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Bank of France Report on Debtor Characteristics


Iain Ramsay


The Bank of France published recently its 2014  report  on the demographic characteristics of  individuals using the OverIndebtedness Commissions during 2012 (Enquête Typologique; for a discussion of the development of the French system see my  2012 article).  Those using the system are primarily renters or living in subsidised accommodation (90 per cent) in a country with a home ownership rate of approximately 60 percent.  Single individuals (including separated, divorced and widowed) are overrepresented. Women comprise 54 percent of debtors. Compared to the general French population, higher grade employees and managers are underrepresented and blue and white-collar employees over-represented.  Those in the age group 25-54 are overrepresented.  A high level of unemployment exists with 26 percent unemployed at the time of application.  Over 75 percent have less than €2000 in monthly resources and 49 percent less than the SMIC (the minimum full time wage of €1425 in 2012). Over 50 percent have no repayment capacity. Those using the rétablissement personnel procedure which permits an immediate discharge of debts for individuals who have no possibility of making repayments over the next eight years are more likely to be women (60 percent), renters or in subsidised accommodation (only 1 percent owners), earning less than the minimum wage (69 percent).

The use of the immediate discharge procedure has grown significantly in recent years, from 33,378 cases in 2008 to 68,235 in 2013, partly because of changes in the law which facilitated the use of this procedure by the Commission.  Although the Bank of France no longer publishes the reasons for  filing with the Over-indebtedness Commissions, earlier studies suggest that unemployment and other changes of circumstances are the primary reasons. Although  French debtors may not fit the ‘middle class’ image of the US bankrupt, further research going behind the headline data would be necessary to confirm this hypothesis. The Overindebtedness Commissions were introduced in 1989 as part of a programme of measures (see the Loi Neiertz), one of which was the introduction of a Fichier which records the names of those filing with the Commission. A controversial issue has been whether France should introduce a general credit reference system with positive as well as negative data which creditors could consult  before granting credit. The government recently proposed a Fichier Positif  operated by the Bank of France but it was struck down as disproportionate to the right of privacy by the  Conseil Constitutionel.I  will discuss this in a separate post.





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