Over-indebtedness: personal reinstatement with judicial liquidation

Data subjects

A personal reinstatement procedure with 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 impossible to implement the other measures to deal with over-indebtedness (conventional plan or measures imposed) to improve its financial situation.

• He (or, in some cases, his spouse) owns property (valuable real estate or furniture of no particular use in everyday life) the sale of which could repay some of the debts.

Goods that cannot be sold

Some goods cannot be sold. These are:

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

Consequently, a personal reinstatement procedure with judicial liquidation is possible on condition that the over-indebted person (or his spouse) owns property other than these.

Pre-approval of over-indebted

The over-indebtedness commission must convene the over-indebtedness and obtain its agreement before initiating a personal recovery procedure with judicial liquidation.

The absence of over-indebtedness at committee summonses is tantamount to refusal.

Opening Hearing

The over-indebted party and its creditors shall be summoned to the opening hearing by registered letter with acknowledgement of receipt (the over-indebted party shall also receive a simple letter), at least 1 month before the date of the hearing.

At the hearing, the judge hears the over-indebted and its creditors.

It assesses the situation irredeemably compromised and the good faith over-indebted.

If he finds that these two conditions are met, the court orders the opening of proceedings. The opening judgment shall then be published in the Bodacc: titleContent.

The judge may also appoint a representative, which will be responsible for drawing up a review of the economic and social situation of the debt overhang.

Consequences of the opening judgment

Once the opening judgment has been delivered by the judge:

• Execution procedures and pay transfers (except maintenance debts and certain buildings) against over-indebtedness shall be suspended and prohibited until the closure judgment.
• Deportation orders (except those based on an award judgment in the case of foreclosure of immovable property) are suspended until the final judgment.
• The over-indebted person no longer has the right to sell his property without the agreement of the agent.
• The creditors shall have two months after the publication of the opening judgment in the Bodacc: titleContent to declare their debts to the agent (or, if not, to the court registry) by registered letter with request for notice of receipt.

Economic and social balance sheet

From the opening judgment, the trustee has 6 months to draw up the economic and social balance sheet of the over-indebted person.

This balance sheet shall consist of a statement of claims and, where appropriate, a proposal for a plan (measures imposed).

Once established, this balance sheet is sent to the over-indebted and creditors by registered letter with acknowledgement of receipt. It shall be delivered or sent to the Registry of the Court by simple letter.

The economic and social assessment carried out may be contested by registered letter with notice of receipt sent to the court registry no later than 15 days before the liquidation hearing.

Liquidation Hearing

The Registry of the Court of First Instance shall convene the over-indebted and creditors at the hearing of the judgment of liquidation.

At that hearing, the court shall rule on any disputes relating to the economic and social balance sheet drawn up by the representative and shall fix the claims.

It may then:

• Order the judicial liquidation of the assets of the over-indebted person and appoint a liquidator responsible for the amicable or forced sale of the assets of the over-indebted person within 12 months
• Declare the proceedings closed for insufficient assets (if no goods can be sold)
• Either draw up the plan (measures imposed) proposed by the trustee, if the judge considers that liquidation by the court can be avoided

This judgment may be challenged on appeal.

Sale of goods

The liquidator first prepares a plan for distributing the proceeds of the sale among the various creditors.

This allocation may be contested by creditors. Disputes and supporting documents must be sent to the liquidator by registered letter with a request for notice of receipt within 15 days following the notification project.

Without challenge in time, the project is approved by the judge and the liquidator then proceeds with the sale of the property.

Closing Judgment

At the end of the sale of the property, and depending on the amount obtained, the judge makes a final judgment:

• for extinguishment of liabilities when the sale of the assets has made it possible to pay off all the debts
• or for insufficient assets (in all other cases).

Consequences

Payment Incident File

Over-indebtedness is recorded in the Personal Credit Reimbursement Incident File (PPIF) for 5 years from the final judgment.

Debt forgiveness

The decision of the judge (closing judgment) entails the cancelation of all non-professional debts.

Some debts, however, are not forgiven. This is the debts paid by the surety of the over-indebted if this surety is an individual (example: surety of a tenant). They also include maintenance debts (in particular maintenance), criminal fines and damages awarded to a victim.