Is your debtor management still up to date? New obligations when recovering debts from a consumer

On 24 May 2023, the new Book XIX of the Code of Economic Law (hereinafter CEL) was introduced. Book XIX CEL regulates the amicable recovery of late-payment debts from consumers, and imposes several additional obligations on the part of creditors. The rules apply to new agreements and new debts as of 1 September 2023, and to all recoveries as of 1 December 2023.

We have listed these new elements for you below.

1. The first payment reminder is free of charge.

From now on, your company has to send a first reminder of the unpaid debt without any charge, and without already claiming default interest and/or compensation. The first reminder always has to state whether additional charges will possibly be applied in the event of late payment.

Only after a waiting period of fourteen (14) calendar days after sending this initial reminder without charge can your company apply default interest and/or compensation. You therefore need to limit yourself to recovering the outstanding principal amount in this first reminder.

2. A number of legal ceilings have been introduced:

2.1. For example, possible compensation must be expressly stipulated before the commencement of the contract between your company and the consumer, and these are capped as follows:

• in the event of recovery of a debt up to €150, the compensation can be maximum €20;
• in the event of a recovery of an outstanding balance between €150.01 and €500.00, the compensation can be maximum €30.00 plus 10% of the amount due on the tranche between €150.01 and €500.00,
• in the event of recovery of debts above €500.01, the compensation may be €65.00 plus 5% of the amount due on the tranche above €500.00, with a maximum of €2,000.00.

Compensation above these maximum amounts cannot be charged to the consumer. This ceiling on the compensation applies to any compensation clause, regardless of whether there is only one clause or a combination of clauses stipulating a penalty(s) in the event of late payment. Contractual provisions providing for compensation which are inconsistent with the foregoing are prohibited and shall be considered null and void.

2.2. Any default interest referred to in the contract may not exceed the interest rate as stipulated in the Act of 2 August 2002 on combating late payments in commercial transactions. For the second half of 2023, the rate is 12%.

2.3. The cost of an additional reminder may not exceed the amount of €7.50, plus postage applicable at the time of sending.

3. In addition, the law lays down further rules as regards amicable debt recovery

For example, companies tasked with recovering unpaid debts (such as court bailiffs, lawyers and collection agencies) are required to verify the 'lawfulness' of the compensation claimed before commencing any act or procedure of amicable recovery. For example, the consumer cannot be declared in default when a court bailiff determines that the payments claimed are not in accordance with the legal ceilings as cited above.

In addition, anyone attempting to collect the debt from the consumer, namely a court bailiff, lawyer or collection agency, is required to actively inform the consumer:

• about their right to obtain all documents justifying their debt;
• to request payment facilities;
• on the procedure to be followed if the debt is disputed.

If the consumer disputes their debt, the amicable recovery procedure will be suspended and the debt collector is given a period of thirty (30) calendar days to make a decision whether or not to issue a summons. If the debt collector takes longer than thirty (30) calendar days in this regard, the default interest will stop running during this period and cannot be charged until the decision to issue a summons is made.

When a repayment plan is agreed upon, the consumer must receive a statement of their payments and the balance remaining due at least once a year. When the debt is paid in full, the consumer must be notified. In short, any agreement made regarding the payment of a debt must be confirmed to the consumer.

Moreover, the debt collector may not charge the consumer a separate fee for their intervention.
After reading all this, perhaps your model reminders, notices of default and/or terms and conditions need an update? If so, don't hesitate to contact our specialists.