The tendering of the natural person is of special interest to the Law, especially considering the negative effects that its insolvency has on the national economic system.
4 september 2018
Title: Insolvency proceedings of the natural person in Law 20.720. A doctrinal and jurisprudential analysis.
Author: Karenn Díaz Campos
Insolvency of a group of consumer debtors may result in the insolvency of a number of creditors, leading to a chain reaction that affects the public economic order. This problem gives rise to the elaboration of the Master thesis Insolvency procedures of the natural person in Law 20.720. A doctrinal and jurisprudential analysis.
The modification to the insolvency system introduced by Law 20.720/2014 on Reorganización y liquidación de empresas y personas proposes a different denomination to the one known until now. A distinction is made between the procedures applicable to natural persons and to debtor companies. Under the regime of the old Bankruptcy Law (18.175/1982), the Chilean bankruptcy system was in line with the rules and standards established by the member countries of the Organisation for Economic Development (OECD). However, legislator has forgotten some relevant factors and even ambiguous clauses. These make difficult the insolvency proceedings application and, in many cases, it remains in jurisprudential or administrative definition, understanding that the first in Chile does not constitute a precedent and criteria can perfectly change.
The origin of bankruptcy rules was focused on the undertaking incentive, taking into account the figure of the entrepreneur and its vital role in the growth of the national economy.But at the same time, the new bankruptcy rules are focused on creating specials proceedings for the natural non-entrepreneur in order to give them a real opportunity to resume. It is in this last perspective that the interest of this investigation is centred and especially the analysis of the Insolvency Proceedings of the Natural Person in Law 20.720 and of some conflicts that have presented the application of these insolvency proceedings.
The investigation elucidates if the normative that regulate the bankruptcy of the natural person in Chile is an adequate tool of the State to avoid over-indebtedness of the consumer debtor
In the current economic system in Chile is increasing concern about the overindebtedness of individuals. There is entirely feasible to fall into operations that inevitably lead to insolvency.The objective of not contemplating a system of prevention of over-indebtedness of the consumer debtor nor of exoneration of the consumer debtor debts added to easy access to credit and low minimum income generates a perverse scenario that little guarantees the credit and patrimony of the debtors, when these are not businessmen.
This situation of analysis is compounded by the importance of determining insolvency in the voluntary liquidation procedure, which is further complicated when we focus on the case of the enforceability of payment of the credit with State guarantee in the case of voluntary liquidation request. The decision of the Supreme Court in case 4656-2017 fixed the criterion of exclusion of credit with State guarantee, which brings with it a delimitation of the limit of freshstart and credit with State guarantee as a credit specially excluded from insolvency proceedings.
All of the above leads us to take into account the economic situation of the consumer debtor in Chile and would explain why the debt of Chilean households is close to 70% of their income, according to the Central Bank. And how the same system, at present, facilitates access to credit, but does not raise salaries or improve inequality in the distribution of assets in Chilean society. And how currently the same system facilitates access to credit, but does not raise salaries or improve inequality in the distribution of assets in Chilean society.
It is therefore necessary to improve the Chilean insolvency system or for the legislator to be especially concerned about the economic situation of the natural person debtor, in order to prevent a major crisis in the system, which, if the current conditions of the bankruptcy system are maintained and with the persistent increase in the indebtedness of the Chilean population. Added to this year fiscal adjustments, does not guarantee a system that effectively deals with the insolvency and cessation of payments of the consumer debtor.
