The liberal fresh start for individuals in U.S. bankruptcy law is “peculiarly American” and the debtor-friendly U.S. bankruptcy law is “unique in the world.” The swift, fresh start for a debtor without the need for an income payment as a condition of discharge or even the requirement of insolvency as a condition of access is a defining characteristic of U.S. consumer bankruptcy law. The U.S. system is also organized around courts and lawyers rather than a public administrator, with the consequent U.S. “primacy of lawyers rather than an administrator.” Given these characteristics, and their link to U.S. values, foreign models may be of limited use as blueprints for reform. However, since the 1980s, many European states have introduced the possibility of a “fresh start” for consumers, a process accelerated by the Great Recession, while the United States modified its commitment to access to the fresh start in 2005 through the enactment of the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA). The U.S. consumer bankruptcy system could also be increasingly characterized as an “administrative” system of processing.
Ideas about the U.S. system of consumer bankruptcy influenced European reforms, but substantial differences exist between European systems in terms of access criteria, institutional frameworks, financing, and discharge conditions. What explains these differences within Europe and between Europe and the United States? Why have distinct institutional frameworks emerged for implementing consumer bankruptcy law in Europe and the United States? My current research focuses on these questions, using England, France, Sweden, and the United States as case studies. My approach draws on insights from historical institutionalism, which provides useful concepts for identifying mechanisms of change, recognizing the importance of the role of “law in action.” This approach does not provide a causal theory of change. Indeed its recognition of contingency, unintended consequences, and path dependency in development suggest challenges for developing such a theory. It may, however, assist understanding of the likelihood of greater convergence of laws. For example, European policymakers have, since the Great Recession, demonstrated greater interest in harmonization of European personal insolvency laws, a topic that traditionally was conceptualized as subject to particular national, cultural, and social values which prevented harmonization. This Article outlines some of the key concepts associated with varieties of historical institutionalism, suggesting their relevance to comparative studies of bankruptcy, and illustrates them with examples from England and Wales, the United States, Canada, and France. It concludes that consumer bankruptcy laws and institutions are neither expressions of enduring national values nor merely the outcome of the current configuration of interest group pressures.