Bankruptcy, the Debt Restructuring of Natural Persons Act

Bankruptcy threatens and what do you do, what does the curator do? What is a clean slate and what happens to the debts? If you don’t pay your debts, you could be declared bankrupt. You can also use the Debt Restructuring Natural Persons Act, the WSNP. The legal term for debt counseling is 3 years, but can be shortened or extended. For this form of debt restructuring, a debt restructuring loan and the consequences for the bankrupt, everyone deserves a second chance. This way you have a good chance of getting out of trouble. Sometimes a reorganization loan offers help.

The WSNP, how does it work?

  • Bankruptcy and the WSNP
  • WSNP and the clean slate
  • Which debts are covered by the WSNP?
  • What is debt restructuring?
  • Will you be admitted to the WSNP?
  • Steps to WSNP
  • Debt restructuring credit
  • Conversion of bankruptcy into debt restructuring
  • The movable property and WSNP
  • WSNP and own house
  • Mortgage and WSNP
  • Are you allowed to incur new debts?
  • What is the postal block?
  • The amount to be released
  • When can you stop taking the WSNP?
  • Communication with the administrator
  • Key lock

Bankruptcy and the WSNP

If a natural person, an ordinary citizen, goes bankrupt or is subject to a suspension of payments, his entire world is turned upside down. Bankruptcy means seizure of assets and the obligation to repay everything and pay off debts. Until the bankruptcy is lifted. There is normally no such thing as a clean slate. The situation is different with the Debt Restructuring of Natural Persons Act, WSNP, where the clean slate plays a significant role.

WSNP and the clean slate

Even at the end of the statutory debt restructuring, the amount saved often turns out to be insufficient to pay all debts in full and residual claims remain. Due to the clean slate, these residual claims are no longer payable by creditors. This applies to all debts that existed at the time of application of the WSNP, with the exception of some student debts with the Information Management Group and claims resulting from a criminal conviction with the Central Judicial Collection Agency. The chances are also lost for a creditor with a debt incurred before the date of application of the WSNP and who reports too late to the administrator. The amount can no longer be recovered from you. If the creditor reports during the WSNP restructuring, he will participate in the distribution by the administrator.

Which debts are covered by the WSNP?

The operation of the WSNP includes all debts that arose before you were admitted to the WSNP. The only exception to this is the long-term student debts with the Informatie Beheer Groep. Criminal fines and unlawfully obtained benefits as well as compensation for crime victims are covered by WSNP, but are therefore not included in the clean slate.

What is debt restructuring?

You will not simply be admitted to the process of the Debt Restructuring of Natural Persons Act, WSNP. The procedure is as follows. First you must go to the Municipal Credit Bank or the Social Services in your municipality. A debt counselor then makes an inventory of the creditors and the amount of the debts. He then tries to reach an agreement with the creditors through a so-called amicable process. This means that an offer is made to pay part of the debts in return for the remainder of the claim being waived. If this amicable process is successful and all creditors agree, you do not need to submit a WSNP application. A restructuring loan is appropriate if your income does not exceed 130% of the minimum wage. This allows you to pay off existing debts within three years if the creditor agrees.

Will you be admitted to the WSNP?

If the amicable process is not successful, the debt counselor will draw up a petition with a debt restructuring statement as an attachment. Once signed, the documents are sent to the court, the legal process. A few weeks later you will receive a summons from the court to appear. During that hearing or shortly afterwards you will be told whether you will be admitted to the WSNP. The court immediately appoints an administrator, curator. It also happens that the municipality or an agency designated by it does not cooperate in drawing up the petition and the statement. In that case, you must draw it up yourself and submit the application for admission to the WSNP to the court. It is true that if you submit a petition several times within ten years, the chance of rejection is very high.

Steps to WSNP

So the steps to take are:

  • Registration with the Municipal Credit Bank or Social Services in your place of residence;
  • A care provider from a recognized agency first tries the amicable process;
  • If an amicable process is not successful, a request will be made to the court for your admission to the WSNP.

Debt restructuring credit

In the amicable process, an offer can sometimes be made to creditors on the basis of a restructuring loan. The creditors receive payment in one go and you finance this with a restructuring loan that you must repay in the next 36 months. An offer of this amount is made to creditors and payment is made upon final discharge, so that you are also rid of it. A kind of clean slate. This can be beneficial for creditors. It is true that creditors must agree with what they are paid, because that will usually only be part of the debt. Your benefits are:

  • No more creditors.
  • After 3 years the debt is repaid.
  • After 3 years you are free again to do what you want.

If the agreement with the creditors is successful, make sure that you have repaid the restructuring loan on time.

Conversion of bankruptcy into debt restructuring

If the bankrupt submits a request to convert the bankruptcy into debt restructuring, the curator will advise the court about this. To this end, the administrator maps out the debts, income, personal circumstances and fixed costs.

The movable property and WSNP

To pay the debts, items will also be sold after an inventory if the proceeds from the sale exceed the costs to be incurred. This concerns so-called excessive contents. You should think of a caravan, a scooter or a car. But if you need the means of transport for commuting to and from work, then in most cases you can keep the means of transport.

WSNP and own house

If the owner-occupied home has excess value, the debtor must cooperate in the sale of the home.

Mortgage and WSNP

If no debt renewal takes place, the home you are living in will in most cases be sold. This will first be used to pay off the mortgage, followed by any remaining debt to the creditors. If the proceeds from the home are not sufficient to pay off your mortgage, the mortgage provider can submit the remainder of the mortgage debt for debt restructuring.

Are you allowed to incur new debts?

As long as the WNSP applies to you, you are not allowed to incur new debts. In most cases, new debts will lead to an interim termination of the statutory debt restructuring, resulting in bankruptcy.

What is the postal block?

The mail block, which applies at least for the first 13 months of the WSNP, means that all your mail is first sent to your administrator. He opens all your letters and telegrams. In this way, the administrator wants to monitor whether you are adhering to your obligations. The mail block can be extended by the court at the request of the administrator. The administrator forwards the weekly mail at least once a week.

The amount to be released

The amount to be released, abbreviated as vtb, is legally set at a minimum of 90% of the social assistance standard that applies to you. Furthermore, a reservation surcharge of 5% applies. So a total of 95% of the social assistance standard. If you also work at least 20 hours per week, your VTB will be increased by another 5%, bringing you to 100% of the social assistance standard. As long as the WSNP applies to you, you can request the alimony judge not to have to pay alimony by submitting a request for a null settlement. The payment obligation will then start again as soon as the WSNP has been cancelled.

When can you stop taking the WSNP?

The legal term is 3 years, but this can be shortened or extended by the administrator. The WSNP can also be stopped earlier at your own request by offering an agreement. If this is successful, the residual debt will be canceled sooner. In that case, the creditors give you the guarantee that the remaining claims have been waived.

Communication with the administrator

According to the Recofa WSNP guidelines, the administrator must be available by telephone for the debtor at least a few hours a week. The administrator may indicate that he prefers to be contacted in writing. It must be clear to the debtor how the communication will proceed.

Key lock

Finally, a clean slate is something else. You can get a clean slate if you have gone through the WSNP completely and have not reached an agreement prematurely. Some of the requirements are that you must not have incurred any new debts, you must not have disadvantaged your creditors and you have complied with the imposed best efforts and information obligations. The clean slate then guarantees that the remaining claims are no longer due to the creditors.

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