Personal insolvency

• Author: Diana Deleanu
• Position: Lecturer Professor Diana Deleanu, PhD Candidate, The Faculty of Social and Administrative Studies, 'Nicolae Titulescu' University of Bucharest (e-mail: dianadel@univnt.ro).
• Pages: 75-81

LESIJ NO. XXII, VOL. 2/2015

PERSONAL INSOLVENCY

Diana DELEANU*

Abstract

In 2014 a d raft bill on personal insolvency reached public debate, stirring controversy in both

financial and academic environment. The current paper aims at analyzing the merits and weak points

of the draft bill.

Keywords: insolvency, debtor, creditor, restructuring, bankruptcy.

1. Introduction*

The international insolvency

proceedings’ regulation extends now not

only to trade entities, but also to the

municipal and individual proceedings.

Many European countries have a long

standing practice in restructuring the

financial situation for individuals who are

unable to efficiently cover their debts.

2. Content

Personal insolvency, also known as

"personal bankruptcy" (which is

scientifically inaccurate) has been

generating significant doctrine and ethical

controversy, even in jurisdictions with an

old and constant practice. The inaccurac y

comes from the fact that –traditionally-the

notion of bankruptcy proceedings ends with

the dissolution / liquidation of the entity

(such as in trade companies’ case). Of

course, this rule could not apply

accordingly in insolvent individuals.

Therefore, this notion appeared from

the need to protect the indebted citizen, a

more understanding approach than the one

* Lecturer Professor Diana Deleanu, PhD Candidate, The Faculty of Social and Administrative Studies, ”Nicolae

Titulescu” University of Bucharest (e-mail: dianadel@univnt.ro).

which characterized the nineteenth century:

the debtors prison.

Almost two centuries ago, in order to

obtain a bank loan, Romanian traders had to

be registered with the Trad e Register, to be

debt-free and not been sentenced to the

debtors' prison.

The drastic approach from the

nineteenth century (which characterized

that historical time) left a strong imprint on

society, as we see it reflected even in the

literature of the time. The work of Charles

Dickens would have clearly had another

profile, would the author not been scarred

as a child by his family’s sentence in the

debtors prison, after unnecessary expenses

his parents made.

Therefore, individual ins olvency

requires a 'personal' approach, different

from the "technical" one (appliccable to

trade companies) because the regulatio n

borderline touches upon individual rights

and freedom and because, without aiming at

that, the proceedings also affect the rights of

third-party individuals, who need not be

affected.

We cannot help wondering if

regulating this procedure isn’t a form of

legislative regression after the human