What is over-indebtedness? The law defines it as ” a situation of persistent imbalance between the obligations assumed and the liquid assets to deal with them, as well as the definitive inability of the debtor to regularly fulfill his obligations “. In simpler terms, it is the situation in which the consumer has too many debts to bear on his ability to cope with his own assets, to which he adds the impossibility for him to repay his installments on a regular basis.

Possible remedies to get rid of debts

To remedy this situation, the Law provides consumers with various tools that make it possible to compile an over-indebted crisis, by contacting an authorized body or professional such as accountants, lawyers and notaries and then a court. The procedure therefore allows to settle its debts, without necessarily repaying its debts entirely. This process leads to the debit of the consumer who at that point will be able to start from scratch, effectively eliminating the debtor problems that have emerged in the past.

To get to the debt, the consumer has three possibilities:

) Agreement with creditors – Creditors must sign a proposal submitted by the consumer representing at least 60% of the credits.

2) Plan of the consumer – It is the procedure usually most used in these cases, especially for consumers who are natural persons and not companies, with debts unrelated to professional or entrepreneurial activity. For this procedure, the agreement of creditors is not necessary, but the consumer must nevertheless guarantee to be able to repay a portion of debts greater than the creditors could obtain through the liquidation of all consumer goods.

To access the plan, the following conditions must exist:

  • be a subject excluded from the procedures provided for in the bankruptcy law;

  • have not already requested the procedure in the past five years;

  • not having immediately resolved, revoked or ceased the effects of the plan;

  • being in a situation of over – indebtedness;

  • provide documentation that accurately describes the economic and financial situation.

3) Liquidation of assets – In the event that it is impossible to proceed with the consumer’s plan, it will be necessary to liquidate all of its assets except those that are impenetrable. This route is also accessible if there are other existing bankruptcy procedures or if you have already recourse to agreements with creditors or consumer plans in the previous five years.

Each of the three routes, however, leads to the debit, with the benefit for the consumer to be freed from residual debts towards unsatisfactory bankruptcy creditors.

Regulatory updates

At the beginning of 2015 emerged the first clarifications by the judges on the application of the procedure. It has been pointed out that private individuals must present the detailed plan with the deadlines and payment methods, as well as the economic and equity documentation.

Having done this, the private person must be assisted by professionals appointed by the judge ; for families, in this case, this professional must be a lawyer, as established on April 29, 2014 by the court of Vicenza. The motivation lies in the judicial nature of the proposal put forward by the debtor, with the purpose of composing a financial crisis that will see two opposite sides before a court.

On 28 January 2015, the Ministry of Justice decree number 202 dated 24 September 2014 was published in the Official Gazette on the register of bodies authorized to manage the over-indebted crisis held by the Civil Justice Department.

Accountants, lawyers and notaries can be registered by right through the submission of the application. Also the Public Administrations find space in this register, in particular the organisms constituted by:

  • Regions

  • Provinces / Metropolitan Cities

  • Common

  • University

  • Chambers of Commerce

In all these cases it is necessary to stipulate an insurance policy that provides for a ceiling that is not less than one million euro.

Examples of court decrees

On March 31, 2015 two decrees of homologation of the Court of Bergamo clarify that the Judge should not evaluate the convenience of the Consumer Plan, as the legitimacy and feasibility of the proposal.

However, if the creditor disputes the plan presented by the CCA, it will be up to the Judge to assess its convenience with respect to other alternatives, which also include the sale of the debtor’s assets. This is the provisions of the Decree of the Court of Pistoia of January 3, 2014.

Lastly, in a recent decision of 9 June 2015 by the President of the bankruptcy section of the Court of Verona, a ban was banned from commencing or continuing executive or precautionary actions until the date when the approval measure was final.

CrediFamiglia recommends a sustainable management of its debts, always paying close attention to its real concrete possibilities of spending and investment.

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