The availability of personal bankruptcy is helping the United States return to economic growth, while tougher bankruptcy terms in Europe are holding the continent back, according to a MarketWatch comparison.

America’s busy bankruptcy courts provide a forum for “cleansing the financial system,” writes Michael Casey in commentary for MarketWatch.

That counterintuitive take apparently implies that forgiving bad financial decisions may actually be good economic policy.

Editor's Note: 'It’s Curtains for the US' — Hear Unapologetic Warning from Prophetic Economist.

In Europe, “a place that is now beset by economic stagnation, sliding property prices and soaring unemployment, people are straitjacketed by laws that make it near impossible to have their debts forgiven,” Casey says.

“In the U.S., by contrast, growth is returning and both consumer and business confidence are picking up after millions of foreclosures and personal bankruptcies were rammed through the courts.”

In 2011, there were 1.36 million personal bankruptcies filed in the United States, or about 450 per 100,000 people.

But a German debt firm compiled data showing that in six European nations — Germany, France, Austria, Finland, the Netherlands and Spain — the personal bankruptcy filing ratio was 96 per 100,000, less than one-fourth the U.S. rate.

The Wall Street Journal reported that in Spain, a nation groaning under high unemployment and housing debt, there is no mechanism for writing down individuals’ unpaid debts. In Ireland, another poor eurozone economy, only 30 people filed for bankruptcy in 2011, according to MarketWatch.

“So, while American households have used mortgage defaults to cut their total outstanding debt levels by more than $1 trillion since the crisis in 2008, household debt in the eurozone hasn’t fallen at all,” Casey writes.

“And that means that European consumers will take a lot longer than their American counterparts to start to grow their spending again.”

Fitch Ratings estimates U.S. personal bankruptcies will fall by 6 to 7 percent in 2013, Reuters reports.

Total consumer credit reached nearly $3 trillion in November 2012, up 6 percent over 2011, according to Reuters.

“Though consumers are taking out a record number of car and student loans, they continue to do a commendable job of paying that debt off,” said Fitch Managing Director Michael Dean. “Momentum in both the housing and equity markets should also help drive personal bankruptcies lower.”

Editor's Note: 'It’s Curtains for the US' — Hear Unapologetic Warning from Prophetic Economist.