Borlo Law For Excessive Debt

Borlo Law is a unique mechanism set up under the French law with an intention to tackle the over indebtedness of the citizens of France. This mechanism was first set up in the year 1990 and was amended in the year 1995, 1998 and in 2003. This enactment constituted an administrative body known as House Hold Debt Commission to act as a conciliatory body between the debtor and the creditors. The law entrust judiciary to legalize the decisions or the recommendations proposed by the commission to start up with the personal recovery procedure.

The household debt commission constituted under the Borlo Law had been working under the Banque de France. It is the duty of the commission to act as a mediator between the debtor and the creditor by enabling them to reach into an amicable settlement and to help them the frame effective and practical repayment schedules for settling the debts. Household debt commission framed under the Borlo law is also authorized to make recommendations to the courts while trying case that involves the question of repayment of debts.

When a case of over indebtedness is admitted by the commission, the commission will draft a repayment schedule for the debtor to be followed based on the income and the debts that a debtor owes to his creditor or creditors. Both debtor and the creditors should be heard by the commission before preparing the repayment schedule. Once prepared, the repayment schedule should be given to the creditors and the debtor inviting their objections with regard to the repayment schedule prepared by the commission. If they agree to accept the schedule it should be presented before the magistrate for getting approval from the judiciary by the commission. Schedule prepared to resolve severe over indebtedness problems may contain recommendations for writing off certain portions of debts. Extreme cases may require total writing off of the debts.

If the commission is of the opinion that it is not possible for the debtor to repay the debts for some valid reasons the commission can recommend the court to initiate the personal recovery procedures. But it should be done only with the consent of the debtor. The debts in question will be settled completely with this personal recovery procedure.

Borlo Law insists that the commission should verify whether the case that comes before it satisfies the definition given to the term over indebtedness in the French Consumer Code before it admits a case of indebtedness for their consideration. The cases that involve professional debts will not be entertained by the commission.

The parties of the matter admitted by the court will be informed about the admission of the case once it has decided to take up the matter. The court before which the matter is pending should stay the matter until the commission takes a final decision upon the issue.

To get a correct picture of the debts of the debtor the commission directs the creditors to submit a detailed statement of the debt that the debtor owes to them. When the commission draws up a repayment schedule priority will be given to the loans financing the purchase of the applicant's residence. All the creditors who have granted cash loans or consumer credit will be treated equally by the commission. The schedule drafted by the commission should be given to the debtor as well as the creditors to verify. Refusal by a single creditor will lead to failure of the proposal made by the commission. If the financial condition of the debtor is so bad the commission can refer the matter to the judiciary recommending personal recovery with a written consent from the debtor.