When a debt becomes payable, the prospect of foreclosure can quickly become a source of anxiety. For a private individual or the manager of a very small business, this is a delicate time when financial equilibrium is threatened. French law, aware of this vulnerability, has introduced a protective mechanism that allows debtors acting in good faith to request a judicial break in order to organise their affairs: the grace period. This measure, far from wiping out the debt, is part of the global framework for civil enforcement procedures as a means of overcoming a temporary difficulty. However, obtaining these time limits is not automatic and requires solid arguments, often with the support of a expert lawyer in enforcement law to maximise the chances of success.
What is a judicial grace period?
Definition and legal basis: article 1343-5 of the Civil Code
The grace period is a payment facility granted by a judge to a debtor who cannot pay his debt immediately. It is primarily based on article 1343-5 of the Civil Code, which states that "the court may, taking into account the situation of the debtor and the needs of the creditor, postpone or stagger payment of the sums due, up to a maximum of two years".. The aim is not to cancel the debt, but to offer a temporary respite to allow the debtor to reorganise financially. This measure is the prerogative of the judge; a creditor is never obliged to accept a partial or deferred payment without a court order.
Possible adjustments granted by the judge
The judge's powers in this area are relatively broad. He can adjust the terms of debt repayment to suit the specific situation of the debtor. The adjustments provided for by law mainly include :
- Outright deferral of the payment due date, up to a maximum of two years.
- Debt repayment by instalments, i.e. dividing the debt into several instalments over a maximum period of two years.
- The decision that payments will be applied first to the principal of the debt, rather than the interest, means that the principal amount owed can be reduced more quickly.
- The order states that the sums deferred or paid in instalments will bear interest at a reduced rate, which may be lower than the legal rate, by special reasoned decision.
The court may also make the granting of these periods conditional on the debtor taking specific action to guarantee future payment of his debt, such as setting up a security.
The conditions for granting the grace period: a balance of interests
The debtor's situation: good faith and temporary difficulties
To qualify for a grace period, the debtor must first and foremost be acting in good faith. This means that they must not have deliberately organised their insolvency or shown any dilatory manoeuvres. The essential condition remains the nature of the financial difficulties: they must be temporary and cyclical (loss of employment, illness, accident in life, sudden drop in activity) and not structural or irremediable. The judge seeks to determine whether the respite granted will really enable the debtor to overcome a temporary obstacle and then resume normal payments. An application for payment respite only makes sense if the creditor has already initiated or is about to initiate an enforcement measure, often after formal notice, which must be given to the debtor. based on an enforceable title a valid document evidencing a debt that is certain, of a fixed amount and due.
Taking account of the creditor's needs
The judge does not simply examine the debtor's situation. He must balance the interests involved, as specified in article 1343-5 of the Civil Code. He takes into account the "needs of the creditor". In practical terms, if the creditor is a small business, a craftsman or an individual whose financial situation depends on the rapid collection of the sums owed, the judge will be less inclined to grant long delays that could put the creditor at risk. The decision is therefore based on a delicate balance between protecting the debtor and preserving the creditor's rights.
Reasons for refusal and debts excluded from the scheme
Rejection by the judge: a discretionary power
The judge has discretionary power to refuse to grant a period of grace and, unlike a decision to grant a period of grace, which must be justified, a refusal does not, in theory, have to be justified. A refusal may be based on the debtor's lack of good faith, for example if he has concealed part of his income or wilfully worsened his situation. Similarly, if the difficulties presented do not appear to be temporary but structural, the judge will consider that the grace period is not the appropriate solution and that another procedure is more appropriate. The absence of a credible repayment plan or the fact that a debtor has already been granted a grace period without complying with it are also frequent reasons for an unfavourable decision.
Legal exclusions: non-negotiable debts
By law, certain categories of debt are not eligible for a grace period because of their nature, which is often a matter of public policy. The most important of these are maintenance debts (alimony, contributions towards the upkeep and education of children, compensatory benefits). Their vital nature for the creditor justifies the judge not imposing any deferment or rescheduling. Other debts are also excluded by specific legislation. This is particularly the case for employee debts, which cannot be deferred under the Labour Code, or social security contributions. In addition, under article 512 of the Code of Civil Procedure, the grace period does not apply if the debtor has reduced the guarantees that he had given to his creditor by contract, or if his assets have already been seized by other creditors. It is important to note that the opening of collective proceedings (safeguard, reorganisation or liquidation) paralyses individual lawsuits, rendering a traditional request for a period of grace ineffective in favour of the specific rules for companies in difficulty.
The special case of over-indebtedness: the essential distinction
It is crucial not to confuse a request for a period of grace with the personal over-indebtedness procedure. The grace period is intended for solvent debtors who are faced with a temporary liquidity problem. The over-indebtedness procedure, on the other hand, is designed for individuals whose overall indebtedness is such that they are "clearly unable to meet all their non-business debts". This situation, described as irremediably compromised, is long-lasting and structural. It is managed by the over-indebtedness commission and can lead to far more serious measures, such as a recovery plan spanning several years, or even partial or total cancellation of debts. The judge will refuse a period of grace if he or she considers that the situation does in fact constitute over-indebtedness.
