If you find yourself in a situation of over-indebtedness, you can follow a collective debt settlement procedure. This procedure aims to help you turn your financial situation around while enabling you to lead a dignified life.

It comprises 3 phases, namely:

1. the conventional settlement phase before the Mediation Committee for Over-indebtedness;
2. the judicial administration phase before the Justice of the Peace;
3. the personal recovery phase ('civil bankruptcy'), also before the Justice of the Peace.

Who is concerned

Individuals domiciled in Luxembourg and who are clearly unable to meet all their non-business debts.

The following are excluded:

• legal persons in the broad sense of the term (e.g. companies, associations, etc.);
• debtors in their capacity of trader, unless:
  • they have ceased trading for at least 6 months or have been declared bankrupt; and
  • they are over-indebted only in respect of their non-business debts.

This procedure is not available to anyone who:

• has organised their own insolvency;
• has embezzled or concealed, or attempted to embezzle or conceal, all or part of their assets;
• has, without the consent of their creditors, the Mediation Committee for Over-indebtedness or the judge:
  • increased their indebtedness with new loans; or
  • disposed of their assets (sale, donation, etc.) during the procedure.

How to proceed

Phase 1: conventional settlement

Filing an application

You must send an application for admission to the conventional debt settlement procedure (available for download under 'Forms / Online services') to the following address:

It is recommended to contact one of the information and advisory offices for over-indebtedness (Service d’information et de conseil en matière de surendettement - SICS) before applying to the Mediation Committee.

Supporting documents

You must also enclose with your application:

• a copy of an identity document (ID card or passport);
• an estimate of your income, expenditure and debts;
• if you are a trader:
  • a certificate stating that you had been removed from the trade and companies register at least 6 months prior to the time of application; and/or
  • a final judgement concluding the business bankruptcy proceedings.

Decision to accept the application

Once you have submitted your application, you must work with the SICS in charge of your case and provide it with all the necessary documents so that it can assess your assets and liabilities. Once the application is complete, the Mediation Committee decides on the acceptance the application. The Commission's decision will be sent to you by registered mail.

Effect of the acceptance of the application

Admittance to the conventional debt settlement procedure has the effect of opening the collective debt settlement procedure and suspending:

• enforcement procedures, except those relating to:
  • the current term of maintenance payments;
  • any damages awarded following acts of deliberate violence for bodily harm suffered;
  • the forced eviction of a person ordered to vacate the premises they occupy;
• contractually agreed assignments of earnings;
• the accrual of interest.

Duration of the effects of the acceptance decision

The effects of an acceptance decision:

• take effect from the 1^st day following the date of publication of the debt settlement notice in the register;
• are maintained in the event of an appeal under the collective debt settlement procedure, pending judgment.

Creditors' obligations

Within one month of publication of the notice of collective debt settlement in the register, your creditors must declare their claims to the SICS.

A declaration template is available for download under 'Forms / Online services'.

The Mediation Committee decides on the admissibility of claims. All claims must be certain (indisputable) and liquid (the amount is fixed or determinable).

Conventional settlement plan

Preparation

The SICS works with you and your creditors to draw up a conventional debt settlement plan which includes, in particular:

• the procedures for implementing the plan;
• the mutual obligations of the parties involved;
• measures to postpone or reschedule the debt payments;
• assistance with social, educational or financial management matters;
• public or private financial aid;
• full or partial cancellation of debts;
• a reduction in interest rate.

Validity

The conventional settlement plan may not exceed a duration of 7 years, except for the repayment of loans taken out to purchase your main place of residence, for which the plan allows to avoid its sale.

Acceptance of the plan

The conventional settlement plan is accepted if at least 60 % of the creditors representing 60 % of the total claims agree to it. Creditors who have been duly informed and who have not taken a position on the proposed plan are deemed to have accepted the plan.

If new elements arise, the plan may be modified.

The Committee may also, under certain conditions, recommend a moratorium for a maximum duration of 1 year which:

• must be accepted by 60 % of the creditors representing 60 % of the total claims; and
• has the effect of suspending the payment of debts.

You will receive social support and financial management support as soon as the agreed settlement plan or moratorium is put in place.

