2.  France

The French system has also evolved toward offering more valuable benefits to debtors and making more “reasonable” demands for that relief.  Change has arrived more slowly and less powerfully in France than in Germany, however.  In 1989, France launched the second consumer debt-relief system on the European continent.   It started out quite hesitantly, focusing simply on encouraging negotiated plans among creditors and debtors, and very seldom did such plans offer any discharge of debt.   Only in 1999 were French courts empowered to impose a discharge of any portion of the debtor’s unpaid obligations at the conclusion of a payment plan.  Even since then, the French courts have applied this “ultimate” relief very sparingly,  more often requiring debtors to pay all of their debts through long-term payment plans that leave debtors at a very low standard of living.  Since February 2004, a small subset of the most financially troubled French consumers can receive an almost immediate and total discharge of debt, but courts have remained reticent to offer such relief.  

In the early years of the new French system, many negotiated plans left debtors with less than $2300 per year per person in the debtors’ households.  Many sources have predicted that a majority of these early French payment plans are doomed to failure.   Beginning in 1999, however, the legislature addressed the problem of this miserly system by requiring that all plans leave to debtors at least that part of their income that the law exempts from seizure (as in the German system).  A review of French plans in 2001 nonetheless revealed that 65% of plans left debtors between $8400 and $16,800 per year, and only 3% left debtors with more than this.  

At least in the early years, and perhaps even now, it seems that the French approach to consumer overindebtedness potentially asks too much of debtors and offers too little in return.  As a result, consumers might well view this system as not offering a “fair” division of value to debtors and creditors.  The balance of rewards and sacrifices in the French system does not bode well for inculcating a sense of fairness among debtors and consumers observing the system from the outside.  This may undermine the educational value of the French system and ultimately reduce its effectiveness in both treating and curing overindebtedness in France.

3.  Belgium

The Belgian system—among the very newest—has the potential to move even further from a “fair” allocation of benefits and burdens.  In force since January 1999, the Belgian consumer debt relief law encourages out-of-court agreement to a plan formulated by a “debt-mediator” chosen by the debtor, but it vests wide discretion in the court to impose a plan in case of failure to reach such agreement.   Like the original French law, the Belgian law resists offering a discharge and allowing debtors to escape their debts.  It readily allows the court to impose a plan discharging debts for penalties and fees, but not for basic principal or interest.   The proponents of the law clarified that a plan without a discharge of principal would be the norm.   Only under extraordinary circumstances may the court proceed to consider a discharge of principal, and even then the law as written allows only a partial discharge.