Collective debt settlement in Belgium: procedure, effects and repayment plan

When debts pile up and you can no longer repay them, the law in Belgium offers a protective mechanism: collective debt settlement (collectieve schuldenregeling / règlement collectif de dettes). This procedure deals with all your debts together through a repayment plan, guided by a debt mediator and supervised by the labour court. It brings peace of mind, but also demands discipline. This article explains who qualifies, how the procedure works, what it costs and what its consequences are.

Who qualifies for collective debt settlement in Belgium?

Collective debt settlement, governed by Article 1675/2 et seq. of the Judicial Code (Gerechtelijk Wetboek / Code judiciaire), is open to natural persons who are not an undertaking and who are unable, on a lasting basis, to pay their debts that are due or will fall due. In addition, you must not have manifestly brought about your own insolvency. A temporary payment problem is therefore not enough: the debt burden must be structural.

Anyone who carries on a professional activity as a self-employed person is an undertaking and falls under the insolvency rules of Book XX of the Code of Economic Law, such as bankruptcy or judicial reorganisation. If you have ceased your self-employed activity, you can only apply for collective debt settlement six months after ceasing it or, if you were declared bankrupt, after the bankruptcy has been closed. You can read more about this distinction in our article on the bankruptcy of a sole trader or a company.

The petition to the labour court

You file a petition with the labour court (arbeidsrechtbank / tribunal du travail) of your place of residence. In the Brussels-Capital Region, this is the Dutch-speaking or the French-speaking labour court of Brussels. The petition sets out, among other things, your family situation, your income, your assets, your debts and your creditors, and the causes of your debt problems. You may file it yourself, but an incomplete or poorly substantiated petition often leads to delays or even a refusal.

The judge rules on admissibility. If the petition is declared admissible, the judge appoints a debt mediator: a lawyer, a notary, a bailiff (gerechtsdeurwaarder / huissier de justice) or an approved institution, such as a public social welfare centre (OCMW / CPAS) with an approved debt mediation service.

The consequences of admissibility

The admissibility order has immediate and far-reaching consequences, for you and for your creditors:

• a situation of concurrence arises: creditors can no longer pursue individual recovery;
• all enforcement measures are suspended: existing attachments only retain their protective effect and no new enforcement attachment can be levied;
• wage assignments are suspended as well;
• interest on your debts is in principle suspended;
• your income is usually paid into an account held by the debt mediator, who pays you a living allowance for your day-to-day expenses;
• you must not worsen your insolvency or favour any creditor, and you may not, without the judge’s permission, perform acts beyond the normal management of your assets, such as taking out a new loan;
• the decision is registered in the Central File of notices of attachment, delegation, assignment and collective debt settlement.

To find out how attachment works in normal circumstances, read our article on attachment by a bailiff.

Which debts does collective debt settlement cover?

Collective debt settlement covers all your debts, including tax and social security debts, energy and rent arrears and consumer credit. For certain debts, however, remission is as a rule excluded, such as maintenance payments, compensation awarded for personal injury caused by a criminal offence and criminal fines. These debts are included in the plan but remain payable in full.

A life in keeping with human dignity and your living allowance

The plan must enable you and your family to lead a life in keeping with human dignity. The debt mediator therefore draws up a budget and pays you a living allowance for fixed costs such as rent, energy, food and the costs of your children. As a rule, you keep at least the part of your income that is exempt from attachment. The surplus goes to the creditors.

The amicable settlement plan

The debt mediator first tries to draw up an amicable settlement plan accepted by all interested parties. The plan sets out how and when the debts will be repaid, possibly with a remission of interest or of part of the capital. A creditor who does not object in time is deemed to consent, and the judge formally takes note of the accepted plan. An amicable plan lasts in principle no more than seven years.

The judicial settlement plan

If no amicable agreement can be reached, the judge can impose a judicial settlement plan, which is also binding on creditors who disagree. Such a plan lasts in principle no more than five years. The judge can grant extra time to pay, remit interest and, under stricter conditions, for instance after the sale of your attachable assets, also remit part of the capital.

In exceptional cases, where no repayment at all is possible, the judge can even grant a total remission of debts without a settlement plan. Such a total remission may be accompanied by support measures and can still be revoked for five years, for example in the event of false statements.

How much does collective debt settlement cost?

The debt mediator’s fees and costs follow rates set by royal decree. They are borne by the debtor and paid as a priority from the available budget. If that is not possible, or not fully, the Fund for the Treatment of Over-indebtedness (Fonds ter bestrijding van de overmatige schuldenlast / Fonds de traitement du surendettement) steps in. For the assistance of your own lawyer with the petition, you may, depending on your income, be entitled to second-line legal aid through the Legal Aid Office (Bureau voor Juridische Bijstand / Bureau d’Aide Juridique).

The end of the settlement

If you carry out the plan correctly, the collective debt settlement ends when the agreed or imposed term expires. The remissions provided for in the plan then become final, and the entry in the Central File is removed. You manage your own finances again, with a clean slate for the debts that were remitted.

Revocation of the collective debt settlement

Collective debt settlement is not a free pass. At the request of the debt mediator or a creditor, the judge can revoke the decision or the plan, for example if you provided inaccurate information, worsened your insolvency, fail to meet your obligations or concealed certain assets. After a revocation, creditors may once again pursue individual recovery.

Is collective debt settlement right for you?

Collective debt settlement is a far-reaching procedure: for several years, you lose control over your income. If you can still manage your debts with a few payment plans, amicable debt mediation, for example through the public social welfare centre or an approved debt mediation service, is sometimes a lighter solution. We help you make the right choice, based on an honest analysis of your income and expenditure.

Frequently asked questions

How long does collective debt settlement take?

An amicable settlement plan lasts in principle no more than seven years, a judicial settlement plan in principle no more than five years. At your express and reasoned request, this period can in certain cases be extended, for example to keep your family home. Bear in mind that preparing the plan itself can also take several months.

Can I keep my home?

That depends on the circumstances. If a sale is necessary to pay the creditors, the home can be sold, as a rule through a notary. Sometimes keeping it is possible, for example if the current mortgage remains affordable. The judge and the debt mediator take into account a life in keeping with human dignity for you and your family.

Can I still have a bank account or credit during the procedure?

As a rule, you keep an account for your day-to-day expenses, into which the debt mediator pays your living allowance. Taking out new credit is, however, ruled out without the judge’s permission, because you may not increase your debt burden.

As a creditor, am I obliged to take part in the procedure?

Yes. As a creditor, you must, in principle, declare your claim to the debt mediator no later than one month after notification of the admissibility order, and you may comment on the draft plan. A creditor who fails to declare in time, even after a reminder, is deemed to have waived the claim. Individual recovery is excluded during the procedure.

Novex Advocaten at your side

We assist debtors with the petition and throughout the procedure, and we represent creditors seeking recognition of their claims. We refer entrepreneurs to the appropriate procedure, such as judicial reorganisation or bankruptcy with discharge of debts. Mr Mohamed Asfour, lawyer, assists you in English, Dutch, French and Arabic.

Call 0484 99 22 72 or email asfour@novexadvocaten.be.