Over-indebtedness: personal recovery without judicial liquidation

Verified 21 January 2021 - Directorate for Legal and Administrative Information (Prime Minister)

The personal recovery procedure consists in writing off the debts of an over-indebted person when his financial situation is so bad that no measures to deal with over-indebtedness are possible. This procedure is initiated by the over-indebtedness commission, with the agreement of the over-indebted. It is pronounced without judicial liquidation (i.e. without sale of assets) when the over-indebted person does not possess any assets.

If not (possibility of selling the asset of the over-indebted), a personal recovery procedure with compulsory liquidation may be engaged.

A personal reinstatement procedure without judicial liquidation is initiated by the over-indebtedness commission when the situation of over-indebtedness meets the following 2 conditions:

  • He is in a situation irredeemably compromised, i.e. it is clearly impossible to implement the treatment measures (conventional plan or measures imposed) to improve its financial situation.
  • He (or, in some cases, his spouse) does not own property the sale of which could repay some of the debts (valuable real estate or furniture of no particular use in everyday life).

If the overindebted person does not own any property that can be sold (a insufficiency of assets), the commission recommends a procedure of personal reinstatement without judicial liquidation.

This is the case when the over-indebted household owns almost nothing, except the following:

  • Goods necessary for everyday life
  • Non-professional goods, but essential for working (e.g. car or computer)
  • Goods which have no market value and for which the selling costs would be disproportionate to the selling price

FYI  

the commission's recommendation may be contested by the over-indebted or the creditors.

Where the Commission considers that the situation of over-indebtedness justifies personal recovery without judicial liquidation of the over-indebtedness, it shall warn the over-indebtedness and its creditors by registered letter with notice of receipt.

In addition, it shall have its decision published in the Bodacc: titleContent within 30 days.

The letter also sets out how and when to challenge the decision.

The letter sent by the commission states that the decision may be challenged by a declaration delivered or sent by registered letter with notice of receipt to the secretariat of the commission within 30 days.

The period shall run from notification of the decision of the commission.

The declaration must be signed and include the following information:

  • Name, first name and address of the author
  • Contested decision
  • Grounds for the challenge

It may be delivered or sent by registered mail with notice of receipt to the secretariat of the Commission.

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In case of dispute

The secretariat of the commission shall forward the challenges received to the Registry of the Judicial Tribunal.

The court registry shall convene the over-indebted party and the creditors by registered letter with notice of receipt at least 15 days before the challenge hearing.

Audience

At the end of the challenge hearing, the protection litigation judge makes one of the following decisions:

Effects of personal reinstatement without judicial liquidation

Where the judge orders a personal reinstatement without judicial liquidation, the decision shall have the following consequences:

  • Erasure of all non-professional debts (fixed at the date of judgment) of the over-indebted person, except debts paid by a debtor's guarantor if that guarantor is an individual, maintenance debts (including maintenance), criminal fines, damages awarded to a victim
  • Recording of over-indebted in Personal Credit Reimbursement Incident File (PPIF) for 5 years

Please note

the cancelation of a debt created by an unpaid check is tantamount to regularization, that is to say the right to use his checkbook again.

In the absence of a challenge

In the absence of a challenge (or if a challenge is received after the deadline), the commission sends a simple letter to the over-indebted and creditors indicating that its decision to initiate a personal recovery procedure without judicial liquidation is necessary.

Personal reinstatement without judicial winding-up shall entail the following consequences:

  • Clearance of all non-professional debts (fixed at the date of the commission decision) of the over-indebted, except debts paid by the surety of the over-indebted if this surety is an individual (example: surety of a tenant), maintenance debts (including maintenance), criminal fines, damages and interest allocated to a victim.
  • Recording of over-indebted in Personal Credit Reimbursement Incident File (PPIF) for five years.

Please note

the cancelation of a debt created by an unpaid check is tantamount to regularization, that is to say the right to use his checkbook again.

FAQ