Personal Recovery Without Judicial Liquidation: The Write-Off Covers All Debts Arising Before the Decision, Declared or Not (Cass. civ. 2e, 26 March 2026, No. 23-18.726, F-B)

French Supreme Court (Cour de cassation), Second Civil Chamber, 26 March 2026, appeal No. 23-18.726, F-B (published in the Bulletin)

What Was the Background to the Case?

An individual guarantor (caution) had been ordered, by a judgment of 4 January 2017, to pay a bank a sum under her guarantee of a loan taken out in 2011 by a company that had been placed in judicial liquidation.

The guarantor subsequently found herself in a situation of personal over-indebtedness. On 10 May 2019, the over-indebtedness commission for individuals drew up imposed measures of personal recovery without judicial liquidation in her favour. As no challenge was brought by the creditors within the statutory period, the commission validated, on 12 July 2019, the total write-off of her debts with effect from 10 May 2019.

In the meantime, another dispute had arisen: the same bank had summoned the debtor, by a writ of 9 April 2019, before the Lorient court of first instance (tribunal de grande instance) in her capacity as a partner with unlimited liability of a property holding company (SCI) in which she held 70% of the shares. By a judgment of 3 July 2019, that is two months after the over-indebtedness commission’s decision (10 May 2019) but a few days before the formal validation (12 July 2019), the bank obtained a further order against the debtor, with provisional enforcement, on that second basis.

On the strength of that judgment of 3 July 2019, the bank commenced property seizure proceedings. The debtor challenged those proceedings before the enforcement judge (juge de l’exécution), who found that the debt underlying the second order had been written off and declared the seizure inadmissible. The Poitiers Court of Appeal (cour d’appel) upheld that decision. The bank appealed on a point of law. In its judgment of 26 March 2026, the Court dismissed the appeal and adopted an extensive reading of the write-off.

What Is Personal Recovery Without Judicial Liquidation?

How Does the Measure Work?

The procedure takes place in several stages. When a debtor files an over-indebtedness application, the commission examines the debtor’s situation. If it finds that the situation is irremediably compromised and that the debtor has no assets capable of satisfying the creditors, even partially, it may impose a measure of personal recovery without judicial liquidation.

The commission then notifies the measure to all known creditors, as well as to the debtor. Creditors have thirty days to challenge the measure before the judge responsible for protection disputes (juge des contentieux de la protection) (Article L. 741-4 of the Consumer Code). If there is no challenge within that period, the measure becomes final and produces the total write-off of the debts.

The write-off is retroactive: it takes effect on the date of the commission’s decision, not on the date of validation. This is a central feature of the judgment under discussion.

Difference from Personal Recovery With Judicial Liquidation

Where the debtor owns assets that can be realised, the commission may refer the case to the judge responsible for protection disputes with a view to personal recovery with judicial liquidation. This judicial procedure allows the debtor’s assets to be sold and the debts to be partially discharged; for the balance, the write-off is ordered. In both cases, the end result for the debtor is the write-off of the debts; what differs is the procedure and whether or not assets are realised beforehand.

What Principle Does This Judgment Establish?

The judgment states a principle of considerable scope, in a formula likely to become a reference point: “It follows from the combined application of Article L. 741-2 of the Consumer Code, in its wording resulting from Law No. 2020-734 of 17 June 2020, and of Articles L. 741-4, R. 741-1 and R. 741-4 of the Consumer Code, that, where there has been no challenge under the conditions laid down by Article L. 741-4, personal recovery without judicial liquidation imposed by the commission entails, save for statutory exceptions, the write-off of all the debts, professional and non-professional, of the debtor that had arisen on the date of the commission’s decision on the imposed measure of personal recovery without judicial liquidation”.

The Applicable Provisions

The legal basis of the reasoning is Article L. 741-2 of the Consumer Code, in its wording resulting from the Law of 17 June 2020. That provision states that the measure imposed by the commission entails the write-off of debts, except those referred to in Articles L. 711-4 and L. 711-5 (statutory exceptions) and those whose amount has been paid by the guarantor or by a co-obligor who is an individual.

The procedural mechanism is defined by Article L. 741-4, which sets out how creditors may challenge the measure, and by Articles R. 741-1 and R. 741-4, which govern the time limits and formalities.

The Scope of the Write-Off

Three essential points emerge from the judgment:

• The write-off covers all debts, professional and non-professional, without distinction;
• It covers debts that had arisen by the date of the commission’s decision, not those fixed on that date by a court;
• It applies regardless of whether the debt was declared to the over-indebtedness commission.

The distinction between the origin of the debt and its fixing by a court is central. A debt may exist in law well before a court decision fixes its amount definitively. For example, the unlimited liability of a partner in an SCI towards the company’s creditors arises on the day the company debt itself arises, not on the day the court orders the partner to pay. If the partner is placed in a PRWJL, the write-off strikes that original obligation, even if the court order comes later.

Is a Debt Not Declared to the Commission Written Off?

