The issue of household over-indebtedness is still topical, and even if the battle to curb it seems to be bearing fruit, it remains no less worrying.
The number of overindebtedness cases is falling
At the beginning of February, the Banque de France published the number of cases submitted to the various overindebtedness commissions, and we can see that this figure has fallen in 2019. It has never been so low. Thanks to the Lagarde Act in 2010 and the Hamon Act in 2014, the share of consumer credit in overindebtedness has fallen by almost 20%, from 60% in 2010 to 40% in 2019. Nearly 10 billion euros have been withdrawn from the consumer credit market. The current economic climate (historically low mortgage rates) and policies to regulate the distribution of consumer credit have contributed to this gradual, steady decline. In 2018, the number of files submitted to overindebtedness commission secretariats was 162,935. This compares with 181,123 in 2017. In 2019, the decline continues for the 7th year running, with more than 20,000 fewer files than in 2018, or 141,013.
Rising number of households on the verge of overindebtedness
While the number of overindebtedness cases has been falling for several years, why is overindebtedness still a concern? Some professionals, notably at the Banque de France, doubt that the systems in place are sufficient: "There has been progress, that's undeniable, but not all over-indebted people are taken care of. Some households are off the radar. Particularly young households and entrepreneurs who don't realize just how much over-indebtedness they're in. Some think they're not in any danger, while others really are, and don't dare start an over-indebtedness procedure to get back into a more bearable situation. Overall, the number of households on the verge of overindebtedness continues to rise. All it takes is one of life's mishaps for them to find themselves underwater and unable to pay their bills and loans.
Profile of households close to overindebtedness
The profile of people who can fall into overindebtedness no longer resembles that of 10 or 15 years ago. Today, the people most likely to enter the spiral of over-indebtedness are those with weak employment or family situations. While the number of cases of over-indebtedness is falling, and is one of the lowest in over 30 years, the proportion of households in debt is on the rise, and giving cause for concern. This is a relatively unique situation in the euro zone. It is referred to as the "grey zone of over-indebtedness". With the surge in mortgages, French household debt in 2019 passed the 1,440 billion euro mark. In the event of an economic crisis impacting activity or interest rates, the solvency of these households would be in serious difficulty.