Personal Insolvency in Finland

Abstract

Household debt has increased rapidly in Finland in the 21st century, and difficulties in personal finance have become more common. According to economic literature, personal insolvency is likely to cause reduced work effort and it may also affect entrepreneurship negatively. It has been argued e.g. by the World Bank that an effective insolvency system which gives debtors a "fresh start" via debt discharge makes entrepreneurship more attractive and can also increase productivity and economic stability. However, there is only little reliable evidence on the economic effects of insolvency legislation reforms.

The purpose of this background paper is to discuss the Finnish insolvency processes, compare them to examples in other countries and identify possible bottlenecks. This report is based on earlier international literature, expert interviews and descriptive statistical analysis.