In the next posts, I will try to give an overview of several issues
that I hope American readers will find useful. It is difficult to find a proper balance in
these posts, making them interesting for both (us) the geeks and the
people without this kind of mental disease. That is why this first post
will be dedicated to give an overview of how I see the way we deal with consumer credit in Europe, advancing some ideas that I will develop later. Those versed in this topic will probably find nothing new
in it and can have a rest relaxing doing a very special quiz.

The first point to be noted is quite obvious: the difference
between consumer bankruptcy and consumer overindebtedness. Also obvious
is that a difference does not mean absence of a connection. In fact, at
least in Europe, the need of an adequate instrument for consumer
bankruptcies, similar or equivalent to the American fresh start, is
strictly connected to the massive recourse of consumers to credit.
Historically, the natural environment of insolvency proceedings was an activity for merchants due to their usual access to credit. Individuals
(i.e., people having no professional or business activity) did not use
it until very recent times. In Spain, for example, a few years ago it was
really uncommon to ask for credit, and now, it´s an everyday practice.
It is not very scientific to use personal anecdote, but I could say that my grandparents didn’t
even ask for credit to buy their own house, my parents used a mortgage
to buy their house and a personal credit for the car, and a few weeks
ago my brother decided to change his TV for a flat one that will be
paid in 10 months via credit card, needing nothing to get it but to
show his ID.

As soon as individuals became indebted, the problem of overindebtedness appeared, and a proper solution
for the hard cases (bankruptcies) was needed. But, should that justify
a unified legal treatment? Answering in a "Gershwinish" way: no, it ain’t necessarily so. This connection does not mean that both subjects
should be afforded by the legislators as one. In Europe, in fact, they
are not. And, in my opinion, it is the right way to do it. The law faces
different problems that need different solutions and, probably,
different policies, even if we think that consumer bankruptcy is the
final stage for overindebtedness and consumers should receive blanket protection, stretching from the legal mechanisms of protection for consumers
in the market of credit to the specific provisions for those debtors in
case of insolvency.

The difference said above is not an irrelevant issue when speaking about the European position in these questions. It seems that there is a kind of consensus about consumer protection in the market of credit as a part of the much wider consumer protection policy, but none (or, almost none) in terms of having a common position regarding the consumer bankruptcy. It doesn’t mean that there is no coincidence in national legislation in consumer bankruptcy, but rather that there is no common position from the European Union that should be followed by its member states. This is in a clear contrast with the situation of consumer protection in the market of credit, where there was a directive on the subject beginning in 1986 (the Directive 87/102/EEC of 22 December 1986).

The main reason for this different approach to consumer bankruptcy versus consumer credit  could be found in the difference between both legal systems in historical terms. As it is well known, consumer protection policy is very recent (in the EU, the adoption as a common policy started as late as in 1975, with the so-called Preliminary Program for a consumer protection and information). It is such a recent phenomenon in terms of legal policy that it did not have to deal with very different national systems and it could be adopted (more or less) the same in every member state. Bankruptcy law, instead, is ancient and it deals with questions that have different solutions in the different legal systems that could be found in Europe like, let’s say, how property is transferred, the categories of collateral, or even the goals and basis of the insolvency proceedings, where there has been great differences among the member states. That is why it has been impossible to reach an agreement to get the different bankruptcy laws closer, and it is probably the reason why there is no common position regarding consumer bankruptcy. The closest we have been in Europe to a common bankruptcy law is the Council Regulation (EC) No 1346/2000 of 29 May 2000 on insolvency proceedings, which, in fact, relies on the coordination of transnational insolvency proceedings but respect the specificity of the national legislations.

In the next posts, I will focus in those two categories, starting with the present situation in consumer protection in the market of credit and following with the consumer bankruptcy questions. It is very important to remember the differences shown in the previous paragraph: they are the reason why I will be able to explain the common position in Europe about consumer protection in the market of credit, but will have to adopt a (more or less) national perspective when speaking about consumer bankruptcy, trying to compare the situation among several European countries