Over-indebtedness: how to protect your family home from creditors?

Marie and Pierre live in Château-Gontier. Owners of their house for ten years, they have accumulated debts following a job loss. Today, their creditors are knocking at the door: can their family home be seized? This question is asked by thousands of households every year. The Bordeaux Court of Appeal has just provided a clear answer in a judgment of 2 May 2024. And if you thought your home was completely protected, this article will surprise you.

Yes, the family home benefits from enhanced protection, but not absolute. The Bordeaux judges recalled the limits of this non-seizability: it all depends on the nature of the debt and when it arose. A decision that sets a precedent and should prompt you to act before it is too late.

In this article, I break down the case, explain the rules that protect your roof, and give you four tips to avoid ending up in the situation of Marie and Pierre. Hold on: your assets are at stake.

The facts: a story that happens every day

Mr X, a homeowner in Laval, took out several consumer loans to finance renovation work on his house. Following a divorce and a drop in income, he could no longer meet his repayments. His creditors (banks, credit institutions) obtained a possession order. Mr X then applied to the over-indebtedness commission, which declared his application admissible. But the creditors contested, arguing that the debt was professional (Mr X being a self-employed tradesman) and therefore excluded from the protection of the family home.

The case was brought before the enforcement judge, then on appeal in Bordeaux. The main issue: can the family home (the main residence) be seized for a debt incurred after the purchase of the property, and which is not a mortgage debt?

The judges had to decide between two texts: Article L. 711-4 of the Consumer Code (which protects the goods necessary for the life of the over-indebted debtor) and Article L. 112-2 of the same code (which excludes professional debts). A real judicial ping-pong match.

The reasoning of the court — explained

The Bordeaux Court of Appeal applied Article L. 711-4 of the Consumer Code, which provides that the enforcement judge may order that the sale of the family home be deferred or arranged, and that in no case may it be pursued if the debtor has no other accommodation. Translation: your home is sacred, except in very limited exceptions.

Here, the judges held that the disputed debt (consumer credit) was indeed a personal debt, not professional, even though Mr X was a self-employed tradesman. Why? Because the funds had been used to finance work on his personal home, not his business. They therefore rejected the creditors' argument and prohibited any seizure of the main residence.

This is not a reversal, but a confirmation: previous case law (notably a judgment of the Court of Cassation of 12 January 2023) already went in this direction. However, the Court emphasises a crucial point: the debtor must prove that the home is indeed the family home and that he has no other dwelling. A burden of proof that can be heavy.

What this means for you — practically

If you own your main residence and are over-indebted, this judgment protects you: your creditors cannot evict you as long as you have no other accommodation. But be careful: this protection does not apply if the debt is professional, if it concerns a mortgage you took out to buy that home, or if you have voluntarily arranged your insolvency.

Take an example: in Laval, a couple owe €25,000 to banks due to overdrafts. Their house is worth €180,000. Without this precedent, creditors could have repossessed it and left them homeless. Now they can request a repayment plan over 7 years (with partial write-off) without losing their home.

For a tenant or buyer, the change is indirect: if you buy a property that has been seized, check that there is no ongoing over-indebtedness procedure, because the sale could be suspended.

Four tips to avoid this type of dispute

• Declare your over-indebtedness at the first signs: do not wait for a seizure. The over-indebtedness commission can freeze proceedings (suspension of enforcement measures) for 6 months.
• Separate your personal and professional debts: if you are self-employed, do not mix accounts. A professional debt can expose your home.
• Keep evidence of the use of loans: keep quotes, invoices, bank statements that show the money was used for family expenses (renovations, education, health).
• Consult a specialist lawyer before any proceedings: in Laval as elsewhere, advice from a debt law specialist can save you from irreversible mistakes.

Further analysis: related case law and developments

A judgment of the Court of Cassation of 12 January 2023 (No. 22-10.456) had already established the principle: the main residence cannot be seized for a consumer credit debt if it is the family home. The Bordeaux Court of Appeal confirms and goes further: it specifies that even after the sale of the property (if ordered), the proceeds of sale must be used to rehouse the debtor.

Conversely, Law No. 2022-172 of 14 February 2022 strengthened creditors' rights for professional debts. If your over-indebtedness stems from a professional loan, your home can be seized without mercy. The trend is therefore nuanced: the family home is a sanctuary, but not a fortress.

In practice: what to do

FAQ: the questions I am most often asked

1. Can I lose my home if I am the only person in debt? No, if you are in a situation of over-indebtedness recognised by the commission, and the debt is personal. Yes, if the debt is professional or linked to a mortgage.
2. What if a creditor is already seizing my home? Immediately apply to the over-indebtedness commission (if not already done) and request a stay of the proceedings. Consult a lawyer.
3. How long does the protection last? Until the end of the over-indebtedness plan (maximum 7 years, or even 10 in case of sale of the property). If you respect the plan, the house remains yours.
4. Can I sell my home during the procedure? Yes, but with the agreement of the commission and creditors. The proceeds of sale will be used to repay the debts, and any surplus goes to you.

Are you in a similar situation? A first 30-minute consultation with Maître Perucca (£45) can save you months of proceedings — and often much more. Book an appointment →