When debts pile up and you can no longer manage them, Belgian law provides a protection mechanism: the collective debt settlement (CSR). This procedure allows to tackle all debts together through an amicable or judicial discharge plan, under the guidance of a debt mediator. In this article, Novex Lawyers explains who qualifies, the procedure and the consequences.
Who is eligible for the collective debt settlement?
The collective debt settlement is open to natural persons who are not merchants (and therefore cannot go bankrupt) and who are in a state of persistent payment difficulties. Specifically, someone who can no longer pay their debts and whose financial situation has deteriorated permanently. Self-employed people cannot appeal to the CSR; for them, bankruptcy exists as an alternative.
How do you apply for the collective debt settlement?
You should have a petition in the labor court of your place of residence. When filing, you must include a statement of all your debts, income and expenses. The court will decide if you are admissible. If yes, it will issue a debt mediator to (usually a notary, lawyer or CPAS employee).
The amicable discharge plan
In the first stage, the debt mediator attempts to establish a amicable discharge plan draw up a plan accepted by all creditors. This plan determines how and when the debts will be repaid - possibly with partial forgiveness of interest or capital. The duration of an amicable plan is up to 7 years.
The judicial discharge plan
If no amicable agreement is possible, the labor court imposes a judicial discharge plan on. This plan is binding on all creditors, including those who do not agree. The court can remit interest and impose a payment plan. In exceptional cases, even part of the capital may be remitted.
Impact of collective debt settlement
From the admissibility decision, strict consequences apply:
- All pending attachments are lifted or suspended;
- No new herds may be established;
- Creditors cannot collect individually;
- You may not take on new debt without the debt mediator's permission;
- You are required to cooperate in the procedure and disclose your income situation.
Collective debt settlement assistance
Novex Lawyers assists you in preparing the petition, communicating with the debt mediator and creditors, and following up on the discharge plan. We also defend creditors seeking recognition of their claims in ongoing CSR proceedings. Contact us for an initial discussion.
Also read: Bankruptcy in Belgium: procedure and consequences | Recovery of invoices in Belgium
