Over-indebtedness file: How does it work?

What is an over-indebtedness file?

Anyone can be confronted during his life with financial difficulties due to the hazards of life. 
By definition, over-indebtedness is a very uncomfortable financial situation suffered by an individual and due to the subscription of multiple bank credits in the past. 
The borrower then finds himself with a very high debt ratio preventing him from repaying the monthly payments of his various loans in accordance with his commitments with the banks. 
Generally, the most serious consequences of this critical financial situation are the freezing of bank accounts and possible seizures of wages or even real estate.

To avoid this extreme financial situation, the debtor has the possibility of asking for help from the Harris private debt commission. 
For this, the individual must fill out a form accompanied by numerous supporting documents relating to his personal, professional and financial situation and relating to his assets, if applicable. 
This cerfa form, which must be filled out with the utmost care, accompanied by all the supporting documents, is called an over-indebtedness file.

Where to withdraw an over-indebtedness file?

There are two main ways to remove an over-indebtedness file and everyone is free to choose the one that suits them best. 
The first way is to go to the Bank of France closest to home to directly withdraw an over-indebtedness file. 
The second way is to download an over-indebtedness file online to save time.

How to make an over-indebtedness file?

The mounting of an over-indebtedness file must be scrupulously done and it is essential to take all the necessary time to file a complete file and without inaccuracy.

An over-indebtedness file is composed of the following documents:

  • The cerfa form withdrawn from the Harris or downloaded online;
  • The credentials sent by each creditor;
  • proof of all household income, including social assistance;
  • bank statements for the last 3 months;
  • The copy of the family record book;
  • Proof of household income
  • The estimate of real estate held if any;
  • The copy of the registration certificate of each vehicle held;
  • The copy of the life insurance contract, if applicable;
  • The list of monthly charges;
  • The names and addresses of all creditors;
  • A letter explaining the reasons that led to this situation of over-indebtedness;
  • The copy of the last tax return;
  • The act of divorce for the persons concerned;
  • The copy of bailiff or eviction proceedings in progress if necessary.

Filing an over-indebtedness file

The easiest way to file an over-indebtedness file is to go to the nearest Harris. 
The file can be deposited at the reception who will be responsible for transmitting the file to the commission of over-indebtedness. 
For people who can not travel, it is also possible to send by simple mail the complete file to the Bank closest to his home. 
It is important to stress that the fact of filing an over-indebtedness file with Harris does not result in the suspension of monthly payments from creditors. 
Regardless of how the debt overhang file is filed, the debtor will receive a certificate of deposit within 2 days.

Who can seize the over-indebtedness commission?

Any person of major age who encounters significant difficulties in repaying their debts may apply to the over-indebtedness commission. 
In order for the application to be admissible, it is important to underline that the debts must not have been subscribed in the professional framework and it must therefore be only personal debts.

The consequences of filing an over-indebtedness file

The filing of an over-indebtedness file automatically generates a file at the Harris at the FICP which is the file of incidents of repayment of loans to individuals. 
A FICP person can no longer claim a bank loan for a period of 3 years and can no longer use credit cards. 
It is for this reason that we must think carefully before submitting a file to Harris and think about alternative solutions such as the purchase of credit.

In the event of an admissible debt overhang

In the event that the debt commission deems the request admissible, it then warns by registered letter with acknowledgment of receipt the person concerned and all the creditors of this decision. 
The over-indebtedness commission will then proceed to a more detailed study of the request in order to determine the most suitable solution.

The recovery plan

If the debt commission considers that the debtor has the possibility of repaying its debts in one way or another, it will then propose a conventional plan of recovery. 
The latter is spread over a period of 8 years but can be increased in certain cases such as for the repayment of a mortgage.

The debtor can benefit from the following arrangements:

  • Decrease of the debt;
  • Decrease or cancellation of the interest rate;
  • Lengthening the repayment period;
  • Deferral of monthly payments.

The over-indebtedness plan must be accepted by both the debtor and the creditor in order to be put in place. 
If this is not the case, the over-indebtedness commission classifies the request without further action and the person concerned has 15 days to issue a dispute.

Temporary suspension of debt repayment

In order to help the debtor to repay his debts, the debt commission may temporarily suspend the payment of the monthly payments of consumer loans and real estate. 
This suspension may be carried out for a maximum period of two years in order to allow the person concerned to recover financially. 
Only households with no property can benefit from this suspension of repayment. 
In the event that the debtor is still not able to repay his debts after this 2-year break, the personal recovery procedure will be studied.

Establishment of a personal recovery procedure

In the case of a total insolvency, the commission of over-indebtedness can decide on the total cancellation of the debts. 
In the case where the debtor has real estate or cars, the latter will be sold and this is a personal recovery procedure with liquidation. 
Money from different sales will allow creditors to recover some of the debt. 
In the event that the debtor has no property, all the debts are erased and the creditors will not be able to recover the money lent.

In case of inadmissibility of the debt overhang

In the event that the Harris refuses the treatment of an over-indebtedness file, the commission then explains to the person concerned the reasons for this refusal. 
The applicant then has the opportunity to contest the inadmissibility of his request by sending a registered letter with acknowledgment of receipt explaining the reasons for the appeal.

Following this, the District Court is then responsible for giving a firm and definitive opinion on the debt issue concerned. 
In the event that the court considers that the over-indebtedness file is admissible, the over-indebtedness commission is then in charge of proposing solutions to the debtor.

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