Refusal of the plan

If the conventional settlement plan is not accepted within 6 months of the acceptance decision, the Committee will draw up a 'default report' establishing the failure of the conventional settlement procedure.

The suspensive effects of the acceptance decision cease after a period of 2 months from the date of publication.

In this case, you can present a petition to the Justice of the Peace to initiate the judicial administration procedure (see below). In the absence of a petition, you cannot initiate a new collective debt settlement procedure for a period of 2 years.

Phase 2: judicial administration

Submission of the petition

If the conventional settlement phase has failed, you can file a petition for judicial administration:

• before the Justice of the Peace of your place of residence, in as many copies as there are parties;
• within 2 months of publication of the default report in the register;
• together with a copy of the default report.

Judicial administration plan

The Justice of the Peace issues a judgment setting out a judicial administration plan which may include:

• a suspension of payment for all or part of the debts;
• a reduction in the interest rate;
• a plan for probationary purposes, for a maximum period of 5 years;
• the dates on which compliance with the plan will be checked.

Phase 3: personal recovery

Opening conditions

Submission of the petition

You must submit an petition to the Justice of the Peace of your place of residence, in as many copies as there are parties.

Decision

The judge decides whether or not to open the personal recovery procedure.

The judge may:

• make access to the personal recovery procedure conditional on the implementation of a probationary judicial administration plan of a maximum duration of 5 years;
• order a social investigation and social monitoring.

Liquidation of the debtor's personal assets

The judge ensures that:

• an assessment of your economic and social situation is drawn up;
• receivables are checked;
• assets and liabilities are valued.

If there are assets to be liquidated, the judge:

• rules on any disputed claims;
• orders the liquidation of your personal assets.

Throughout the liquidation process, the rights and actions concerning your assets are exercised by a liquidator who is appointed by the judge. Within 6 months, the liquidator must:

• sell your assets out of court; or
• organise a forced sale.

Effects of the personal recovery procedure

Following the compulsory liquidation of your assets, the judge will order:

• the closure of the procedure: the assets realised are sufficient to repay the creditors; or
• the closure of the procedure on grounds of insufficient assets.

In the event of closure due to insufficient assets, all your non-business debts will be cancelled, except:

• any debts paid by your guarantor or co-obligor;
• the current term of maintenance payments;
• financial compensation for victims of deliberate acts of violence for personal injury suffered.

Requirements

During the procedure, you are bound by an obligation of good conduct. You are held to:

• cooperate with the authorities and bodies involved in the proceedings;
• as far as possible, engage in paid work that corresponds to your abilities;
• not worsening your insolvency, and acting faithfully in an effort to decrease your debts;
• not favour a creditor, with the particular exception of:
  • maintenance creditors for common terms;
  • landlords for current rental terms;
  • suppliers of services and products essential to a dignified life;
• comply with the commitments made in connection with the procedure.

If you breach the obligation of good conduct, you risk having the procedure revoked.

Information and advisory offices for over-indebtedness

If you find yourself in a situation of over-indebtedness, you can obtain information on the steps to take from one of the following Information and advisory offices for over-indebtedness (SICS):

• Inter-Actions a.s.b.l.:
  • Esch-sur-Alzette:
    
    • adress: 1, rue Helen Buchholtz, L-4048 Esch-sur-Alzette;
    • telephone: 54 77 24 22;
    • email: endettement@inter-actions.lu;
• Health and Social Welfare League (Ligue Médico-Sociale)
  • Luxembourg City:
    • address: 2, Rue G.C Marshall, L-2181 Luxembourg;
    • telephone: 48 83 33 300;
    • email: endettement@ligue.lu;
  • Ettelbruck:
    • address: 2A, Avenue Lucien Salentiny, L-9080 Ettelbruck;
    • telephone: 48 83 33 300;
    • email: endettement@ligue.lu.

Concerned individuals are advised to contact one of the SICS offices before applying for admission to the conventional debt settlement procedure before the Mediation Committee.

Good to know

The Ministry of Family, Integration and the Greater Region has produced a video explaining the over-indebtedness procedure. The video is available on the Ministry's YouTube channel in the following languages:

• French;
• German;
• English;
• Portuguese.

Forms / Online services

Who to contact