In its appeal, the bank argued the opposite: it considered that the claim it relied on, based on the judgment of 3 July 2019, was not mentioned in the list of debts annexed to the over-indebtedness commission’s decision, and that, for that reason, it could not be written off.

The argument was plausible. Logically, one might think that the write-off can only cover debts known to the commission, which quantified and listed them before imposing the measure. A debt unknown to the commission, because the creditor did not declare it or the debtor did not disclose it, would seem able to escape the write-off.

The French Supreme Court rejects that analysis. The logic is different: what matters is not the list, but the effective date of the measure. Every debt that arose before that date is written off, whether or not it was declared and whether or not it appears in the table. Declaration is not a condition of the write-off; it is merely a means for the creditor to defend its interests during the procedure (by exercising its right of challenge at the proper time).

Which Debts Escape the Write-Off?

The write-off is not absolute. The Consumer Code provides for several categories of debts that are not written off:

• Maintenance debts (Article L. 711-4);
• Debts arising from fraud or from a criminal conviction (compensation for damage caused by certain offences, restitution following a misappropriation of public funds, fines);
• Debts arising from a criminal conviction to pay damages (unless the judge decides otherwise);
• Guarantors and co-obligors who are individuals and who have paid in place of the debtor keep a right of recourse against the debtor (Article L. 741-2 in fine);
• Debts that arose after the date the measure took effect: such debts obviously escape the write-off, since they did not exist on the date provided for by the text.

For the debtor, it is important to gauge these exceptions: while most bank, tax (under certain conditions), rental and professional debts are written off, certain residual obligations may remain. A precise analysis is necessary to identify what remains payable and what no longer is.

What Are the Practical Consequences for Debtors?

This judgment is a cornerstone for the legal certainty of people who have come out of a personal recovery without judicial liquidation.

First, it secures their position against late creditors. Those who did not take the trouble to declare their claim or to challenge the measure within the time limits cannot, years later, produce an enforceable title and commence proceedings. The debtor can raise the write-off against them as of right, relying on a simple argument: the debt arose before the date the measure took effect, it is written off, whatever the date of the judgment that quantified it.

Second, it puts an end to the delaying tactics of certain creditors who, having missed the over-indebtedness procedure, waited for a later judgment in order to turn it into a title for seizure. The Court closes that door: a judgment delivered after the date the measure took effect does not revive a written-off obligation.

Finally, it reminds guarantors and partners with unlimited liability that they too can benefit from the write-off once they have been placed in a PRWJL. The professional nature of the debt is no obstacle to the write-off, contrary to what some banks may have argued.

How to Defend Yourself Against a Late Claim?

For a debtor who is being pursued today despite a past PRWJL, several steps are worth following.

Step one: retrieve the commission’s decision and its validation letter. These documents are the proof of the write-off and make it possible to identify precisely the effective date (the date of the decision imposing the measure, not the date of validation).

Step two: determine the date on which the debt being pursued arose. For a contractual debt (loan, guarantee), the debt arises when the contract is concluded. For the debt of a partner with unlimited liability, it arises with the company debt that the partner guarantees. For a liability debt, it arises at the time of the triggering event.

Step three: compare the dates. If the debt arose before the date the PRWJL measure took effect, it is written off, subject to the statutory exceptions.

Step four: raise the write-off, either as a defence or by bringing proceedings. Before the enforcement judge, challenging the seizure makes it possible, as in the case under discussion, to obtain its withdrawal and a declaration of inadmissibility. Before the trial court seised by a writ of summons, the write-off can be raised in defence to have the claims dismissed.

As regards residual avenues for compensation where the situation is more complex (for example where the debtor claims to have been the victim of banking failings predating the over-indebtedness), it is worth recalling that the bank may also be held liable under its obligations arising from the RTS of the European Banking Authority (Regulatory Technical Standards supplementing PSD2), still under-used in banking litigation but capable of supplementing the traditional grounds.

Conclusion: A Landmark Judgment That Secures Exits from Over-Indebtedness

The judgment delivered on 26 March 2026 by the Second Civil Chamber, published in the Bulletin (F-B), forms part of a consistent body of case law, but it has the merit of stating the principle with a clarity that the lower courts had not always shown. The rule is now crystal clear: where there is no challenge, the PRWJL entails the write-off of all debts that arose before the date the measure took effect, whether or not they were declared, and whether or not they are professional, save for statutory exceptions.

For debtors who have been through the ordeal of over-indebtedness, this is an essential guarantee: the procedure is meant to allow a genuine fresh start, not to leave a sword of Damocles hanging indefinitely over them in the form of creditors who failed to play their part in the procedure.

The firm LE BOT Avocat regularly assists people who have benefited from a PRWJL and who find themselves, years later, facing proceedings from late creditors. A rigorous analysis of the dates and the legal bases, combined with reliance on the judgment of 26 March 2026, most often makes it possible to obtain the dismissal of the claims or the withdrawal of enforcement proceedings wrongly commenced.

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