Clearing debts with the personal recovery procedure | Consolidation of loan

The personal recovery procedure allows someone overindebted and in an “irretrievably compromised” situation to start from scratch with the cancellation of their debts. The recourse to this ” personal bankruptcy ” is exceptional, and has serious financial consequences.

When you are too indebted,

When you are too indebted,

Filing an over-indebtedness file with the Bank in France is the only possible solution. The over -indebtedness commission will then make the necessary decisions. It will establish either a conventional recovery plan or for hopeless overindebtedness a personal recovery solution.

It should be noted that the use of the term “personal bankruptcy” is abusive. Personal bankruptcy is actually reserved for entrepreneurs. The procedure is very different from personal recovery.

What to expect in case of bankruptcy of an individual.

What to expect in case of bankruptcy of an individual.

(updated in January 2019, with the provisions of article 58 of the law n ° 2016-1547 of November 18th, 2016 of modernization of justice of the 21st century, applicable as of January 1st, 2018)

Several options are possible. The most common, there is nothing to do, or almost: it is the commission of over-indebtedness which will make the request after study of the file of over-indebtedness.

The debtor can himself request a personal recovery procedure. He can do this through the over-indebtedness commission, if he sees that he can no longer comply with the recovery plan.

The debtor may also file a request for a personal reinstatement procedure if, after 9 months after the submission of the over-indebtedness file, the board has still not provided guidance on the file.

The last way to obtain a personal recovery procedure is through the judge of the High Court, the TGI, when asked to challenge the solutions recommended by the commission of over-indebtedness. He will do it with the consent of the debtor.

spread the debts over a longer repayment period.

  • In the absence of an agreement, it can impose measures: debt moratorium, lowering of interest rates, rescheduling of repayments.

Conventional recovery plan

Conventional recovery plan

This is the plan established by the over-indebtedness commission to repay the credits. A new schedule is established, in agreement with the creditors. In most cases, the repayment period is lengthened. Normally, at this point, the person still has property that she could sell, and regular income.

This plan entails a file at the Bank in France, we find ourselves FICP, that is to say banned credit for the entire repayment period, up to 7 years.

The debt moratorium

The debt moratorium

Alternatively, for those who have a reasonable hope of improving their personal situation, the commission may decide a moratorium. Repayments of outstanding credits are suspended for a maximum of two years, without fees or interest. This decision is pronounced by the judge, and you must not have seizable property to benefit from it.

And if neither the conventional recovery plan or the imposed measures work?

The over-indebtedness commission may then initiate the personal recovery procedure without liquidation. If the over-indebtedness has assets that can be sold, the commission asks a magistrate to open a judicial procedure with judicial seizure.

The commission of overindebtedness warned by registered letter with acknowledgment of receipt the indebtedness and the creditors.