Overindebtedness files on the rise at the Banque de France

According to the latest figures from the Banque de France, the number of overindebtedness cases is up sharply on 2020. However, this mainly reflects a normalization of the situation after a year of sharp decline.

Overindebtedness files: a rise after an exceptional 2020

According to figures published on June 3 by the Banque de France, 54,666 cases of overindebtedness were registered between January and May 2021, compared with 39,744 in 2020. This 37.5% increase, which may seem considerable, should be put into perspective.

By 2020, the number of overindebtedness applications had fallen by 24%, reaching their lowest level since 1990, the year in which the Neiertz law was applied and the overindebtedness procedure introduced.

The institution explains this significant decline by the confinement of spring 2020. The various Banque de France branches remained open, but many French people thought they were closed.

A 12% drop in consumer credit production and the introduction of credit moratoria by banks also contributed to the sharp fall in the number of overindebtedness cases last year.

Fears for the months ahead

Although the number of overindebtedness cases has risen sharply since the start of 2021, they are now back to pre-crisis levels. The increase compared with 2020 is therefore not alarming, and the trend is even downwards compared with 2019, with a 16.8% drop in the number of cases filed.

However, the Banque de France has expressed fears about the end of the crisis, when the various public economic support schemes come to an end. Their gradual disappearance should lead to an increase in the number of business failures, and a rise in the unemployment rate, which will not be without consequences for the financial situation of households.

At the Banque de France, trade unions are also concerned about the likely increase in the number of overindebtedness cases to come, and regret that the institution has decided to reduce its workforce, even though the workload looks set to increase.

The Banque de France remains vigilant in the face of the risk of an explosion in overindebtedness cases, and to this end has introduced the monthly financial inclusion barometer, a new monitoring tool designed to identify "monthly trends in the information and support needs of individuals in the financial field", as stated by the regulator in a recent press release.

This tool will enable us to observe "the difficulties encountered by the public: access to accounts and banking services essential to everyday life, identification and management of situations of financial fragility, provision of relevant and balanced information on banking and financial matters". It will therefore have an essential role to play in anticipating and managing the rise in overindebtedness.