These French who are struggling to repay their credit

Consumer credit is selling well despite the purchasing power crisis. However, both sides of the coin must be considered. Having too much debt can be a problem. Defaults have increased by more than 30% in the past year.

The French borrowed too much during the pandemic

Families who have to contend with higher and higher prices in recent months and who have tighter budgets are having far more problems with their bank accounts. Many cities have an organization that helps and supports families who have more difficulty managing their debts and repayments.

There must be enough money in your account to process the loan repayment. If your bank account does not have enough money or is empty, the loan will not be repaid. If after 30 days the money has not yet been replenished in the account and you have not even repaid the loan, you will be registered in the National File of Payment Incidents (FNIC).

The Banque de France released data showing that 58,135 people were added in July, a huge increase compared to July last year.

Banks are increasingly expecting customers to default on their loans and have set aside hundreds of millions of euros as a risk indicator. Credit repayment incidents have increased rapidly since July, 30% more than last year. Banks have been more flexible during the pandemic years in granting credit, but now the situation is getting worse.

Furthermore, the Banque de France reported that in July 9,000 bank cards were removed from users’ hands for being misused. This is more than double compared to July last year (28% more). The cards were misused by their owners when monthly bills and credit payments were not made. Many French people face payment problems, as inflation drives up prices and some, already close to the limit, go into the red.

“People have become heavily in debt because with consumer loans of less than 3% or 2.5% they have multiplied their loans and have monthly installments to pay”, explains Jérôme Cusanno, president of the French Association of Bancassurance Intermediaries, at the microphone of the ‘Europe 1.

Solutions to get out

The good news is that despite the incidents of non-payments, the number of over-indebtedness cases has not increased. Since January, the number of people who have exceeded the debt limit has decreased by 10%. However, banks believe there is greater risk by the end of the year.

The war in Ukraine, as well as rising interest rates and inflation, do not inspire optimism. French banks have set aside hundreds of millions of euros to tackle future payment problems, as they could happen more often than before.

The Banque de France allows people who cannot repay their loans to suspend payments for free for up to 24 months. If your practice is accepted, you can benefit from a 24-month period on current payments, without paying more. You can also contact a credit broker to combine all your current payments and reduce them.

The gap between families struggling to make ends meet and those able to save is widening. In the first quarter of 2018, households saved a total of € 39.9 billion on savings products. This is an increase of 8.9 billion compared to the previous quarter.

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