Private Household Debt in Europe and the Importance of an Effective Insolvency Law

Overall, the debt ratios of private households in most EU countries have risen sharply in recent years. Lasting private household debt can negatively impact the economy as a whole if the debt overload is so high that it constrains private consumption and leads to a drop in GDP. One way of dealing with excessive private household debt is to carry out debt write-offs and restructurings in the context of consumer insolvency laws, but such legislation does not yet exist in all European states.