Everyone has the right to a second start. When a person is too indebted to be able to repay his debts, he can benefit from the law known as the ” second chance “, the law of orientation and programming for the city, and the urban renewal. This law allows an individual to follow a personal recovery procedure (PRP) which is equivalent to a business bankruptcy applied to the situation of individuals.
When does the personal recovery procedure take place?
An over-indebted person can submit an over-indebtedness file to the Banque de France so that it can be studied by an over-indebtedness committee. If the file is admissible, two possible outcomes: either it will be processed by the over-indebtedness commission, which will establish a conventional reimbursement plan, or it will be processed by an enforcement judge (also called “JEX”).
In order for the over-indebtedness file to be seen by JEX, the situation must be critical and it will be impossible to set up a recovery plan in order to settle part of the debts. This is particularly the case when the debtor’s repayment capacity is totally insufficient and when it has little hope of increasing significantly in the medium term.
Note that not all debts are affected. Thus criminal convictions, maintenance debts, professional debts, debts settled by a bond or pecuniary reparations are excluded from the PRP.
What are the stages of PRP?
Before applying to the Executing Judge, the commission requests the authorization of the debtor to initiate a personal recovery procedure. The agreement will then be given in writing on a form given to the debtor. This form informs that the PRP is likely to involve in his regard a decision of liquidation of his personal patrimony.
For their part, the creditors can file an appeal against the decision of the commission within 15 days from the notification, which is transmitted with the file to the enforcement judge. Then the enforcement judge will appoint a liquidator. The latter first establishes a balance sheet of the debtor’s assets.
The judge can decide to liquidate part of the property, excluding everyday property or essential for professional practice. The liquidator can sell these goods amicably within 12 months, failing which, he can organize a forced sale. He then proceeds to the distribution of the proceeds of the goods sold and reimburses the creditors according to their rank.
The consequences of personal recovery?
As of the closing date of the PRP judgment, the debtor will be registered for a period of 8 years with the FICP (National File of Credit Repayment Incidents for Individuals). For 8 years, he will no longer be able to take out a loan to finance a project, an automobile or an apartment.
As we can see, PRP is therefore a solution of last resort. It has consequences which are also very disabling for households. In return, and this is the objective of the personal recovery procedure, the debts are written off. The debtor no longer owes anything to his creditors who no longer have the right to claim the money, or to harass him or take money.