Workshop “Perspectives on Personal Insolvency”, URJC, 16th and 17th of december

These Monday afternoon and Tuesday morning I have the privilege of hosting a workshop with several of the most relevant professors in the area of personal insolvency. For anybody who has had some interest in this topic, the names of Nadja Jungmann, Robert Lawless, Johanna Niemi, Iain Ramsay or Udo Reifner are very well known. For the rest, I will simply say that among them there are authors of several of the best reports made in the EU, experts of the recent World Bank report on personal insolvency or main bloggers of the most respected blog in the US about consumer credit and bankruptcy and the reference in empirical methodology in law. There are not so many opportunities of gathering together such a group of researchers and Lourdes Garnacho and myself were fortunate enough to convince them to join us for this meeting in the Universidad Rey Juan Carlos. Organizing any kind of these meetings is always somehow exhausting and I guess that everybody thinks at some point if they are worth it. In this case, I should say that it was well worth ten times the effort actually needed. Although their work, as it happens with any good researcher, is well known and, therefore, more or less accessible, meeting somewhere to discuss on this topic provides a invaluable opportunity to build a common knowledge and to share different points of view and methodologies that improve everybody’s work. In my personal case and, I guess, for the rest of my Spanish colleagues who attended the workshop, it gave me the opportunity not only of meeting personally some of the people whose work I do admire, but also to be part, at least for that time, of a discussion among the leading researchers on that topic. Therefore, I thank them all for accepting my invitation to come to Madrid.

The topic of the workshop was personal insolvency. There was a reason for that: the recent amendment of the Spanish Insolvency Law to introduce a (kind of) discharge in our legislation, after many years of reluctance and a very limited approach to the problem of insolvent individuals, mainly focused on mortgage debtors, made it a good idea to hold this workshop in the context of the research project of which I am the main researcher. It might seem that there is already some international consensus on this area, after the progressive extension of these special procedures in Europe and other countries, and that the problem was only, under our perspective, that Spain was way behind other countries. However, as the World Bank Report and the discussions in the workshop showed, what it has been happening in the latest years is forcing to rethink again the different models and the different amendments made to them. The shift on the basic argument from the social perspective to a clear economic benefits of discharge approach is very clear, surfacing in the progressive importance of the analysis of this topic in the context of entrepreneurship. The latest amendments also seem to negatively affect the model, as the presentation of Nadja Jungmann on the Dutch model showed to us. Some biases in their real use could lead to unexpected results, as the collective research presented by Bob Lawless on Race and Chapter 13 choice showed. The impact of the housing crisis on individuals makes it necessary to start thinking whether the traditional position about mortgages and personal insolvency should be adapted to the new scenario, something that Johanna Niemi expressly pointed in her presentation. The idea that the situation is unsatisfactory was present in many of the presentations and the following debate, raising the question of whether the insolvency approach was the right way to deal with it. Udo Reifner expressed many times the idea that this approach was wrong and the attention should be put on the credit side, going to the cause rather than trying to cure its effect.

I think (and, even being a newcomer to this area compared to the rest of the attendees, I expressed this idea when closing the workshop) that there is much yet to be done in this area in our countries. As the gathering of this group of researchers showed, many problems remain to be studied and the lack of empirical data is embarrasing if compared to the effort made in the US by the researchers involved in the Consumer Bankruptcy Project (Elizabeth Warren and Bob Lawless, among others). A strong coordinated and common research work all across the EU would be very useful, maybe as a way to counterweight the undoubtedly powerful lobbying of the financial sector if the results confirm the intuitions of many of us. The independence and social function of the public universities makes them the place to start and nurture projects of this nature and the possibilities that technology gives facilitates a coordinated effort that will multiply the results. My first idea, when deciding to hold this seminar in Madrid, was learning from the experience and methodology of some of the best academics in the field of personal insolvency. Now, I think that it might serve as the first step for future developments in this area in the EU. If it was the case, I would feel more than proud.