Evolution of Over-Indebtedness and Payment Defaults

The number of over-indebted individuals in Belgium has been closely linked to the overall growth in credit contracts. While the proportion of defaulting credit contracts has remained relatively stable over time, the average amount of unpaid debt has significantly increased. Where a Belgian borrower used to have an average unpaid balance of around 6,000 €, this figure has risen to approximately 8,000 € today, reflecting a heavier burden per defaulting contract.

Regional disparities are also marked. Payment defaults affect a larger share of borrowers in urban and economically more fragile areas. For example, Brussels and Wallonia record a higher percentage of defaulting borrowers than Flanders. However, in Flanders, the average amount of arrears can be higher, reaching around 9,500 €, which indicates that when difficulties arise, they can be substantial.

On a national level, the total volume of outstanding repayments has grown over the years, with several billions of euros in overdue payments circulating in the financial system. The typical profile of an over-indebted person remains particularly sensitive: many are between 25 and 44 years old and live in households with limited income, often not exceeding 1,250 € per month. These households are especially vulnerable to income shocks, unexpected expenses, and rising living costs.

The Consequences of a Payment Default in Belgium

In Belgium, as soon as you accumulate three unpaid instalments on a credit contract, the credit institution is legally obliged to register your default with the National Bank of Belgium. You will be notified by registered mail, and your contract will be listed as defaulting in the central credit register.

The direct consequence is a drastic limitation of your future borrowing capacity. Once you are registered as a defaulting borrower, you can no longer obtain new credit in Belgium until you have fully repaid all unpaid amounts, including late interest and any penalties related to the default. Even after regularising your situation, the law imposes a waiting period of 15 months before you can obtain a new loan.

In the case of a mortgage loan, the consequences can be particularly serious. If payment defaults persist, the bank may initiate foreclosure proceedings on your property, which can lead to a public sale. Just like in the real estate crises observed in the United States or Spain, the sale price may be insufficient to cover the remaining debt. When the default occurs in the early years of the loan, the borrower has often repaid mostly interest and very little principal, which can leave a significant residual debt even after the sale of the house.

At Crédit Populaire Européen, we have implemented a proactive prevention policy against payment defaults, with a particular focus on mortgage loans and instalment loans. Our objective is clear: protect your long-term interests, avoid over-indebtedness, and help you build a sustainable financial plan.

For instalment loans, our brokers carefully analyse each application file. We apply a strict debt ratio that does not exceed 40% of your income. We review with you the requested amount, the desired duration, and the exact use of the funds. Sometimes, requesting a slightly lower amount or choosing a more reasonable duration is the best way to ensure that you will be able to repay your loan comfortably and without stress.

For mortgage loans, we favour absolute transparency. Some institutions may propose very low interest rates that look attractive at first sight, but hide an unfavourable repayment structure where the borrower repays a lot of interest and very little principal during the first years. In the event of early payment default (within the first 10 to 15 years), the situation can become disastrous, as the remaining principal still owed remains very high.

We advise you to choose repayment plans where you pay more principal than interest, even if it means a slightly higher monthly instalment. This approach has two major advantages: it helps you better understand your true repayment capacity and allows you to reduce the principal faster. In the long term, the total cost of your loan is lower, and you significantly reduce the risk of over-indebtedness.