Home » Bankruptcy » Continuing rise in overindebtedness files in France—but significant regional variation

Continuing rise in overindebtedness files in France—but significant regional variation


Iain Ramsay


The Bank of France issued  recently its Barometer of Overindebtedness for the third trimester of 2014.  Filings with the Commissions reached over  230000, a  rise from 217000 in  2009.  In an earlier post  I outlined the findings of the Bank’s  Enquête Typologique  of debtors in 2012.  The Bank issued in November 2014 a further report  for 2013. This indicates similar demographic characteristics of debtors–overrepresentation of renters, single individuals, and women in the rétablissement personnel  procedure, those between 25-54, the unemployed and blue and white-collar employees.  Debtors are atypical of the French population. In 2004 31 percent of debtors had no repayment capacity, in 2013 54 percent had no repayment capacity and 71 percent less than €250. Applications to the commission  represent 4.35 persons per 1000 of the national population  (15 years or older).

The report breaks down over-indebtedness by region, comparing  the  filing rates with the regional levels of unemployment, RSA (social welfare), separation and divorce rates, and disposable income of the population. Filings corresponded generally with these factors; the old industrial regions  exhibited higher levels of filing.  However there were some anomalies with for example southern regions such as  Midi-Pyrenées (3.74) having significantly lower levels than Haute-Normandie (6.24) notwithstanding similar indicators on unemployment, social welfare, divorce and disposable income.  The report speculates that these differences might be explained by other factors such as social norms.

The issue of subnational variations in insolvency filings within Europe has not been studied systematically.  In England and Wales recent data from the Insolvency Service also indicate significant differences between regions with the North East and South West having higher than national levels of bankruptcies and DROs, and London  a significantly lower level. Paul Bishop has analysed these data over the period 2000-2007  using a variety of techniques.  He finds a persistently high level of bankruptcies in the South West which may be associated with low incomes and the large presence of ex-military personnel. He also found  a low-level of filings in London  which may be associated with higher incomes and the “Capital city effect”.  US  studies of persistent regional variations have often focused on state variations in laws and local legal culture but also recognise other demographic characteristics. The European studies suggest that greater attention might be paid to regional variations in bankruptcy filings. Since these filings may often be the ‘canary in the mine’ signifying economic or social problems, regional studies may be more helpful in identifying problems and  targeting potential policy solutions.





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