MonthJanuary 2019

Overindebtedness: personal bankruptcy and its consequences

In France, civil bankruptcy in the strict sense of the term may concern persons who live in the Moselle, the Lower Rhine or the Upper Rhine. In the other departments, over-indebted persons may be subject to the measures provided for by the law on overindebtedness.

In the case of self-employed persons, personal bankruptcy is a sanction that can be taken in case of serious irregularities.

In these geographic areas, civil bankruptcy is provided for individuals who are in good faith, but who are totally unable to pay their debts. The debtor can file a case before the competent court which most often pronounces its judicial liquidation. The consequences of this decision are as follows:

  • the judgment is executed immediately. The judge appoints a judge-commissioner, a liquidator and a bailiff to make an inventory of the debtor’s assets;
  • the debtor is invited to contact as soon as possible the study of the liquidator who proceeds to the sale of the property seizable and having a sufficient market value, the debtor being divested of all his goods. He can no longer withdraw cash from his bank account, but the furniture necessary for his life can not be seized;
  • creditors can no longer sue the debtor, nor enter a mortgage on their property;
  • once the liquidation is completed, the judge declares the closure of the proceedings, which in principle has the effect of erasing all debts of the debtor, except those resulting from a criminal conviction.

Finally, the debtor is enrolled in the FICP for five years, which prevents him from obtaining a bank credit. Additional information is available on various sites dedicated to personal bankruptcy .

The personal recovery procedure

This is the procedure that applies in other French departments. If the insolvency of the debtor is such that he can not pay his debts, even if a conventional recovery plan is put in place, he may ask the enforcement judge to grant him the benefit of the personal recovery.

The execution judge organizes a hearing at which the debtor and his creditors are summoned, and he opens the proceedings at the end of this hearing. Then, a report of the situation of the taxpayer is established and the judge has a delay of four months to take one of the following decisions:

  • closure of the proceedings with the cancellation of the debts of the debtor;
  • establishment of a conventional recovery plan where possible;
  • judicial liquidation of the debtor if he possesses property of sufficient value that can be seized.

Personal recovery involves enrollment in the FICP for a period of five years.

Personal bankruptcy provided for by the French Commercial Code 

This penalty may be imposed on a merchant, a self-employed person or a company executive following the bankruptcy of the company. It is taken in case of dishonesty or serious incompetence, especially in the following cases:

  • abuse of corporate property or behaving as if the property of the company belonged to it;
  • serious accounting irregularities, fictitious accounting;
  • pursuit for a personal purpose of an activity resulting in losses and leading the company to the cessation of payments;
  • diversion or dissipation of assets;
  • maintenance of the company in artificial survival with a view to delaying the opening of a collective procedure.

The consequences of a bankruptcy of an officer are the following:

  • prohibition to run a company or carry on a business activity throughout the duration of the sanction;
  • prohibition of the exercise of elected office

And personal bankruptcy in Quebec?

And personal bankruptcy in Quebec?

As in Alsace-Lorraine, personal bankruptcy also exists across the Atlantic in Canada. This is a well-known reality in Quebec, a French-speaking land par excellence. Here too, personal bankruptcy is an individual’s right to protect oneself against one’s creditors.

Of course there are always disadvantages to not invite individuals to raise debts they will never pay. In Quebec, the consequences are similar to those in Alsace-Moselle, as in the seizure of movable property. But all so-called “liberal” debts will be canceled, including those relating to taxes, mortgages, car loans or credit card-related – among other possibilities.

The 5 signs that prove you have debt problems


Did you know that more than 40% of Quebecers are systematically worried about their financial situation?

For many reasons, your financial situation has the potential to deteriorate over time and you can quickly find yourself in a situation of overindebtedness. To avoid being overwhelmed by your debts, it is important to quickly realize that you are in financial trouble before it is too late.

For this, the bankruptcy trustee N. Séguin presents you with 7 signs showing that you probably have debt problems.


1. Your income does not pay back your expenses


To get a good financial situation, your income must be greater than your expenses. In revenues, you can include:

  • Your salary
  • Your family benefits and your alimony
  • Your housing allowance
  • Employment Insurance benefits
  • Any other income you can collect

Your expenses consist of:

  • Your rent
  • Your credit card payments or loans
  • Your food expenses
  • Your personal expenses
  • Your insurance
  • Any other expense

In the event that your income is lower than your expenses, you are certainly in a worrying financial situation. The income / expense ratio should be at least equivalent, although you do not have a margin of safety for contingencies.


2. Your month ends are difficult


More than 39% of Quebecers report having difficulties at the end of the month to pay their bills. This quickly becomes an alarming sign for debt problems.

When you pay your bills late or leave them unpaid, your debts accumulate and you are quickly overwhelmed over the months. It is important to act quickly before you end up without electricity or housing, for example.


3. You fight with your credit cards

 3. You fight with your credit cards


The credit card says a lot about your financial situation and your debt problems. If any of these situations apply to you, this could alert you to:

  • You have trouble repaying the full amount of your credit cards
  • You pay only the minimum required for your credit cards
  • Your bank accounts are uncovered
  • You already had your credit card declined in store
  • You are using a credit card to pay the balance of another credit card

If the amount of your credit cards frequently exceeds your repayment capacity, you risk debt problems.


4. You are asking for help


Debt problems often result in seeking help from family, friends and relatives. You want to have your credit card reimbursed by your peers in order to remedy your financial situation. This can prevent more frequent debt problems.


5. You are worried


Debt problems are a big source of stress, worry and upheaval. You have trouble sleeping well and are afraid of your financial future. These negative feelings prove your financial uncertainty. Regulating your debt problems will prevent you from being in a psychologically uncomfortable situation.


These signs are similar to your current financial situation and you are experiencing debt problems, contact our bankruptcy trustee N. Séguin. We accompany you to regulate and correct your debt problems with debt consolidation , consumer proposal and personal bankruptcy .