Over-Indebtedness in a Couple: Good Faith Must Be Assessed for Each Spouse (Cass. 2e civ., 21 May 2026, No. 23-20.970)

French Supreme Court (Cour de cassation), Second Civil Chamber, 21 May 2026, No. 23-20.970 (judgment No. 539 F-B, partial quashing)

What happened before the trial courts?

The case concerns a married couple who, faced with considerable debt, filed a joint application with an over-indebtedness commission for treatment of their financial situation. The commission first declared that application inadmissible. The spouses challenged that decision before the court.

The procedural history then became eventful. By a judgment of 13 December 2021, a Court of First Instance (tribunal judiciaire) declared the spouses’ application admissible. But one of the creditors, which had not been summoned to the proceedings, lodged a tierce-opposition (third-party opposition) against that judgment. Other creditors, also strangers to the initial proceedings, intervened in the case. It was in this context that, by a new judgment of 10 July 2023 delivered at final instance, the Court of First Instance of Saint-Étienne finally declared the application for over-indebtedness treatment inadmissible, holding that the couple had acted in bad faith.

To found that bad faith, the judge relied on a series of factors relating to the husband’s conduct: he “has been handling, for several years, extremely large sums of money”, the use of which remains, for the most part, unexplained; his only argument (that he injected these sums into “unclear and a priori highly speculative industrial strategies”) would not justify debts of €1,933,424.89; and he allegedly did not show a genuine desire to clear his liabilities, going so far as to block the sale of a property forming part of an estate. The judge deduced bad faith and, consequently, the inadmissibility of the application.

The spouses appealed to the Cour de cassation. Their ground of appeal criticised the judgment for having sealed the fate of both applicants by examining only the husband’s situation, without ever considering the wife’s good faith.

Why is good faith a condition of access to over-indebtedness relief?

The starting point of the reasoning is Article L. 711-1 of the Consumer Code, which opens the benefit of over-indebtedness treatment measures to “individuals acting in good faith”. Good faith is therefore not a mere moral ornament: it is a condition of admissibility of the application. Without it, the door to the procedure remains closed, regardless of the scale of the debts.

This requirement aims to prevent a person from deliberately organising their own insolvency, concealing assets or income, or incurring debts knowing they will not be able to repay them, only to then demand the write-off of their liabilities. Good faith is presumed: it is for the party challenging it, such as a creditor, to provide the evidence capable of calling it into question. But the judge is not bound by this presumption and may, in light of the file, find bad faith.

How does the judge assess good faith?

The assessment of good faith is concrete and global: the judge examines the debtor’s conduct at the time the debts arose and throughout the procedure. Particular scrutiny is given to the sincerity of the statements made, the absence of manoeuvres to artificially increase liabilities or organise insolvency, and the debtor’s cooperation. Bad faith presupposes that the debtor was aware of creating or aggravating their over-indebtedness, or that there was clear procedural disloyalty.

Why must good faith be assessed for each spouse?

This is the central contribution of the judgment. The Cour de cassation lays down a clear rule: “the judge must rule on the good faith of each applicant to the over-indebtedness procedure”. In other words, where a couple files a joint application, there is not one debtor to examine, but two. Each spouse is a separate individual, holder of their own rights, and the good faith condition laid down by Article L. 711-1 must be verified individually.

A couple’s joint application is a procedural convenience: it allows a financial situation that is often intertwined to be dealt with together. But this unity of treatment does not merge the persons. One spouse’s bad faith is not contagious: it is not automatically passed on to the other. The judge must therefore inquire, for each of them, whether or not the good faith condition is met.

Does the judge’s sovereign discretion override this requirement?

It might have been objected that the assessment of good faith falls within the sovereign discretion of the trial judges (which is correct) and therefore escapes review by the Cour de cassation. The judgment takes care to defuse this objection. Yes, the assessment of good faith falls within the sovereign discretion of the trial judge; but that discretion is exercised within the framework set by law. And the law requires the good faith of each applicant to be assessed. The judge therefore remains free to conclude that each spouse acted in good or bad faith, but is not free to dispense with examining the situation of either of them.

