Collective debt settlement is a judicial procedure for structural debt problems. The debtor must petition the competent labour court to open collective debt settlement proceedings.

Following approval of the debt settlement plan, the court will appoint a debt negotiator. As from the time a debtor is subject to a collective debt settlement plan, this person may no longer receive income. The debt negotiator is responsible, insofar as possible, for repaying the debts. The negotiator will pay the debtor an allowance to cover daily expenses, such as food, rent, incidentals and so on. This is referred to as the living allowance. Larger expenses must be approved by the debt negotiator (or even the court).

The purpose of a collective debt settlement is to allow the debtor to repay outstanding debts, insofar as possible, and to live more or less decently during the repayment period. At the end of this procedure, the debtor should be debt free.  

A debt collection agency is a company entrusted with the collection of unpaid debts on behalf of (primarily) other businesses. 

Fulfilment of the criteria set out below will give rise to the notification of a payment default:

• for instalment sales, instalment loans, finance leases and mortgage loans:
  • when three instalments are not made on time or not paid in full, or
  • when a past-due instalment is not paid or not paid in full within three months, or
  • when future instalments become immediately due and payable.
     
• for credit lines and mortgage loans:
  • when some or all of the principal amount falls due in accordance with the terms of the credit agreement and is not repaid, or repaid in full, within a period of three months, or
  • when the principal amount becomes due in full and is not repaid or repaid in full, or
  • when the total amount to be repaid is not repaid within one month following expiry of the debt clearance period.
    Debt clearance means that, by a given date, your account must be cleared or repaid in full.