Over-indebtedness: personal recovery without judicial liquidation

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
• The over-indebted person (or, in some cases, his or her spouse) does not own any property the sale of which might repay 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.

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 BodaccBodacc : Official Bulletin of Civil and Commercial Advertisements 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.

The implementation of personal reinstatement without judicial liquidation is different, depending on whether or not there is a dispute:

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

• Clearance of all professional and 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, debts related to a pawnbroker, fraudulent debts to a social organization (for example, the CafCaf : Family Allowance Fund).
• Recording of over-indebted in Personal Credit Reimbursement Incident File (PPIF) for five years.

In case of debt for unpaid rent or expenses, the judge of the lease may grant the tenant, under certain conditions, a period for repaying this lease debt (maximum 3 years).

Where the decision of personal reinstatement without judicial liquidation comes after the decision of the judge of the lease, the cancelation of the rental debt replaces the period of payment granted by the judge of the lease, and the effects of the rescission clause shall be suspended for the following 2 years.

If the over-indebted person pays the rent and expenses during these two years, the cancelation clause must be considered as not being activated. Otherwise, the effects of the rescission clause shall resume.