Starting over after bankruptcy in Belgium: building your second chance

Starting over after bankruptcy is expressly possible in Belgium. A bankruptcy feels like the end of the road, but Belgian insolvency law (Book XX of the Code of Economic Law, Wetboek van economisch recht / Code de droit économique) is built around a second chance. What you acquire after the bankruptcy judgment in principle falls outside the bankruptcy estate, the discharge (kwijtschelding / effacement) releases a bankrupt individual from their remaining debts, and nothing prevents you from starting a business again, unless a professional ban (beroepsverbod / interdiction professionnelle) applies.

There are, however, pitfalls that can derail your fresh start. This article explains what is allowed, what is not and how to prepare properly. If you have only just been declared bankrupt, first read our article on your rights and obligations after the bankruptcy judgment.

Starting over after bankruptcy: what can you do straight away?

From the moment of the bankruptcy, you may work as an employee. Unless a professional ban applies, you may also start a new self-employed activity or set up and manage a new company.

The assets and income you acquire as an individual after the bankruptcy judgment in principle fall outside the estate. Your new income is therefore in principle not used to pay off debts that predate the bankruptcy, with the exception of, among others, maintenance debts. Your obligations towards the trustee (curator / curateur) do remain: you stay reachable and provide the information requested.

The professional ban

The court may prohibit a bankrupt or a director of a bankrupt company from running a business or managing a company, if it is established that they contributed to the bankruptcy through a manifestly serious fault. Separately, a criminal court may also impose a professional ban upon conviction for certain offences.

The bankruptcy itself therefore does not automatically lead to a professional ban: it is only imposed after proceedings in which you can defend yourself. If the public prosecutor, the trustee or an unpaid creditor moves in that direction, seek legal assistance immediately.

The discharge: the foundation of your fresh start

Without a discharge, the debts of the past continue to follow you. The discharge only exists for a bankrupt individual, such as an entrepreneur trading as a sole trader. If it was your company that went bankrupt, you are in principle not liable for its debts as a director, unless you gave a personal guarantee or are held liable as a director.

For bankruptcies declared since 1 September 2023, a separate application is no longer required: the discharge is in principle granted automatically. The court may, however, refuse it in whole or in part at the request of an interested party, the trustee or the public prosecutor, in particular if you committed manifestly serious faults that contributed to the bankruptcy. An economic setback is not a serious fault.

Loyal cooperation with the trustee and the supervising judge (rechter-commissaris / juge-commissaire) is therefore key: give them complete and accurate information. Moreover, the discharge does not cover all debts. Maintenance debts and debts arising from compensation for the death of, or physical injury to, a person that you caused through your own fault, among others, remain payable.

The bridging right for the self-employed

If you were self-employed, you may, subject to conditions, be entitled to the bridging right (overbruggingsrecht / droit passerelle). This is a temporary benefit, with retention of certain social rights, for self-employed people who have to cease their activity, including after a bankruptcy. A self-employed director of a bankrupt company may also qualify.

You apply for the bridging right with your social insurance fund for the self-employed. Do so quickly: the application must be made before the end of the second quarter following the quarter of the bankruptcy judgment, and strict conditions apply, including on how long you have been affiliated as self-employed (as a rule, at least four quarters of contributions paid within a period of sixteen quarters). Also ask the fund how a new self-employed activity would affect your benefit.

Your home and your family

When a sole trader goes bankrupt, the home in principle falls into the estate. The position is different if you made a declaration of unseizability (verklaring van onbeslagbaarheid / déclaration d’insaisissabilité) before a notary beforehand. Subject to conditions, it protects the home against creditors of business debts that arose only after that declaration, but not against older debts.

Your spouse or legal cohabitant, current or former, who is personally liable for a debt you incurred during the marriage or legal cohabitation is also released from that debt as a result of the discharge, unless the debt arises from a contract that your partner concluded, alone or together with you, and that is unrelated to your professional activity. A consumer who stood surety free of charge, such as a relative or a friend, may ask the court to be released if their commitment is manifestly disproportionate to their income and assets.

In practice: starting again as a self-employed person

A new activity requires the same formalities as any start-up: registration with the Crossroads Bank for Enterprises (KBO / BCE) through an approved enterprise counter, affiliation with a social insurance fund, activation of your VAT number and a separate business bank account. Expect suppliers to ask for payment in advance at first.

Keep your new activity strictly separate, administratively, from everything related to the bankruptcy. Do not use any assets, accounts or customer data of the bankrupt business without the trustee’s consent.

Pitfalls when restarting

• Do not take over any assets of the bankrupt business without the trustee. Stock, equipment, customer files or a trade name belong to the estate. Anyone who takes them risks civil and criminal consequences and jeopardises their discharge.
• Buy what you need through the trustee. The trustee sells the assets with the authorisation of the supervising judge, often on reasonable terms. A proper takeover, recorded in writing, protects you against disputes later on.
• Avoid confusion. A new business whose name or presentation misleads creditors about its link with the bankrupt business is a risk.
• Consider your position as a director. If the trustee has brought a claim against you as a director, take those proceedings into account before entering into new personal commitments. See also our article on directors’ liability in bankruptcy.

Financing and a new company

Banks are cautious after a bankruptcy, but their doors are not closed. A transparent file opens doors: an honest explanation of the causes, the discharge or the prospect of it, and a realistic financial plan.

If you opt for a private limited company (BV / SRL), it must always be incorporated by authentic deed before a notary. The founders must ensure sufficient initial equity and draw up a financial plan. Do not take this lightly: if the company is declared bankrupt within three years of incorporation and the initial equity was manifestly insufficient, the founders may be held personally liable. Read more in our step-by-step guide to setting up a private limited company.

Learning from your first business

A fresh start is the moment to address the weak points of your first business: realistic pricing, strict follow-up of unpaid invoices, timely payment of VAT and social security contributions, and an accountant who regularly provides you with up-to-date figures.

Those who see early on that things are going wrong have the most options, from a payment plan to judicial reorganisation. So do not wait for the first summons.

Frequently asked questions

How soon can I set up a new company?

In principle immediately, unless a professional ban applies. In practice, it is best to wait until your role in the bankruptcy is clear and the assets have been properly sold through the trustee.

May I work as an employee during the bankruptcy?

Yes. The salary for work you perform after the bankruptcy judgment falls outside the estate, even if your employment contract already existed before the bankruptcy (Cass. 31 March 2022). You do, however, remain liable for maintenance debts.

Do I have to apply for the discharge myself?

For bankruptcies declared since 1 September 2023, in principle not: it is granted automatically, unless the court refuses it following an application. For older bankruptcies the previous rules apply, so have your situation reviewed.

May I continue to use the trade name of my bankrupt business?

The trade name may belong to the estate. If you want to keep using it, arrange this expressly with the trustee.

Do I have to tell new business partners about my bankruptcy?

The bankruptcy judgment was published in the Belgian Official Gazette (Belgisch Staatsblad / Moniteur belge), and banks and suppliers can find that information. An honest explanation of the causes and of your new plan usually works better than silence.

Novex Advocaten can help

We assist entrepreneurs during and after bankruptcy: in their dealings with the trustee, when taking over assets, when facing a possible professional ban or a challenge to their discharge, and in preparing their fresh start. See also our articles on the discharge of debts after bankruptcy and on the bankruptcy of a sole trader versus a company.

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