Over-indebtedness: personal recovery without judicial liquidation

Verified 20 June 2024 - Directorate for Legal and Administrative Information (Prime Minister)

You want to know what is the procedure of personal reinstatement without judicial liquidation and how it takes place? This procedure is intended to wipe out the debts of an over-indebted person. It is proposed by the over-indebtedness commission, when the financial situation of the over-indebted person is so bad that no other solution is possible. It's said without judicial liquidation, that is to say, without sale of the assets, when the over-indebted person has no assets. We'll explain.

The over-indebtedness commission shall initiate a personal recovery procedure without judicial liquidation where the over-indebtedness is in the following situation:

  • Its financial situation is irredeemably compromised, i.e. none of the measures to deal with over-indebtedness (conventional plan or measures imposed) could not improve it
  • He (or, in some cases, his spouse) does not own any property the sale of which might pay back some of the debts. We're talking about a insufficiency of assets. This is the case when the over-indebted household only has goods necessary for everyday life, or non-professional goods which are essential for working purposes (e.g. cars or computers), or goods which have no market value and the selling costs of which are disproportionate to the selling price.

FYI  

Where at least 1 of the assets of the over-indebted can be sold (e.g. valuable property or furniture of no particular use in everyday life), the committee may propose a procedure for personal reinstatement with judicial liquidation.

Where the over-indebtedness commission considers that the over-indebtedness situation justifies a 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. The letter also sets out how to challenge this decision within 30 days.

The Debt Relief Commission shall have its decision published in the Bodacc: titleContent within 30 days from the date of its decision, so that any creditors not known to the commission may still challenge its decision. They shall have two months from the date of such publication to send the statement of their claims and any dispute to the secretariat of the Commission.

The letter sent by the Debt Relief Commission indicates that its decision may be challenged by a declaration delivered or sent by registered letter with notice of receipt to the Commission Secretariat, 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
  • Reasons for the protest.

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

Reminder

The Debt Relief Commission shall have its decision published in the Bodacc: titleContent within 30 days from the date of its decision, so that any creditors not known to the commission may still challenge its decision. They shall have two months from the date of such publication to send the statement of their claims and any dispute to the secretariat of the Commission.

Where the situation of over-indebtedness so warrants, the committee recommends a personal recovery without judicial liquidation of the over-indebtedness.

It warns of over-indebtedness and its creditors, who have the opportunity to challenge the opinion of the Debt Relief Commission.

The continuation of this procedure is different, depending on whether or not there is a dispute:

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In the absence of a challenge

In the absence of a challenge within the time limit (or in the event of a challenge outside the time limit), the over-indebtedness commission shall address the over-indebted and the creditors a simple letter stating that his 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 over-indebtedness, except debts paid by the surety of the over-indebted person if this surety is an individual (example: surety of a tenant), maintenance debts (including maintenance), criminal fines, damages awarded to a victim
  • Recording of over-indebted in Personal Credit Reimbursement Incident File (PPIF) for five years.

Please note

The forgiveness of a debt created by an unpaid check is tantamount to regularization, i.e. the right to use your checkbook again.

In case of dispute

The secretariat of the Debt Relief Commission shall forward to the graft of the court of justice the challenges it has received.

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

At the conclusion of the challenge hearing, the protection litigation judge shall take one of the following decisions:

  • The judge shall order a personal reinstatement without judicial liquidation, which shall be published in the Bodacc: titleContent within 15 days to allow unadvised creditors to appeal against this judgment.
  • Either the judge opens a personal reinstatement procedure with bankruptcy, provided that the over-indebtedness is agreed.
  • Either the judge refers the over-indebtedness file to the over-indebtedness commission for it to prepare a conventional recovery plan or measures imposed.

FYI  

There is an appeal against that judgment.

The effects of personal reinstatement without judicial winding-up are as follows:

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

Please note

The forgiveness of a debt created by an unpaid check is tantamount to regularization, i.e. the right to use your checkbook again.

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