Personal Debt in Europe

Abstract

This chapter provides an account of the role of personal debt in the modern economy. In particular, it covers the economic dynamics of national personal debt markets and the importance of debt in the current economic model, and analyses the social, demographic and economic characteristics of individuals in debt.Section 2.2 focuses on the size and the growth of the personal debt market in Europe. To this end, data from the ECRI Statistical Package are analysed over the period 1995-2016, both at aggregate level and by country. The focus is not only on the total amount of debt, but also on relative measures, such as the debt to GDP ratio, the debt-toincome ratio and the per-capital amount of debt, in order to draw a picture of the personal debt market in Europe and its evolution over time. Section 2.3 focuses on the factors shaping the evolution of the personal debt market, while Section 2.4 provides an empirical analysis of the characteristics of indebted consumers using data from the Eurosystem's Household Finance and Consumption Survey (HFCS). The analysis is framed within the life-cycle theory, 1 which is the traditional economic setting where the characteristics of individuals holding debt are analysed. The socio-demographic and economic features of consumers who participate in the debt market are separately investigated for mortgage debt and consumer credit, to shed light on existing differences between the two groups of borrowers. personal debt in europe: size and growth of the marketIn the last twenty years credit to households 2 in Europe had experienced a strong growth until the 2008 crises, a downturn in the following years and an upward trend 1

Natural person ltd.: Towards a unified discharge regime for entrepreneurs and consumers

“…79 This approach meant that consumers were not entitled to any kind of debt discharge. 80 In recent decades, however, countries that did not provide for discharge procedures for non-business debtors have adopted separate 'consumer insolvency procedures', offering previously unavailable debt relief to troubled households. 81 That evolution came with the deregulation of countries' consumer credit markets in the late 1970s and early 1980s, 82 causing an increase in household debt problems.…”

“…90 In the case of individuals, as noted above, it is mainly the common law jurisdictions that (traditionally) recognise the ability of non-traders to discharge debts through bankruptcy. 91 Specifically in England and Wales, debt discharge was introduced into bankruptcy law in 1705. However, since the 1570 statute 'An Act Touching Orders for Bankrupts', English bankruptcy law had applied only to (insolvent) persons engaged in a trade or business, rather than consumers.…”