Collective debt settlement

A collective debt settlement is a way to help people with large debts pay them off. In this, a debt mediator, appointed by the labour court, helps you make a plan to pay your debts. This plan ensures that you can live a normal life despite your debts. This scheme is only for private individuals and not for companies.

Today, collective debt settlement only applies to private individuals and therefore not to companies.

Specifically, the collective debt settlement procedure works as follows:

• You file a petition with the labour court of the district where you live, listing your income, expenses and debts.
• The court appoints a debt mediator.
• Together with the debt mediator, you agree on your living expenses and the plan to pay off your debts.
• If your creditors accept this repayment plan, it is officially confirmed by the court. If they do not accept it, the court will propose a settlement itself.
• The debt mediator receives your salary. With that, he pays your living expenses and pays off your debts. In principle, a collective debt settlement lasts a maximum of 7 years. What is not repaid by then is usually cancelled. However, some debts such as maintenance and penal fines cannot be cancelled.

A lawyer will help you prepare a petition to initiate collective debt settlement proceedings before the labour court. This is because he or she knows the procedure and the court.

Usually, the court also appoints a lawyer as debt mediator. Sometimes this is a PCSW representative. This debt mediator will further guide you in paying off your debts according to a repayment plan.

Is it getting too much for you and do you not see it all clearly with the many papers or do you not understand them all? Then you can always go to your local legal advice for free.
Also know that in certain cases you can get a (completely) free lawyer or are entitled to assistance. This is certainly interesting to check out.

A collective debt settlement offers several benefits for people facing structural debts:

• Protection from creditors: Once the scheme starts, all collection actions by creditors stop, so you experience less pressure.
• Fixed living allowance: You get a fixed amount to live on, so you can continue to pay for your basic needs.
• Debt forgiveness: After the arrangement ends, which lasts up to seven years, your remaining debts (except some such as alimony and fines) can be forgiven.
• Counselling: A debt mediator will help you throughout the process. A lawyer can provide additional support by giving you legal advice and making sure your rights are respected.

You can terminate a collective debt settlement in several ways:

• Voluntary termination: If your financial situation improves, you and your lawyer can ask the court to stop the arrangement.
• Non-compliance: If you do not comply with the plan, the debt mediator or your creditors can ask the court to end the arrangement. In this case, your debts will remain and it is usually not advisable, as you will again have to face your creditors and the pressure that comes with it.
• Settlement: Sometimes, with the help of a lawyer, you can reach an agreement with your creditors to pay off your debts in one lump sum and thus end the settlement faster.

It is always smart to seek legal advice from a lawyer. They can help you determine the best solution for your situation and guide you through the whole process.