You find yourself somewhat in a situation of over-indebtedness and you would like to turn to a mediation organization active in credit and over-indebtedness.
Let’s take stock of this issue together.
Prevention is better than cure
It is primarily 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 first advisor. Everyone has limits, and in terms of credit, this truth also holds.
In this regard, it is your responsibility to be honest with your broker and not to hide information that would give a different picture of your financial situation. Deliberately deceiving your broker is also liable to criminal prosecution as this behavior generally highlights forgery, use of forgery, and false statements which can be prosecuted in court.
Default on monthly repayment: end of access to credit
If you are no longer able to repay your financial installments for two months, the first sanction will be administrative. Your lending institution is legally obliged to report your credit to the National Bank of Belgium. This means that your file falls into litigation and you must repay your entire credit immediately to the credit insurer. Furthermore, you will be listed with the National Bank of Belgium, which will close the doors to credit for a period of 15 months.
Special situation for businesses, self-employed, and liberal professions
There is a mediation organization for businesses, self-employed individuals, and holders of liberal professions. The SME Financing Knowledge Center (CEFIP) can help a business, a self-employed person, or a holder of liberal professions to 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 premium repayments but rather finding common ground between a bank and an entrepreneur so that the latter can access credit.
Currently, given the credit crisis, banks are sometimes more reluctant to grant credit. In this case, the CEFIP can help you try to unlock a temporary situation.
Collective debt settlement
The CEFIP does not intervene for individuals. Therefore, if you have not taken out a loan in the context of your professional activity but in the context of your private life, the situation is different.
The Legislator has provided in Belgium a protective law for individuals who find themselves in a situation of over-indebtedness such that they can no longer meet their monthly premium repayments and can no longer lead a life in accordance with human dignity. This is the law of July 5, 1998, relating to collective debt settlement.
If your request is accepted by the labor court, a debt mediator will be appointed to 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 allow them, as far as possible, to pay their debts, while guaranteeing them 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 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 effect of seizures, as well as assignments of claims
- Waiver of indemnities and fees
- Any other accompanying measure, such as budget guidance, the obligation to undergo detoxification treatment, etc.
If you are experiencing severe financial difficulties and can no longer meet your debts, it is advisable to contact an accredited center for debt mediation (CPAS or non-profit association).