A private individual could resort to this solution if he is faced with accumulated credits that he can no longer pay. However, this procedure is only for people who are bankrupt because of non-work debts (i.e. debts they have incurred solely for their families or personal requirements). It does not also concern self-employed workers (craftsmen, tradesmen…) or individual entrepreneurs. The former is subject to judicial liquidation if they are no longer able to pay their various creditors. This will take place at their request or the request of their creditors or the request of the court. As for the individual entrepreneurs, they are entitled to a debt erasure or debt restructuring under certain conditions such as :
Having ceased payment and being unable to bounce back financially.
Not being a victim of a judicial liquidation during the 5 years before their applications.
Having assets of less than 5,000 euros and not having had an employee in the last six months
Persons not included in these exceptions can therefore refer to the over-indebtedness commission if they wish to restructure their debts. For the request to be admissible, the applicant’s financial situation must be serious. This means that this remedy is the last resort. This could be unpaid real estate and consumer loan debts, debts associated with current charges (rent, bills…) accumulated, tax debts, unpaid guarantees. Homeowners can also use this procedure since November 01, 2010. It is to be reminded that the applicant must be in good faith in his declarations and that he must not manipulate his solvency.
What to do to refer to the over-indebtedness commission?
The debtor can seize this free solution on a personal basis or with his spouse or partner. To do so, he or she should contact the Banque de France branch in his or her vicinity. He or she would then have to fill out the “over-indebtedness” files. This file includes the following documents: the form filling in his civil status, his marital status, his monthly income and assets, and his housing situation. The Cerfa form n°13594*01 also contains information on his monthly current charges, the nature, and details of his credits, and the coordinates of his creditors. The debtor would also have to mention if he is the subject of an ongoing enforcement procedure on his property or eviction. Proof of all resources as well as the tax notice, bailiff’s acts, etc. are indispensable. He would also have to write a letter asking to benefit from this solution. The signed letter should briefly explain the causes of his over-indebtedness and his current financial status. This file should be sent to the secretariat of the commission within one month of the request. If there are false statements, the debtor would no longer be eligible for any of the recovery aid
The commission examines the file for 3 months. During this period, it may request an additional proof. The commission will inform the debtor of its agreement or rejection by a registered letter with acknowledgment of receipt. If it cannot receive the application, its decision of rejection will be explained but the applicant still has 15 days to appeal to the secretariat of the commission. On the other hand, if the application is declared admissible, all proceedings for non-payment will be suspended. The recovery institution will put in place a recovery plan or a personal recovery procedure.
What is the conventional turnaround plan?
In this plan, the commission seeks to establish an agreement between the person in case of overindebtedness and his or her creditors. To do this, there might be obligation rescheduling or delay of developments, lower loan costs, the offer of part of the indebted person’s resources … It will decide the “rest to live”, the necessities and requirements of the family concerned.This includes daily food, water, gas and electricity bills, children’s health care and school fees, travel expenses, etc. By determining the share of income earmarked for debt repayment, it seeks solutions for the implementation of a recovery plan without any party being prejudiced. It is important not to forget any debt when the commission examines it. The plan must be signed and accepted by three actors (the debtor, the creditors, and the commission). At the end of this plan, the debtor would have to make his first payment during the first year following the judgment. The maximum duration of this plan is set at 8 years. If no agreement can be reached, the applicant has 15 days to refer the matter to the commission so that it can impose its recommendations on the creditors. This recommendation will be validated by an examining magistrate and will be authoritative
What about personal reorganization?
If no agreement has been reached or if the situation of overindebtedness is too inextricable, orientation towards personal reorganization could take place. This gives the debtor the benefit of complete erasure of his debts with or without judicial liquidation. In the first case, if the bankrupt person has assets that could be sold, the commission asks the judge with the agreement of the debtor and the creditors for this procedure with the liquidation of assets. Legal proceedings against the over-indebted person will be suspended. The liquidator appointed by the judge will have to make the sale within 12 months from the pronouncement of the liquidation solution. The proceeds of the sale will be used to erase the debts. Otherwise, if the over-indebted person has no property, the judge will pronounce the debts to be erased. All non-professional debts are concerned except for alimony debts, penal and fiscal fines, damages in compensation for a misdemeanor, a crime, or an accident. It should be noted that by benefiting from personal redress without liquidation of assets, the over-indebtedness is registered in the FICP for 5 years after the judge’s order.
Credit repurchase to stop a situation of excess debt
When a person realizes that the amount of his expenses exceeds his income because of his credits, he is advised to contact his creditors to lighten his deadlines. If this proves unsuccessful, he can also resort to a buy-back operation. This operation makes it possible to reduce up to 60% of his monthly payments. To do so, the broker could act as an intermediary between him and the new repurchasing institution. As an intermediary, he negotiates the best conditions for the transfer of the loan and the rate of the new loan. Once the financing is granted, the debtor would have to pay his percentage of about 1% of the borrowed capital. However, the use of a brokerage is not always an obligation in the case of high indebtedness. The over-indebted could just as well compare interesting buyback offers on the online credit buyback comparator sites. Once he has found the repurchasing organization or the bank offering a better rate, he can compile his own file and send it directly to the repurchasing institution. This operation has the advantage of avoiding the FICP file. In short, there are many solutions to get out of excessive debt, and everything depends on the budget and income of each househol