You have taken out one or more loans and for various reasons, you are having difficulty meeting your monthly repayments.
You find yourself somewhat in a situation of over-indebtedness and you would like to turn to a mediation organization active in matters of credit and over-indebtedness.
Let’s take a look at this issue together.
Prevention is better than cure
It is first and foremost the essential role of your credit broker to build a reasonable credit file with you. It is a prudential policy that makes your broker your primary advisor. Everyone has limits, and in credit matters, this truth is also verified.
In this regard, it is your responsibility to be honest with your broker and not to withhold information that would give a different picture of your financial situation. Deliberately deceiving your broker is also subject to criminal prosecution as this behavior generally highlights forgery, use of forged documents, and false statements, which can be prosecuted in court.
Default on monthly repayment: end of access to credit
If you are unable to meet your financial obligations for two consecutive months, the first sanction will be administrative. Your lender is legally obliged to report your credit to the National Bank of Belgium. This means that your file becomes contentious and you must repay your entire loan immediately to the credit insurer. Moreover, you will be listed with the National Bank of Belgium, which will close the doors to credit for 15 months.
Special situation for businesses, self-employed individuals, and liberal professions
There is a mediation organization for businesses, self-employed individuals, and liberal professionals. The SME Finance Knowledge Center (CEFIP) can help a business, self-employed individual, or liberal professional access credit to address a temporary cash flow shortage. In this case, the issue is different. It is not about dealing with a default on monthly payments but rather finding a compromise between a bank and an entrepreneur so that the latter can access credit.
Currently, due to the credit crisis, banks are sometimes more reluctant to grant credit. In this case, CEFIP can help try to unblock a temporary situation.
Collective debt settlement
CEFIP does not intervene for individuals. Therefore, if you did not take out a loan as part of your professional activity but as part of your private life, the situation is different.
The legislator in Belgium has provided a protective law for individuals who find themselves in a situation of over-indebtedness such that they can no longer meet their monthly repayments and can no longer lead a life in accordance with human dignity. This is the law of July 5, 1998, on collective debt settlement.
If your request is accepted by the labor court, you will be assigned a debt mediator who will establish a collective debt settlement plan.
The purpose of the collective debt settlement plan is to restore the financial situation of an over-indebted person. It should enable them, as far as possible, to pay their debts while guaranteeing themselves and their family a life in accordance with human dignity.
The collective debt settlement plan can be amicable or judicial.
- Amicable plan: it is negotiated by the debt mediator with all your creditors; if all parties agree, it is approved by the judge.
- Judicial plan: if the creditors do not agree on such a plan, the judge can impose a judicial settlement plan for a maximum duration of five years.
A judicial plan may include the following measures:
- Rescheduling of debt payments
- Reduction of interest rates
- Suspension of the effects of seizures and assignment of claims
- Waiver of penalties and fees
- Any other accompanying measures, such as budget guidance, mandatory detoxification treatment, etc.
If you are experiencing severe financial difficulties and can no longer meet your debts, it is advisable to contact a center accredited to practice debt mediation (CPAS or non-profit association).
