Suspension of payments, debt restructuring and bankruptcy

Anyone who has debts and cannot get out of it themselves can apply for debt restructuring. Together with the debt counselor, a process is drawn up in which as many debts as possible are repaid. If creditors wish to cooperate, this can be done in the form of an amicable process. However, if they do not cooperate, a legal process will be initiated, also known as WSNP. Companies that are unable to keep their heads above water can apply for a suspension of payments. This starts with a provisional suspension of payments. If the situation does not improve, it will result in a definitive suspension of payments. In many cases this ultimately results in bankruptcy.

Debt restructuring, when debts become too high

What is debt restructuring?

Sometimes it may be that you have so many debts that you really see no way to pay off all your debts. You often get lost in invoices and reminders. You can no longer see the forest for the trees. Then you can use debt restructuring. Debt restructuring means that you transfer all your debts to a debt restructuring company. So you only have one creditor, instead of perhaps dozens. The debt restructuring period lasts a maximum of three to five years. During these years you do not have your own income. You will receive a monthly ‘salary’ from the Debt Rescheduling Company, with which you can cover your fixed costs. The debts are repaid from the part that remains of your income. For example, outstanding invoices and rent or mortgage arrears.

How do you qualify for debt restructuring?

Anyone who has debts and no longer sees a way out of it can request access to statutory debt restructuring under the Debt Restructuring Natural Persons Act (WSNP) . A judge will then decide whether you are eligible for debt restructuring. If the judge admits you to this process, you can be debt-free within three to five years. If you want to be admitted to debt restructuring, you must first follow a so-called amicable process . This means that you draw up an inventory of the debts together with a counselor from the Municipal Credit Bank or the Social Services and then reach an agreement with the creditors. This means that you will look at what kind of debts you have and to whom. So you actually list everything. The agreement means that an offer is made to pay part of the debt in exchange for canceling the rest. If one or more creditors do not accept the agreement, the amicable process has failed and you can gain access to debt restructuring.

What types of debt restructuring are there?

There are two different types of debt restructuring processes. This can be amicable or legal .

Amicable process

In an amicable process, an inventory of the debts is drawn up together with a counselor from the Municipal Credit Bank or the Social Services. An action plan is drawn up together with the debt counsellor. This will calculate how much can be paid off to the creditors each month and make a payment proposal. If approved, the debts must be repaid in 3 to 5 years. If one or more creditors do not want to cooperate, the amicable process has failed. The next step is the legal process. Compulsory agreement A final option for obtaining an amicable process is a compulsory agreement. If some creditors do not want to cooperate, the judge can impose a compulsory composition. This means that creditors are obliged to participate in the amicable debt restructuring. However, this is often only possible when the large creditors voluntarily cooperate and a smaller player resists. The other way around it becomes a lot more difficult.

Legal process

If one or more creditors do not want to cooperate, the judge can impose a statutory debt restructuring scheme. This is also called WSNP , which stands for Debt Restructuring Natural Persons Act . To apply for a legal process, a petition must be submitted to the court. This petition must include an explanation as to why a voluntary arrangement with the creditors is not possible. When all requirements are met, the request is approved and work can start. All creditors are obliged to cooperate in this. An administrator is appointed who ensures that all payments are made on time. During this process, no seizures can be made and interest on the outstanding claims must be frozen. When you follow a WSNP program, you will normally be rid of your debts within 3 to 5 years. The remainder can then be waived.

Suspension of payments

What does suspension of payments entail?

A moratorium on payments is actually nothing more than a postponement of payment. You can apply for a suspension of payments from the court. He will then grant you a judgment so that you do not have to pay the amount owed for a certain period of time. You can see this as a kind of time-out, in which no payments need to be made. During this period, the person or company can get everything in order and get a clear picture of the situation. An agreement can be made with the creditor for a repayment arrangement. After all, the creditors want to see money, of course. Suspension of payments is not very positive for your company. Many other companies refuse to do business with a company that is in receivership. A bank will also not want to grant you a loan, which is of course not very advisable in this case. Suspension of payments also called the gateway to bankruptcy.

What types of suspension of payments are there?

Suspension of payments has two different stages. The provisional and final suspension of payments. Provisional suspension of payments The debtor can apply for suspension of payments from the court. This debtor can be either a person or a company. If he does this, he must hire a lawyer who will represent his interests. All financial documents are submitted when applying for a suspension of payments. All creditors are also examined. A provisional suspension of payments can then be granted. Once this has been done, all creditors will be informed of the situation by letter. Definitive suspension of payments If there is no prospect of improvement in the debtor’s financial situation, a definitive suspension of payments can be granted. This is really only done when there is no longer any prospect of improving the situation. The final suspension of payments lasts a maximum of one and a half years. If matters are not in order within that period, bankruptcy will follow.

Bankruptcy

What is bankruptcy?

Are your debts higher than the value of your assets? Has a suspension of payments not provided a solution? Then you can be declared bankrupt. Bankruptcy is always declared by a judge. When you have been declared bankrupt, you basically have nothing more to say about your own things. You have lost control over all your possessions. Only the curator (lawyer) now has anything to say about your assets. This may sell your assets so that money becomes available to repay creditors as much as possible. However, there are a number of things that cannot simply be sold, namely: furniture belonging to the debtor and furniture belonging to immediate family members. They are also not allowed to claim part of the salary. The (temporary) salary is already pronounced earlier by the judge. He then ensures that all debts are paid from the part of the salary that has been taken.

How can a company be declared bankrupt?

Self-declaration Someone who can no longer pay his or her debts can complete a form at the court. After being summoned, the person will be heard by the judge, after which the bankruptcy can be declared. At the request of creditors Creditors can request the bankruptcy of a debtor by filing a petition with the court. After the petition has been received by the court, the debtor will be summoned and heard. To declare bankruptcy, the debtor must have at least one immediately payable debt and there must be a support claim from another creditor. If this is made plausible and no settlement or other arrangement is made, the judge will declare bankruptcy. The Public Prosecution Service The Public Prosecution Service can also apply for bankruptcy. They can only do this if they have reasons of public interest. For example, when there are very many victims. This almost never happens in practice. The court The court can declare bankruptcy after withdrawal of the suspension of payments. The declaration of bankruptcy is pronounced by the court. If the debtor is a natural person, the court must always inform this person that he can rely on the WSNP (Natural Persons Debt Restructuring Act). The advantage of the WSNP is the possible granting of a so-called ‘clean slate’. This means that the debts of the natural person are ‘erased’. This does not happen in bankruptcy. The debts that a natural person has continue to exist, to the extent that they are not paid in the bankruptcy. When bankruptcy is declared, a curator is appointed and a supervisory judge (RC) is appointed. The examining magistrate supervises the curator and also ensures that the interests of creditors and the bankrupt company or person are respected as much as possible