In the difficult and distressing situation of an individual in a situation of debt distress that is no longer able to meet his or her debts, the constitution and submission of an over-indebtedness file appear as an oasis of hope in the middle of the financial crisis. Desert financial disappointments.
What to do?
Therefore, being abruptly notified of the inadmissibility of an over-indebtedness case may be a blow to a club and cause many questions. The attitude to adopt in this case, and at first, is to keep as much as possible the cool head and identify the causes of this refusal.
These causes are multiple. The Banque de France’s overindebtedness commission, which must justify its refusal, may first of all consider that the indebtedness of the individual is not sufficient to justify the acceptance of a file. It may also consider that certain debts of professional origin have been included in all the debts, or that the individual, showing bad faith, has played an active role in the evolution of his debt (“organization of the ‘indebtedness’).
Appeal against the decision of inadmissibility
It is possible to appeal the decision of inadmissibility of the debt overhang. To this end, it is advisable to write a registered letter with acknowledgment of receipt to the Banque de France, in which the individual declares that he wishes to contest the decision in question, of which he will take care to indicate the references.
It is necessary to act quickly since the delay to form an appeal is fifteen days as from the reception of the letter notifying the file’s inadmissibility. This will result in a convocation of the individual and all creditors before the Execution Judge (JEX), within a (theoretical) deadline of two months.
Having correctly identified and understood beforehand the reason for the refusal of the file will allow the individual to properly prepare his argument and to make relevant observations to JEX when he invites them to produce them.
What to do in case of rejection?
In case of rejection of the appeal, it remains possible to appeal to the Court of Cassation, which should however be reserved in case the JEX decision is possibly tainted by procedural errors.
To re-file an over-indebtedness file with the Banque de France is therefore possible. The individual should then make sure to make this new deposit in the best possible conditions, without haste and taking into account as much as possible errors he may have made during his first attempt. The application should then become receivable without much problem, find a model letter of declaration of overindebtedness here and the form here.
The two crises and the apparent recovery in the USA: a sequence of contraction of the activity, formation of the savings and differential of the restart of the 2 engines of the growth.
To understand why the crisis is rooted in the contraction of the asset investment activity of households in the Top Ten (and for a small part of the middle-class heritage), we must understand why this contraction has a strong influence on the growth of the economy. GDP.
Well-off and wealthy households (Top Ten)
Rich and wealthy households form wealth from their income. These revenues are divided in two:
a) income from capital (income of business owners, Interest, dividend) and income from the work of the upper layers of employees whose emblematic figure is the super-executive officer.
b) speculative income resulting from the sale of movable and immovable assets. When a crisis leads to a contraction of speculative revenues – mainly financial – it makes sense that the proceeds from the sale of assets fall sharply.
The consumption of affluent and wealthy households shrinks from the speculative incomes that they consume; conversely, the share of speculative incomes they can save also falls. This is what happened in 2008. On the other hand, when the financial system is hit by the crisis, the interest earned by the top ten also falls. This happened in 2008 and after.
The share of consumption that the interest can finance is reached, the reaction of the households is to reduce the latter and to make savings on the interests fueling the consumption.
But let’s continue, this decline in the consumption of affluent households is transmitted to the economy, the economic slowdown penalizes, in turn, the dividends and the thousand and one form of interest of the supercars as much as the incomes of the owners of companies which undergo the effects of the slowdown in the economy.
The credit crisis of the subprime crisis and the bankruptcy of the GSE affecting, in turn, the mortgage, the rationale of wealthy and wealthy households is then to drastically reduce their consumption and remake just as quickly savings. The fall in debt issues in the form of shares or mutual funds is then simply explained by the speed with which the share of income of affluent and wealthy households is reduced, these households are indeed affected in their production incomes as much as then in their income generated by asset disposals.
Households in the Low 90 undergo a series of shocks. To the slowdown in the consumption of the Top Ten are added the effects on the economy of the cessation of credit which penalizes the creation of wealth (real estate credit pulling construction, consumer credit stimulating growth, credit to businesses ensuring the ends months of the most fragile).
The cascading effects of the crisis are less rapidly transmitted to the Low 90’s income than the downturn in the speculative incomes and income generation of the Top Ten. Growth largely supported by generalized indebtedness penalizes households of the Low 90 later and longer.
They reduce their consumption later and more sustainably, their savings reform is also later and longer. What most affects their reduction of consumption is unemployment, which explains why the state must intervene by making large social accounts deficits is that contraction of the consumption of Low 90 and savings are more difficult to resorb for the big mass of Americans.
Thus, the Treasury avoids a general and lasting erosion of household consumption with very negative effects on activity and prices.
Differentiation of phases.
The policy of the FED and the Treasury provide a remedy to the crisis, but this remedy seems fragile, uncertain and reversible if the private debt does not take over the debt of non-financial economic actors, households of low 90 in the lead.
The support of the FED for the value of financial and real estate assets has the merit of inflating speculative values and reinvigorating capital gains on sale. Treasury action to support economic activity tends to benefit first and foremost the superframes and capital income excluding interest paid, as interest rates and financial market activity are too low.
Supercars – less affected by unemployment and financially interested are the first to benefit from credit growth maintained by a state that makes public debt the engine of growth for lack of better.
The artificial revaluation of heritage tends to accelerate the recovery of consumption by affluent and wealthy households. It is, therefore, households in the top ten who are starting to consume revenues from the sale of reviving assets thanks to the rise in the price of financial assets.
The revaluation of the patrimonies also leads them to consume their production income and to lower their savings; it is, therefore, they who once again support growth and deepen the external deficit by a rapid return to consumerism deepening external deficits.
This ability to bounce back from the Top Ten – thanks to the policy of the FED treasure couple – explains a notable difference with the 2000s. If the contraction phase of debt securities issues is shorter during the crisis of 2008-2009, it is is that the crisis has given rise to a much more energetic, rapid and massive public intervention than during the millennium crisis. This intervention focused on supporting the securities that are at the heart of consumerism in the Top Ten.