The deputies of the National Assembly adopted the 72 articles of the text of the law consumption first reading last Friday (28/06/2013). This consumer law aims to “rebalance the powers” and strengthen the rights of consumers (individuals) vis-à-vis companies, banks and credit organizations.
A solemn vote will be held on July 3 in the National Assembly and the bill will be voted by the Senate. Everything should happen quickly enough since the deputies and senators of the different political parties seem to agree (for once).
What we are mainly interested in in this bill is the part dealing with credit and overindebtedness, but if you want to know the other parts and laws, this PDF from the Ministry of the Economy is at your disposal.
The fight against over-indebtedness
As shown in this infographic, for any revolving loan proposal of an amount greater than € 1,000, a loan to be amortized must be proposed to the future borrower. This is called the alternative credit offer .
Pure and simple removal of rechargeable mortgages which reminder, allowed to put several times the same property in mortgage.
The debt cancellation period for people moving to the over-indebtedness commission will be reduced to 5 years compared to 8 years currently.
If a revolving credit is not used for one year, it will be stopped. At this moment, it is necessary to wait 2 years.
Finally, a national register of loans to individuals will be created. This positive file will identify approximately 10 million borrowers and will enable banks and financial institutions to more confidently verify the creditworthiness of their borrowers.
Will this law be effective?
Will this law be enough to fight effectively against over-indebtedness ? Impossible to know in advance. It will be necessary that the different parties (individuals and lenders) play the game and respect this new law which can only be positive for the over-indebted people.