DEBT ADVICE IN LUXEMBOURG
Ligue médico-sociale offers spezialised debt advice since July 1993 through the Service d’information et de conseil en matière de surendettement (SICS), an overindebtedness information and advisory service that obtained a first legal basis in December 2000.
Nowadays, the SICS provides help on two levels :
As a contact point when it is difficult to talk about one’s money problems, the SICS advises, accompanies and assists applicants in their various negotiations with creditors.
In order to enable the financial recuperation of people concerned and to allow them to lead “a life according to the principle of human dignity”, the loi du 8 janvier 2013 sur le surendettement (law of 8 January 2013 on over-indebtedness) sets up a collective debt settlement procedure.
The collective debt settlement procedure has three phases (www.guichet.lu) :
Conventional debt settlement phase
The first phase is settled before the Commission de Médiation en matière de surendettement and prepared by the SICS. This allows debtors to pay off their debts to creditors with the help of a conventional debt settlement plan that cannot exceed the maximum duration of seven years set by the Mediation Commission.
Judicial recovery phase
If the conventional settlement phase has failed, the debtor may file a request for reorganisation before the court magistrate.
After hearing the various parties, the court magistrate renders a judgment within one month, establishing a reorganization plan. (max 7 years)
In certain cases, the judge may also propose a plan for probationary purposes, for a maximum duration of five years.
Personal recovery phase
It should be noted that the personal recovery phase, which is subsidiary to the two other phases of the collective debt settlement procedure, may not be initiated unless the over-indebted individual finds themselves in an ‘irremediably compromised’ situation.
The matter is referred to the court magistrate by way of a request and the concerned parties, as well as the Over-indebtedness Consulting and Information Office, will be summoned before the court magistrate.
After hearing the parties, the judge freely determines whether or not the debtor’s situation is effectively ‘irremediably compromised’, and then renders a ruling as to the initiation or not of the personal recovery procedure.
The judge will have a report on the debtor’s economic and social situation drawn up, the claims checked and the debtor’s assets and liabilities evaluated. After having ruled in favour of the personal recovery procedure and ascertained the existence of the assets to be liquidated, the judge will proceed with the judicial liquidation of the debtor’s assets.
Concluding the procedure due to insufficient assets has the effect of canceling all of the debtor’s private debts.
The cancellation of the debts is final, unless the debtor experiences “better fortunes” within 7 years of the decision.
Luxembourg, 16th January 2023
SERVICE D’INFORMATION ET DE CONSEIL EN MATIERE DE SURENDETTEMENT