| Author: | Bigus, J. Steiger, E.-M. |
| Title: | Variable Wohlverhaltensperiode als anreizkompatibles Instrument des Verbraucherinsolvenzverfahrens |
| Journal: | Zeitschrift für Betriebswirtschaft
2003 : NOV, VOL. 73:11, p. 1197-1219 |
| Index terms: | Consumer behaviour Debt management Earnings Germany |
| Language: | ger |
| Abstract: | Since 1999 there is an insolvency procedure for consumers in Germany allowing for a partial debt release under certain conditions. In particular, the debt release requires that the debtor behaves in the creditor's interest and gives up all seizable future earnings for a fixed period of "good conduct", that is, for six years. Our model shows that a fixed period of time might distort the consumer's incentives to work hard. Thus, we propose to amend the current consumer insolvency code by providing a variable period of good conduct. The faster the consumer is able to pay back an incentive compatible fraction of outstanding debt the faster remaining debt is discharged. The creditor's payoff tends to increase, too - compared to the current regulation (original in German). |
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