Out With the New, in With the Old: as Sweden Aggressively Streamlines its Consumer Bankruptcy System, Have U.S. Reformers Fallen Off the Learning Curve?

Abstract

Before the dust had settled on the complete overhaul of the U.S. consumer bankruptcy system in October 2005, Sweden remodeled its consumer bankruptcy law on May 19, 2006. After over a decade of trial and error under its 1994 original law, Sweden has just adopted a streamlined new law to make its system more straightforward and efficient. Of particular interest to U.S. readers, Sweden's original law functioned very much like the revised consumer bankruptcy system just adopted in the United States. U.S. policymakers should be aware of reforms in parallel systems, like that in Sweden, to avoid falling into the same traps that snared our European neighbors. For example, the failure and abandonment of mandatory credit counseling and informal negotiation with creditors in Sweden seems a likely harbinger of things inevitably to come in the U.S. In addition, Sweden has just ushered in an administrative structure that corresponds almost exactly with proposals that were rejected in the United States in the 1970s. Perhaps it is time to reconsider our rejection of these proposals, at least in part. This article examines the Swedish law in books and in action as part of an on-going project to chart - in English - the experiences of our European neighbors with new and developing consumer debt relief systems. In undertaking this project, I hope to encourage U.S. policymakers to climb back to the top of the increasingly international learning curve.

Keywords: consumer bankruptcy, bankruptcy reform, debt adjustment