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‘Foreclosure’ bankruptcy

Published: 27 April 2020

Bankruptcy procedure now cheaper and quicker for banks and other mortgage lenders

One of Jersey’s bankruptcy procedures called a dégrèvement is the process by which the bank or other mortgage lender (“Creditor”) can take the Jersey immoveable property or real estate of a person who is unable to repay their mortgage payments (“Debtor”).

Dégrèvement proceedings require a set of Court hearings, the first of which is an application for an acte Vicomte chargé d’écrire (“AVCD”). An AVCD is an order by the Court requiring the Viscount to notify the relevant Debtor that they have 2- 3 months (depending on the value of the claim) to settle their debt. If the Debtor does not act within that 2-3 month period, a Creditor can, at a separate hearing, procure the Debtor’s immovable property.

Adversarial judgment

Previously, a mortgage lender who wanted to make an application for an AVCD and start the dégrèvement process could only do so after they have obtained an adversarial Court judgment. To obtain an adversarial judgment, the Creditor had to initiate a separate Court proceeding and ask the Petty Debts Court or Royal Court to order the Debtor to pay the outstanding debt.

Furthermore, adversarial litigation proceedings often encounter additional legal fees which can be augmented by other risks. For example, if the debtor seeks to defend the case, or is no longer living on the Island, this can potentially lead to a delay of at least 6 weeks.

Change to 1832 Law: Loi (1832) sur les décrets

However, the law from 1832 and Royal Court Rules have now changed, and the adversarial judgement and associated costs, delays and risks can now be avoided. Since the change to the law, a Creditor can now obtain an AVCD by simply relying on a registered charge instead of obtaining an adversarial judgment. This is another type of judgment obtained when a mortgage is agreed.

Despite these changes, we recommend seeking specialist advice before proceeding as the the new process is dependent upon the circumstances of the case in hand, including the need to correspond with the debtor prior to the application for an AVCD.

Need advice?

Advocate Giles Emmanuel, a Litigation Associate, was first to take advantage of this change to the dégrèvement process in Jersey, successfully representing one of Vibert’s clients in the Royal Court. Contact him for further advice.

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