In a period as difficult as the one we are living through because of the well-known problems caused by the Covid-19 pandemic, many people have lost their jobs, many more will lose them, and many others will close their businesses.
Precisely because of this, in the last week of August a number of people came to my office who had lost all hope faced with debt situations that had become unsustainable, precisely because of a lack of income.
As things stand, the situation does not seem likely to improve, but I have no wish to draw anyone's anger, nor still less to come across as a professional pessimist — heaven forbid! There is, however, a possibility, still little used in truth, for resolving the problem of too many debts. I therefore take the opportunity to say a few words about the so-called "over-indebtedness" procedure, introduced into our legal system by Law no. 3 of 27 January 2012, the so-called "anti-suicide law".
This law introduced into our legal system a debt-discharge procedure to help the so-called over-indebted meet the debts they have taken on so that — without too much sacrifice — they can extinguish them and, at the same time, avoid enforcement proceedings being started or continued against them, such as the seizure of real estate, movable property or third-party assets: the classic seizure of the home, of the car, or the garnishment of one-fifth of a salary, to give some examples.
The concept of over-indebtedness is thus outlined, meaning: "a lasting state of imbalance between the obligations undertaken and the assets readily available to meet them, which causes considerable difficulty in fulfilling one's obligations, or the definitive inability to fulfil them regularly" (under Art. 6, paragraph 2, letter a). For accuracy, I must point out that the old bankruptcy law, as well as the "anti-suicide" law I am discussing, will give way to the new Code of Business Crisis and Insolvency (CCII), which will introduce some innovations arising from case-law developments, but which I do not intend to address here.
That said, without going into legal technicalities, my aim is to make known that, faced with the advance of the economic-financial crisis that began in 2008, our legislator was concerned to allow a bankrupt person who was also a "worthy entrepreneur" to definitively free themselves of residual debts and start a new business activity. The reform, however, had not addressed the whole broad group of so-called "non-bankruptable" persons who, although in a state of serious default, were not subject to the insolvency proceedings then in existence.
In this regard, the range of cases immediately proved significant, since alongside consumers (private individuals) in financial difficulty, there were a whole series of non-bankruptable professional figures such as: commercial entrepreneurs who had ceased trading more than a year earlier, agricultural entrepreneurs, self-employed workers, professionals, partnerships of professionals and artists, non-profit bodies and innovative start-ups. All subjects who, in general, were barred from accessing tools such as debt discharge, tax settlement and restructuring agreements.
The legislator therefore produced the over-indebtedness law in order to offer a tool for debt restructuring and the negotiated management of the crisis even to "non-bankruptable" persons. In brief, the procedure begins with the filing, at the Court of the place where the over-indebted person resides, of an application for the appointment of the designated professional body known as the Crisis Resolution Body (Organismo di Composizione della Crisi, OCC).
This body takes every initiative functional to preparing the restructuring plan and carrying it out. In particular, the OCC's task is to help the debtor manage the over-indebtedness situation while at the same time protecting the creditors. The OCC assists the Judge and acts as judicial liquidator in 3 distinct procedures, each with specific features:
- The consumer plan — consists of a proposal to write down the overall debt exposure and consequently reschedule the residual debt (average duration 6–7 years).
- The debt restructuring agreement — can be filed by non-bankruptable entities and businesses. Unlike the consumer plan, it does not require in-depth assessment of the debtor's "worthiness" and requires the consent of at least 60% of creditors. Once the majority is reached, the agreement is approved by the Court.
- Asset liquidation — the debtor (a private individual or non-bankruptable subject) makes all their assets available to creditors in order to meet their debts. The Court appoints a liquidator to sell the assets, except for unattachable assets and receivables, food, wages, salaries etc., and proceeds to pay all debts on a pro-rata basis.
In conclusion, Law no. 3/2012 currently represents a valid procedural tool for lifting the "weight" of debt and, within a reasonable time, rehabilitating oneself in society.
It is also the right solution for tackling criminal phenomena — such as usury — which find fertile ground to take hold in situations of need and hardship.
Hoping to have given, in this brief piece, a clear if summary picture of the over-indebtedness procedure, I will close with a rather well-known line from the Roman poet Ovid:
"Multa rogant utenda dari, data reddere nolunt."
(They readily ask to be lent things for their use, but are unwilling to give back what has been given.)