The over-indebted European consumers: quo vadis personal insolvency law?

In the wake of the financial turmoil that has characterised recent years, this article examines the state and adequacy of EU law in dealing with the large scale of over-indebted consumers and their insolvency. Legal responses taken within the context of the overall goal of the integration of the EU retail financial market will be examined, while the potential for EU personal insolvency law to stem the "dark side" of such a market in the future will be evaluated. At EU level, the policy and legal measures adopted so far concentrate on the prevention of behavioural causes of over-indebtedness, but the intertwined situation of consumer defaults and insolvencies has been left to the uncoordinated competence of national legislators. The fragmented EU legal framework, insofar as it attempts to deal with over-indebtedness and personal insolvency legislation, is addressed in the context of the legal instrument of mutual recognition that aims to promote clarity of the procedural and jurisdictional rules in cross-border matters. The most recent case law of the European Courts and its limitations are considered, together with the increasing drive towards further integration of EU markets and the economy that creates a mounting pressure for substantive harmonisation. In the promotion of consumer protection, the challenge will lie in addressing the current and profound diversity of national laws and the impact that harmonisation may have on exclusive national competences over social policies.