Recommendation CM/Rec(2007)8
of the Committee of Ministers to member states
on legal solutions to debt problems

(Adopted by the Committee of Ministers on 20 June 2007
at the 999bis meeting of the Ministers’ Deputies)
 

The Committee of Ministers, under the terms of Article 15.b of the Statute of the Council of Europe,

Acknowledging that member states have entered an era where the use of credit has become an essential part of their economies;

Taking into account that the development of the consumer credit market can be beneficial both for the economic growth of member states and for the well-being of individuals;

Noting that although in the majority of cases credit contracts operate without difficulty, increased lending leads to increased debt problems and, in some cases, to over-indebtedness;

Bearing in mind that over-indebtedness of individuals and families has become an increasingly widespread problem in most member states, which frequently leads to social and health problems and social exclusion of families and may put children’s basic needs at risk;

Stressing the responsibility of member states for the effects of their economic and social policies;

Agreeing upon the utmost importance of political, legal and practical measures which the governments of member states should adopt in order to prevent and solve debt problems effectively;

Underlining the need to strike a balance between the legitimate interests of creditors and the basic rights of debtors;

Taking into account Resolution No. 1 on seeking legal solutions to debt problems in a credit society, adopted by the European Ministers of Justice at their 26th Conference (2005);

Recalling Recommendation Rec(2003)17 of the Committee of Ministers to member states on enforcement;

Bearing in mind other work carried out at a European level concerning the settlement of disputes between creditors and debtors,

Recommends that the governments of the member states, when formulating their internal legislation and practice and when seeking legal solutions to debt problems and to over-indebtedness:

1. note that for the purposes of this recommendation over-indebtedness means, but is not limited to, the situation where the debt burden of an individual or a family manifestly and/or on a long-term basis exceeds the repayment capacity;

2. aim to prevent over-indebtedness of individuals and families in particular by:

a. collecting information and statistics on debt problems and analysing the situation of over-indebted individuals and families in their countries;

b. introducing and developing financial literacy on the rights of consumers in general, and budget management in particular, as part of the national education system;

c. effective access to impartial financial, social and legal advice and counselling to those who have problems with and questions about their debts;

d. providing the necessary measures and regulations to ensure responsible practices during all phases of the credit relationship including marketing of credit as well as the collection and use of credit data and other financial information;

e. safeguarding the rights of the guarantors to information as well as preventing the irresponsible use of guarantees;

3. take appropriate measures to alleviate the effects of the recovery of debt in particular by:

a. ensuring an efficient and unbiased enforcement system as well as appropriate legislation, which defines the powers of enforcement agents;

b. respecting the debtor’s rights and human dignity at all stages of debt collection and debt enforcement procedures without infringing the rights of creditors;

c. introducing enforcement alleviation procedures, including the protection of the essential assets of the debtor and garnishment of part of his/her revenue, which take into account the need to strike a balance between the protection of at least the basic living needs of the debtor and his/her family and the efficiency of debt recovery;

d. ensuring the rights of the guarantors of the debtor at all stages of debt enforcement procedure, including, as far as possible, the right to treatment equal to that accorded to the debtor;

e. facilitating the recognition and enforcement in member states of payment judgments and repayment plans emanating from the competent authorities in other member states;

4. introduce mechanisms necessary to facilitate rehabilitation of over-indebted individuals and families and their reintegration into society in particular by:

a. ensuring that debtors have effective access to impartial advice and to debt adjustment in accordance with the criteria established by national law;

b. ensuring that payment plans in debt adjustment are reasonable, in accordance with national practices, both in repayment obligations and in duration;

c. ensuring that debt adjustment covers all debts, excluding only those covered by special waivers provided under national law;

d. establishing mechanisms for extra-judicial settlements and encouraging such settlements between the debtor and creditor;

e. effectively limiting the means of creditors to hinder debt settlements unreasonably;

f. encouraging effective financial and social inclusion of over-indebted individuals and families, in particular by promoting their access to the labour market;

g. encouraging the active participation of the debtor in debt settlement and, where necessary, counselling and advice following the debt settlement;

h. allowing partial or total discharge of the debts of individuals and, where applicable, families in cases of over-indebtedness where other measures have proved to be ineffective, with a view to providing them with a new opportunity for engaging in economic and social activities;

5. facilitate the implementation of this recommendation in particular by:

a. setting up policies relating to debt management and to treatment of over-indebted individuals and families and ensuring uniformity of such policies;

b. ensuring effective co-operation between the competent bodies and professionals involved in the prevention of over-indebtedness, the alleviation of the effects of the recovery of debts and the rehabilitation of over-indebted individuals and families;

c. setting up debt advice, counselling and mediation mechanisms, as well as ensuring, or at least encouraging, effective participation of lending institutions and other public and private creditors in implementing national policies for debt management;

d. ensuring appropriate quality standards and impartiality of the services provided by the responsible bodies and professionals as well as effective mechanisms for controlling these standards;

e. providing easy access to information about consumer rights, which should be readily understood by the general public.



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