A person is considered “over-indebted” when he is no longer able to pay his personal debts, despite his efforts to meet monthly repayments. Focus on the process of dealing with over-indebtedness and the possibility of redeeming its credits to get the head out of the water.
The procedure of treatment of over-indebtedness
A serious situation of over-indebtedness is the result of an accumulation of debts (consumer credits, overdrafts, current expenses, invoices, unpaid rents …). The first step is to seize an over-indebtedness commission to file a file. There is one for each department: its headquarters are located at the Banque de France.
Indeed, the Banque de France is the only interlocutor in case of over-indebtedness. The purpose of the over-indebtedness commission is to help the indebted individual to negotiate a solution with their creditors. Two conditions must however be respected:
- the individual must be truly over-indebted and in good faith , that is, he / she must not have intentionally over-indebted
- he must have already tried by all means to pay his debts before seizing the commission, notably by having tried to redeem his credits. The repurchase of credit can indeed be an alternative to reduce the height of the monthly repayments of the debts and thus avoid the over-indebtedness.
The deposit of the over-indebtedness file is made to the commission of the department in which the individual resides. The procedure is free. All that is required is to complete a declaration of over-indebtedness form, accompanied by the required supporting documents. A certificate confirming the reception of the deposit of the file is then sent by mail within 48 hours. The individual is registered in the ” National Individual Credit Refund Incident File ” (FICP).
Depending on the seriousness of the applicant’s financial situation, and if the file is admissible, the commission will propose different solutions:
- A proposal for a repayment plan , negotiated between the individual and the creditors;
- Imposed or recommended measures for the individual and the creditors;
- Proposing a Personal Recovery Procedure (PRP), if no debt settlement is possible.
The rights of the over-indebted
The admissibility of the file by the commission allows the individual to obtain certain rights. As a first step, all pending seizure procedures are suspended (ie strictly prohibited for two years after the commission’s decision). Only so-called “food” debts are excluded. In case of non-compliance with this prohibition of seizure by a bailiff, the individual may contact the commission to ask the bailiff in question to respect the prohibition. He may also ask the commission to suspend a prominent eviction of housing; this decision nevertheless depends on the agreement of a judge. If granted, personalized housing assistance (APL) and other housing benefits are paid directly to the landlord.
In addition, neither the bank nor other creditors are allowed to terminate or amend existing contracts , such as unilaterally closing the bank account containing monthly income or terminating a borrower insurance contract. Indeed, despite the receivability of the indebtedness of the individual, the latter has the right to maintain his bank account, and the benefit of means of payment adapted to his situation. Likewise, his bank is not entitled to charge a fee in the event of a refusal to draw if the account balance is used up. In addition, the individual is entitled to request a reduction in his bailiff’s fees, as well as his intervention fee charged by the bank.
In return, the over-indebted person does not have the right to continue using his credit cards or to subscribe new credits , except with the prior authorization of the judge. Likewise, it can not sell or sell any of its assets or pay any debts outstanding or prior to the admissibility of its file by the commission. In addition, it must make sure to balance its budget and continue to pay its various bills (electricity, gas, water …), as well as its rent.