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Attachment: unavailable and unseizable claims

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Some debts are resistant to attachment. Even with a writ of execution in your pocket, you may come up against solid legal obstacles. To better understand general operation of this procedureHere's a look at the world of unavailable and unseizable debts.

Unavailable receivables

The unavailability of a claim is a formidable obstacle to seizure by way of assignment. For a more detailed understanding of effects of seizure of assets and disputes arising therefromcase law distinguishes between several cases.

Receivables already assigned or allocated

A claim that has already been removed from the debtor's assets is unavailable to the distraining creditor. This rule is all the more important in the context of a assignment of receivables prior to the attachment. The Court of Cassation has confirmed this on numerous occasions.

For assignments of receivables, the time of perfection is decisive:

  • If the assignment is served before the attachment, the claim escapes the seizing creditor.
  • If the seizure takes place before the assignment is served, the seizing party takes precedence.

This principle extends to claims assigned to a particular transaction. For example, funds received by a lawyer on behalf of his client and channelled through the CARPA account cannot be seized (Cass. 2e civ., 18 Feb 1985). The same applies to funds held by a judicial liquidator as part of the proceedings (Cass. com., 3 Feb. 1998).

Impact of a prior objection

A prior opposition may render a claim unavailable. For example, in the sale of a business, a properly executed stop payment will result in the entire price becoming unavailable to the purchaser.

The syndic of a co-ownership also has the right to object to the sale of a lot (art. 20 of the law of 10 July 1965), making the price unavailable.

Commercial paper and specific mechanisms

Claims represented by commercial paper are often exempt from attachment. The Court of Cassation has confirmed that bills of exchange and promissory notes cannot be seized (Cass. com., 27 Sept. 2005, no. 02-16.902).

In the case of a Dailly assignment, article L. 313-27 of the French Monetary and Financial Code stipulates that the assigned receivable ceases to be the property of the assignor on the date indicated on the slip. Any subsequent attachment is ineffective.

Receivables that cannot be seized

Certain claims are expressly protected by law.

Maintenance claims

Article L. 112-2, 3° of the Code of Civil Enforcement Procedures states that maintenance payments cannot be seized, except for the payment of other maintenance.

  • Contribution to the expenses of the marriage (art. 214 of the Civil Code)
  • Maintenance paid for the upkeep of children
  • Interim measures in divorce proceedings
  • Subsidies granted to a child whose paternal filiation has not been established

Remuneration and limits

Remuneration benefits from a special regime. It is only partially attachable, according to a specific scale (art. L. 3252-2 and R. 3252-2 of the French Labour Code).

This protection does not apply to sums paid in compensation, such as redundancy payments or damages.

Replacement income for unemployed workers (Pôle emploi benefits) is subject to the same rules as wages.

Social and family benefits

In principle, family benefits are exempt from seizure (art. L. 553-4 of the Social Security Code), except to recover benefits wrongly paid as a result of fraud.

Personalised housing assistance is similarly protected (art. L. 821-6 of the Code de la construction et de l'habitation), with a few limited exceptions.

Unavailability resulting from a special text

Some special texts create pockets of unavailability. These cases illustrate some of the special situations relating to seizure of assets for payment which may limit the seizability of claims.

Housing savings plan

Article R. 315-30 of the French Construction and Housing Code stipulates that payments and interest on a PEL are unavailable until the scheduled maturity date.

However, case law has qualified this protection: the unavailability of sums in a home savings plan does not prevent seizure by a creditor of the holder (Cass. 2e civ., 29 May 1991, no. 90-11.714).

Insurance indemnities

Article L. 121-13 of the Insurance Code states that insurance indemnities against certain risks are allocated to preferred or mortgage creditors according to their rank.

This indemnity does not form part of the insured's assets and is therefore not subject to attachment (Cass. 1re civ., 21 Jan. 1977).

Life insurance has some special features. For insurance in the event of death, the policyholder's creditors cannot claim the capital (art. L. 132-12 and L. 132-14 of the Insurance Code). In the case of life insurance, the right of surrender belongs solely to the policyholder and cannot be exercised by his or her creditors (Cass. 1re civ., 28 Apr. 1998).

Sale price of a foreclosed building

The sale price of a property consigned by the winning bidder is generally unavailable, even though it is part of the seized debtor's assets (Cass. com., 22 Feb. 1994).

However, the Court of Cassation has recognised that the payment in full of a registered creditor and the discharge of a second creditor made the price available, allowing a seizure-attribution (Cass. 1re civ., 9 July 1997).

Compensation and its limits

Set-off can interfere with an attachment order.

Legal compensation before seizure

If the conditions for legal set-off (two debts that are certain, liquid and due) are met before the seizure, the garnishee may set it off against the seizing creditor.

As the claim has already been extinguished by set-off, the seizure cannot take effect (Cass. 2e civ., 16 Dec. 2004, no. 03-13.117).

Set-off of related debts

Case law favours offsetting related debts, even after seizure. Article 1348-1 of the Civil Code confirms this solution: related debts are binding on the court.

This rule derogates from the principle whereby attachment by way of payment removes the claim from the debtor's assets.

Interaction with the attribution effect

The immediate effect of seizure of assets normally limits the possibility of subsequent set-off. Any set-off against a claim arising after the attachment is impossible, unless it is related.

This mechanism protects the distraining creditor, but there are exceptions. The practical implications are considerable: a set-off that is validated despite the seizure amounts to depriving the distrainor of the benefit of his action.

Legal action remains the most effective way of resolving these complex issues. A precise legal analysis of the texts and case law is essential before any proceedings. Faced with these challenges, the expertise of a lawyer specialising in attachment is often essential to effectively defend your rights.

Sources

  • Code of civil enforcement procedures: articles L. 111-1, L. 112-2, L. 211-1, L. 211-2, L. 211-3
  • Civil Code: articles 1321, 1346-1, 1348-1, 1349
  • Monetary and Financial Code: article L. 313-27
  • Insurance Code: Articles L. 121-13, L. 132-12, L. 132-14
  • Social Security Code: article L. 553-4
  • Cass. 2nd civ. 18 Feb 1985 (CARPA funds)
  • Cass. com., 3 Feb. 1998 (funds held by liquidator)
  • Cass. com., 27 Sept. 2005, no. 02-16.902 (cash claim)
  • Cass. 2nd civ. 29 May 1991, no. 90-11.714 (PEL)
  • Cass. 1re civ. 21 Jan. 1977 (insurance indemnities)
  • Cass. 1re civ., 28 Apr. 1998 (life insurance)
  • Cass. 1re civ., 9 July 1997 (property sale price)
  • Cass. 2e civ., 16 Dec. 2004, no. 03-13.117 (compensation)

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