How can I obtain extended payment? The procedure
Which court should you refer the matter to: the court hearing the merits of the case, the interim relief judge or the JEX?
The power to grant a period of grace varies according to the stage of the proceedings. Before any enforcement measures are taken, the court hearing the main dispute (e.g. the magistrates' court or the commercial court) may grant a period of grace in its judgment. In urgent cases, the interim relief judge may also intervene. However, once an enforcement measure has been initiated (by the service of a summons to pay or a writ of seizure by a judicial officer), jurisdiction in principle becomes exclusive. The application for extension of payment must then be submitted to the Enforcement Judge (JEX)In some cases, the protection judge may be the competent judge. In certain disputes, it should be noted that the protection litigation judge may be the competent judge. It is important to note that the JEX cannot call into question the enforceable title in principle, but it can arrange for it to be enforced.
The timing and effect of the request
The debtor can make his application at different times. Ideally, the debtor should make the request during the initial proceedings, so that the judgment imposing the debt can be enforced directly. If they have not anticipated this, they should act quickly once the creditor has obtained the writ of execution, preferably as soon as they receive a summons to pay. It is essential to understand that simply referring the matter to the judge has no suspensive effect: it does not stop the seizure procedure in progress. What's more, once an attachment order has been served on the bank, its immediate effect means that, in principle, it is impossible to grant any time limits on the sums already attached. You therefore need to act quickly.
Arguments and documents to be provided
To take a case to court successfully, the claimant must set out their financial situation in a transparent and convincing manner, proving both their good faith and the temporary nature of their difficulties. To do this, they must produce a complete file containing specific supporting documents:
- Proof of income (pay slips, benefits, etc.) and fixed expenses (rent, loans, energy bills).
- Proof of the event that caused the difficulties (letter of redundancy, medical certificate, etc.).
- Evidence of good faith, such as a history of regular payments prior to the incident, or attempts at amicable negotiation with the creditor.
- A realistic, costed repayment plan.
A well-documented and argued application significantly increases the chances of obtaining a favourable decision.
What are the effects of the judge's decision?
If granted: suspension of proceedings and enforcement
When the judge grants time limits, the main consequence is the suspension of enforcement proceedings initiated by the creditor. Any seizure for sale or attachment for payment is suspended for the set period. In addition, during this period, penalties and late payment surcharges cease to apply. It is important to note that this suspension only concerns compulsory enforcement measures; the creditor retains the right to take protective measures (such as a provisional mortgage) to secure his claim.
What are the consequences and remedies in the event of rejection?
If the court rejects the application for a time limit, the decision becomes enforceable immediately. The creditor then has the right to pursue or initiate seizure measures (attachment for payment, seizure of property, etc.). The debtor has the right to appeal, but the scope of this right is limited. An appeal is possible, but it has no suspensive effect, which means that the decision handed down at first instance remains enforceable. To halt enforcement pending appeal, the debtor must obtain a stay of execution from the first president of the court of appeal, which is granted only if there are serious grounds for reversing the judgment. It is crucial to note, and the Cour de cassation constantly reiterates this, that legal action in the form of an appeal, if its sole purpose is to obtain the granting of time limits without contesting the substance of the debt, is inadmissible. In such cases, the decision to refuse acquires the force of res judicata. If the judge decides to refuse to grant payment deadlines, the creditor may pursue compulsory execution. However, if enforcement is carried out disproportionately, the debtor can always challenge the validity of the decision. abusive nature of the seizure.
Specific cases of rental debts and consumer credit
Grace period and rental eviction: regulated protection
Specific rules apply to rent debts under a residential lease. If eviction proceedings are initiated, the judge may grant payment deadlines on the basis of article L. 412-3 of the Code of Civil Enforcement Procedures. These deadlines can be much longer than the two years under ordinary law, ranging from three months to three years. The judge's decision is based on specific criteria such as the occupant's age, state of health, family situation and ability to be rehoused. These deadlines are often coordinated with the winter truce, which suspends evictions from 1 November to 31 March, but does not interrupt the obligation to pay rent.
Consumer credit: derogation from accelerated repayment
Consumer credit offers significant protection. Usually, non-payment of an instalment results in the "acceleration of the term": the contract is terminated and the entire outstanding capital becomes immediately due and payable. Faced with such a clause, the ordinary courts are often at a loss. However, article L. 314-20 of the Consumer Code expressly authorises the judge to suspend the borrower's obligations, even after the end of the term. He may therefore grant a period of grace to allow the consumer, a defaulting borrower, to resume payment of his instalments under a restructured plan, temporarily paralysing the effect of the resolutory clause.
Applying for a period of grace is a valuable tool for debtors faced with unforeseen difficulties, but the outcome depends on a rigorous analysis of the situation and precise arguments. To make sure you have every chance on your side and to help you put your case together, you can call on the assistance of a expert lawyer in enforcement law is strongly recommended.
Sources
- Civil Code: article 1343-5
- Code of civil procedure: articles 510 to 513
- Code of civil enforcement procedures: articles L. 412-3 to L. 412-4
- Consumer Code: article L. 314-20
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