The Right Tool for the Job? Mortgage Distress and Personal Insolvency during the European Debt Crisis

Wolfgang Bergthaler, Jose Garrido and Anjum Rosha

No 2023/092, IMF Working Papers from International Monetary Fund

Abstract: The European debt crisis in the early to mid 2010s brought to the fore the issue of household debt distress: in the countries affected, widespread over-indebdtedness resulted in serious financial and social challenges. The crisis was primarily a mortgage debt crisis, but in several cases, the legal response was based on the introduction of personal insolvency procedures. This paper examines the challenges in designing and implementing legal reforms in this area to promote a better understanding of the main considerations in resolving personal insolvency and distressed mortgage debt in the context of crises. Lessons from the European crisis may prove valuable when dealing with the aftermath of the COVID-19 pandemic and the war in Ukraine on household debt distress.

Keywords: consumer insolvency; household debt; mortgage debt; consumer debt; household debt distress; mortgage debt crisis; B. mortgage debt distress; mortgage distress; Solvency; Mortgages; Corporate insolvency; Debt sustainability; Debt settlement; Europe (search for similar items in EconPapers)
Pages: 40
Date: 2023-05-05
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