Treating the New European Disease of Consumer Debt in a Post-Communist State: The Groundbreaking New Russian Personal Insolvency Law

Abstract

This Article examines the tumultuous transition from restrictive Communism to the debt-fueled consumer economy of modern Russia. In particular, it surveys Russia’s legal response to severe debt distress, situating it in the context of nearly 1000 years of historical development. Effective 1 October 2015, Russia has finally joined most of its European neighbors in adopting a personal bankruptcy law, with characteristics that reflect both evolving international best practices and a series of lessons not learned. This Article offers the first detailed exposition in English of the two steps forward represented by this new law, as well as an evaluation of the one step back that will likely result when Russia experiences the same challenges with personal insolvency procedures that its European neighbors have faced in recent years. The analysis in this Article contributes to a deeper understanding of modern Russian law and society by tracing the striking emergence of a massive consumer debt problem only a few years after the fall of Communism, along with the development of a solution that is largely consistent with European norms but remains in many respects uniquely Russian.

Keywords: consumer bankruptcy, comparative bankruptcy, comparative insolvency, overindebtedness, несостоятельность, неплатежеспособность, банкротство физических лиц, банкротство физлиц