What does debt restructuring entail?

Dutch people who have debts that they cannot repay may be eligible for statutory debt restructuring. A debt restructuring or restructuring loan is an arrangement to support debtors in regaining control of their financial affairs. In that case, all debts are handled by one agency. The payment must then be made to that one institution. In most cases, the municipal social services or the municipal credit bank are responsible for this. The people who end up in statutory debt restructuring do not have access to their finances for three years. In this way, the debts must be paid off in whole or in part during the relevant period. The debtors receive a living allowance and the income goes to the authority. This will be paid off as much as possible every month.

Why do companies participate in debt restructuring?

The creditors want their money back as quickly as possible, and of course the full amount. For people with problematic debts, there is a good chance that they will not get their money back. People who have no money are also not going to pay back. If these people were to undergo debt restructuring, the creditors often have a greater chance of getting their money back, possibly only partially. Companies are therefore often willing to cooperate in debt restructuring. In that case, there is an amicable debt restructuring. The judge can also order companies to participate in the scheme. In that case, there is a statutory debt restructuring scheme.

What does statutory debt restructuring entail?

Debtors who end up in this scheme receive living allowances for a period of three years. The income ends up with the agency that will restructure the debts. The purpose of the agency is to help people pay off debts as much as possible. In many cases it is not possible to pay off the entire debt in those three years. If the debtors have complied with the rules and have done their best to cooperate with the restructuring, the remainder of the debts will generally be canceled. However, this only applies to statutory debt restructuring.

Conditions for statutory debt restructuring

To be eligible for statutory debt restructuring, you must have properly met your payment obligations over the past five years. You may also not have been part of a statutory debt settlement in the last ten years. A petition must be submitted to the court for this. The municipality must cooperate in this, because they must draw up a debt restructuring statement. This must show why an amicable (voluntary) debt restructuring is not possible. The people who end up here are under the supervision of an administrator for three years.

Preventing debt restructuring

People who end up in debt restructuring often lack an overview of their finances. They spend more every month than they bring in. Unfortunately, they are temporarily unaware of this until problems arise. Without realizing it, a debt of several thousand euros has been built up. They are then in a situation where they have to take immediate action to resolve the debts. Unfortunately, it often turns out that they bury their heads in the sand and try not to think about it anymore. This will make the problems even worse.