Over-indebtedness is defined as the inability of a person to repay their debts. This includes personal debts, but also those for which this person has posed as guarantor or jointly responsible, whether in favor of another person, an entrepreneur or a company.

The causes of over-indebtedness

Over-indebtedness affects all social categories, without distinction. In other words, having more income does not protect against over-indebtedness.

A situation of over-indebtedness arises when the balance between debt and income is weakened. The first cause of this imbalance is what are called "accidents of life", for example a divorce or an accident.

Another cause is more progressive: mismanagement of the budget. Accumulating loans, taking out credit lines with different credit institutions, not properly managing the family budget... All this can create an imbalance between income and debts, resulting in a situation of over-indebtedness.

The collective debt settlement procedure

You can't pay your bills or repay your loans? Do you have seizures or transfers on your salary? Contact your banker to explain the situation to him, and try to come to an arrangement together.

If no arrangement could be found, the Law of 8 January 2013 on over-indebtedness provides for a collective debt settlement procedure. This procedure only concerns private and non-professional debts. The goal: to help you get out of a situation of over-indebtedness, by allowing you to repay your debts on terms acceptable to all parties concerned.

Here are the steps of the over-indebtedness procedure for individuals.


Step 1: Contact a specialized service

Before applying for admission for the conventional debt settlement procedure, contact the social office of your municipality, or one of the Over-indebtedness Information and Consulting Offices.

Inter-Actions A.S.B.L.

Over-indebtedness Information and Consulting Office

1, rue Helen Buchholtz, L-4048 ESCH/ALZETTE

Consultations by phone at 54 77 24 - 22 (Monday morning to Friday morning) or by using the contact form. The consultation is free and anonymous.

Health and Social Welfare League

Over-indebtedness Information and Consulting Office

2, rue G.C Marshall, L-2181 LUXEMBOURG - Tel. 48 83 33-300

2A, avenue Lucien Salentiny, L-9080 ETTELBRUCK - Tel. 48 83 33-300 

6, rue Brooch, L-9709 CLERVAUX - Tel.: 48 83 33 300

Email: ligue@ligue.lu

Step 2: Complete the application form admission

Download and complete the application form for the conventional debt settlement procedure. This form should be sent with supporting documents to the following address:

Ministry of Family, Integration and the Greater Region

Mediation Commission for Over-indebtedness

L-2919 Luxembourg

The Over-indebtedness Information and Consulting Service (SICS) will examine your file and inform you whether or not you are admitted to the over-indebtedness procedure.

You are informed of the Commission's decision by registered letter, as are your creditors. From the moment you are admitted, proceedings against your property such as assignments on your salary are suspended. The collective debt settlement procedure is then initiated.

Step 3: The conventional settlement plan

Once the application has been accepted, the Over-indebtedness Consulting and Information Office (SICS) establishes a draft conventional debt settlement plan. This plan is then submitted to the Mediation Commission, which submits it to you and your creditors. The recovery plan may not exceed 7 years.

The plan has to accepted within 6 months by at least 60% of the creditors representing 60% of the total claims.

The reorganisation plan

If the plan is not accepted, SICS will notify you and the Comission will publish a "report of defaults" establishing the failure of the procedure. A judicial recovery procedure may be considered before the court magistrate for a reorganisation procedure. The court magistrate establishes a reorganisation plan, which may entail a suspension of payment for all or parts of the debts.

Last resort: the personal recovery procedure

As a last resort, and only when the situation is irremediably compromised, one can appeal to a personal recovery procedure. This consists of erasing unprofessional debts, with the liquidation of the debtor's personal assets.