Can the liberal concept of personal bankruptcy serve as a guide in regulating this institute in the Republic of Serbia and Republika Srpska?

Abstract

Unemployment, weak consumer power, inability to regularly service credit obligations (problem loans), and inability to settle other financial obligations may be the factors that lead a natural person (consumer) to insolvency. The institute of personal bankruptcy is an institute which provides an opportunity for a natural person (consumer) to be relieved from debts without falling into insolvency, at the cost of having his/her property subject to enforcement. The liberal model of personal bankruptcy is one of the modalities of personal bankruptcy that should be taken into consideration during future regulation. The liberal model of personal bankruptcy is characterized by an open approach, which ultimately leads to a complete discharge of debt. Debt relief is an essential feature of this model, which is based on the idea of providing a chance for a new financial start (fresh start), which puts the interest of the debtor-consumer in the foreground, and the risk is transferred to the creditor. The legal systems of the Republic of Serbia and Republika Srpska do not recognize the institute of personal bankruptcy. Establishing the normative framework of the institute of personal bankruptcy may be a challenge for the legislations of Serbia and Republika Srpska, especially because it is insufficiently considered in domestic legal theory and fairly unknown in judicial and legal practice. For the stated reasons, the authors will point out to the advantages and disadvantages of the liberal model of personal bankruptcy, focusing on why this model should be taken into consideration during the potential legal regulation of the institute of personal bankruptcy. In this way, the authors attempt to initiate a legal discussion about the necessity of the legal regulation of the institute of personal bankruptcy in the Republic of Serbia and Republika Srpska.

Keywords

• natural person
• personal bankruptcy
• liberal model
• insolvency
• debt relief
• financial fresh start