The distinction is essential: sovereign discretion concerns the evaluation of the facts, not the possibility of ignoring one of the applicants. It is precisely the failure to examine, and not the outcome of the examination, that the Court penalises.

Why did the Cour de cassation censure the judgment?

The censure is made on the basis of Article L. 711-1 of the Consumer Code. The Court criticises the Saint-Étienne judge for having ruled “on inadequate grounds which do not distinguish the individual situation of each of the spouses”. Indeed, all the factors relied on to establish bad faith (the sums “handled”, the unexplained origin of the liabilities, the “highly speculative industrial strategies”, the blocking of the property sale) concerned the husband alone. Not a single line of the judgment considered the wife’s conduct: had she taken part in these transactions? Had she profited from them? Had she herself failed in her duty of loyalty towards the creditors? The judgment said nothing on these points.

Having failed to establish the wife’s bad faith, the judge could not, without a logical contradiction, deny her the benefit of the procedure. By extending to the wife a bad faith established only for the husband, the judgment lacked a legal basis.

Consequence: the Court quashes and sets aside the judgment of 10 July 2023 (except insofar as it had declared admissible, as to form, a creditor’s appeal) and remits the case to the Court of First Instance of Lyon. The latter will have to resume the examination, this time distinguishing the good faith of each of the two spouses.

What is the practical impact for over-indebted couples?

The judgment, destined for publication in the Bulletin, goes well beyond the case at hand. It consolidates a debtor-protective approach that practitioners know well but which, in practice, is sometimes overlooked by courts that treat the couple as a single entity. The rule is now stated plainly: a joint application does not authorise a joint, undifferentiated examination of good faith.

Can one spouse be penalised for the other’s bad faith?

This is the whole human stake of the decision. In many couples, only one spouse manages the finances, signs the commitments and sets up the transactions that lie at the origin of the over-indebtedness. The other, often the one who has neither the skills, nor the information, nor the decision-making power, suffers the debt without being its author. To deny that spouse access to over-indebtedness relief solely on the ground that their partner failed in their duty of loyalty would be to punish them for a fault that is not theirs.

The judgment closes that door. The spouse whose good faith is not disproved retains the right to access the procedure and, where appropriate, to have their own situation dealt with. This is a particularly valuable safeguard for the economically dependent member of the couple, whose interests might otherwise be sacrificed on the altar of a global assessment.

How can a couple’s joint application be secured?

For couples, the practical lesson is twofold. First, where the situations are very different, it may be wise to document each spouse’s conduct separately: who incurred which debts, who managed which accounts, who profited from which transactions. Second, in the event of an unfavourable decision, the spouse whose good faith was not specifically examined has a strong argument to challenge the inadmissibility.

However, one must remain clear-sighted about the scope of the judgment: the Court does not say that the wife acted in good faith. It says only that the judge could not find the contrary without having examined her case. On remittal, the Court of First Instance of Lyon may perfectly well conclude, after an individualised and reasoned examination, that both spouses acted in bad faith, provided that this time it establishes the bad faith of each. The judgment imposes a method; it does not prejudge the outcome.

Conclusion

By this judgment of 21 May 2026, the Second Civil Chamber recalls a truism too often lost from sight: behind a joint over-indebtedness application, there are two people, two types of conduct, and two assessments of good faith to be carried out. By censuring a judgment that had extended to the wife a bad faith established only for the husband, the Court protects the spouse who suffers the debt without having been its architect. The decision is doubly useful: as a matter of principle, it anchors the requirement of individualised examination; as a matter of strategy, it offers debtors an effective ground of appeal on points of law (lack of legal basis) whenever a court treats the couple as an indivisible block.

For anyone faced with a decision declaring their over-indebtedness application inadmissible, and more broadly with a dispute pitting an individual against a credit institution, careful examination of the decision’s reasoning may reveal decisive flaws. The firm LE BOT Avocat, specialising in banking law in Paris, assists borrowers, guarantors and over-indebted debtors in defending their rights against banks and creditors.

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