of the author on behalf of the European Commission. It focuses on the recommendations from the study “Overindebtedness of consumers in the EC Member States: Facts and search for solutions.”1

“Social force majeure” — A new concept in Nordic consumer law

Empirical research from various countries indicates that overindebtedness of consumers is, to a considerable extent, attributable to unexpected changes in the consumer's situation caused by illness, unemployment, and other such circumstances. It is therefore relevant to discuss whether and in what way such circumstances should be taken into account in the rules of private law. In Nordic (especially Finnish) legislation, mainly from the 1980s, there are several provisions which provide for mitigation of sanctions against a defaulting consumer if the delay is caused by illness, unemployment, etc. Such rules are contained, inter alia, in the legislation on consumer credit and on interest on delayed payments. On the basis of these provisions as well as some practices developed by the consumer authorities, a general principle of social force majeure is seen to be evolving. This doctrinal principle would enable the courts and other decision-makers to take into account unfavourable changes in the consumer's health, work, housing, and family situation in cases not regulated by specific legislation, e.g., by giving the consumer the right of withdrawal from burdensome contracts in such circumstances or to protect his right to retain electricity and telephone connections in spite of his temporary payment difficulties. The principle is expected to carry increasing weight in the future, especially in the practice of the consumer authorities. Strong arguments speak in favour of the general acceptance of such a principle.