When a creditor initiates debt collection proceedings, seizure of assets is often the first weapon chosen because of its formidable effectiveness. For the debtor, this enforcement measure is often a source of confusion and difficulty, particularly as regards the possibility of obtaining payment deadlines. Contrary to popular belief, once an attachment order has been issued, it is legally impossible to apply for the sums concerned to be paid in instalments. This rule, which is often discovered too late, has major consequences and underlines the importance of an early defence strategy. This article deciphers this mechanism and explains why the timing of your action is crucial.
Attachment: definition and conditions
What is an attachment order?
Attachment is an enforcement procedure that allows a creditor to obtain payment of a debt by seizing sums of money held by a third party (the third party holder) on behalf of the debtor. Most often, this is a seizure of a bank account, which explains the common confusion. However, its scope is much broader. The procedure can be applied to any claim for a sum of money, whether or not it is to be paid successively, such as rent owed by a tenant under a lease, dividends to be paid by a company, or funds held by a notary. The bailiff, now a judicial commissioner with a redefined status, can identify the debtor's bank accounts via the FICOBA file (which lists account numbers), making this a particularly rapid and frequent practice in debt recovery. This private procedure differs from the administrative seizure by third party holder (SATD), which is used by a public accountant to recover debts owed to the State or local authorities. To find out more about how this procedure works, please consult our general article on attachment for payment.
What are the conditions for implementing it?
A number of strict conditions must be met before a creditor can initiate attachment proceedings. Firstly, the creditor, known as the "distrainor", must have an enforceable title. This is a legal document (judgement, order for payment, notarial deed) that officially establishes the existence of the claim and authorises enforcement. In accordance with art. L. 111-6 of the Code of Civil Enforcement Procedures, the amount of the debt that is the subject of the seizure must also be liquid, i.e. valued in money, and due and payable, which means that its due date has passed. If these elements are not met, the seizure is irregular. The procedure therefore involves three parties: the seizing creditor, the seized debtor and the third party holding the funds (bank, tenant, etc.).
The immediate attributive effect: the heart of the mechanism
Transfer of ownership of the claim
The fundamental particularity of attachment by way of payment lies in its "immediate attributive effect", a powerful principle set out in article L. 211-2 of the Code of Civil Enforcement Procedures. This article states that "The act of seizure entails, up to the amount of the sums for which it is carried out, immediate attribution to the distrainor of the seized debt, available in the hands of the third party".. In practical terms, as soon as the writ of attachment is served by the court commissioner on the garnishee (for example, the bank), ownership of the sum of money concerned is instantly transferred from the debtor's assets to those of the creditor. The claim is thus legally and immediately removed from the debtor's assets. The funds then become unavailable in the debtor's account and are, in practice, sequestered by the third party holding the funds until the expiry of the dispute period. This is the linchpin of the entire procedure, and it is essential to understand that the effects and possibilities of contestation.
Consequence: neutralisation of subsequent events
This immediate attributive effect has one major consequence: it freezes the situation on the day and at the time of the seizure. Any subsequent event has no effect on the fate of the sums allocated to the seizing creditor. This means that a subsequent seizure by another creditor, even a preferential creditor such as the Treasury (via an administrative seizure), cannot affect the funds already allocated. The rule is "first come, first served". Similarly, and this is a key point for a company in economic difficulty, the fact that a safeguard, reorganisation or judicial liquidation order is issued after the seizure does not call the allocation into question. As the claim has already left the debtor company's assets, it does not form part of the assets managed by the insolvency authorities.
The insurmountable obstacle to requesting payment terms
Why is it impossible to obtain a payment extension?
The legal logic is implacable and follows directly from the attributive effect. A debtor can only apply for deferred payment in respect of a debt for which he or she is personally liable and which relates to funds that are still in his or her assets. However, as soon as the seizure is effected, the sums no longer belong to him; they have become the property of the seizing creditor. Asking for an instalment would be tantamount to wanting to dispose of property that no longer belongs to you. The case law of the Cour de cassation has consistently confirmed this position, notably in a decision of the second civil chamber of 4 October 2001 (Cass. 2e civ., pourvoi numéro 00-11.609), ruling that the enforcement judge cannot grant deferment of payment, because the seizure-award Since "the effect of the seizure was to transfer ownership of the seized funds to the creditor, [...] the payment made to the creditor could not be called into question".. The allocation is final, provided, of course, that the seizure procedure is in order and that no dispute destroys it.
The key distinction: acting before or after seizure
It is therefore essential to understand that the impossibility of obtaining an extension of payment is not absolute; it is conditioned by the chronology of the procedure. As long as the seizure-attribution has not been initiated, i.e. as long as the deed has not been served on the third party holder of the funds, the debtor retains the possibility of negotiating a payment schedule with his creditor or even applying to a judge for a period of grace. The right to request a period of grace exists, but it is annihilated by the effect of the seizure. This is the difference between proactive debt management, where solutions are possible, and reacting late to an enforcement measure that has already been implemented. Once the writ of attachment has been served, the door closes on this option.
Defence strategies and the importance of anticipation
Negotiating upstream: the only way to achieve a timetable
When faced with a debt that is certain, liquid and due, the only real way to obtain a deferred payment is to anticipate the creditor's action. As soon as you receive a formal notice of default or are served with a judgment, it is vital to contact the creditor or his or her advisers to propose a realistic payment plan. Negotiations carried out before any enforcement measures are taken can lead to a payment schedule agreement which, if formalised in writing, will prevent the seizure from being triggered. Although this approach recognises the debt, it allows you to maintain control and avoid having your cash or bank account suddenly frozen.
Challenging the seizure as to form or substance
If the seizure has already been carried out, requesting payment terms is no longer an option. The only defence then lies in contesting the attachment itself, which must be brought before the enforcement judge within one month of the date of notification (i.e. official notification) of the attachment. Several grounds may be invoked. There may be a substantive irregularity, such as the invalidity of the writ of execution on which the proceedings are based, the extinction of the debt due to the effect of the limitation period or the unseizability of the debt subject to seizure (for example, parts of remuneration from an employment contract or the unseizable bank balance). The dispute may also relate to formal defects in the procedure, such as an error in the calculation of the sums owed or failure to comply with the compulsory information in the attachment deed. In these cases, you will need the assistance of a lawyer to identify the potential flaws and build a solid legal case to obtain an order for the seizure to be lifted.
The opening of collective proceedings: a special case
For a company in economic difficulty, the link between an attachment order and the opening of collective proceedings (safeguard, reorganisation or judicial liquidation) is a technical point of law. As mentioned above, an attachment dated prior to the opening of insolvency proceedings retains its full effect. On the other hand, the opening judgment halts and prohibits any new enforcement procedure (such as a seizure for sale or other attachment for payment) by previous creditors. This means that if the company places itself under the protection of the Commercial Court before its creditors have had time to seize (or convert a protective attachment), its assets are protected. This strategic approach makes it possible to freeze individual lawsuits and deal with the problem as a whole, under the aegis of the court. This is another illustration of the importance of anticipating financial difficulties.
Managing an attachment is a matter of timing and strategy. To anticipate collection procedures, negotiate before any enforcement measures are taken or explore ways of contesting a seizure that has already taken place, contact our firm for a consultation. assistance from a lawyer with expertise in distraint proceedings.
Sources
- Code of civil enforcement procedures (C. proc. civ. exéc.) (in particular articles L. 111-1 et seq., L. 211-1 et seq., R. 211-1 et seq.)
- French Commercial Code (in particular articles relating to insolvency proceedings)
- Civil Code (including articles on the law of obligations)
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