Measures to take when overindebtness occurs

First of all, it is important to
know that when we talk about over-indebtedness the debt of the people is
constantly getting bigger and bigger. The amount of debt is usually so big that
they don’t know how to begin the repayments.

### **Budget guidance**

The first possible measure to be
taken in the situation of over-indebtedness is the budget-guidance. When
someone has difficulties controlling his in- and outcomes, over-indebtedness
might be a consequence. Through budget-guidance, the debtor learns to control
his own financial balance, so the debtor is still controlling his own
financials. Social workers help developing the financial plan and give advice,
but the debtor has to take care of his own payments and the implementation of
his budget plan (Eerste hulp bij schulden).

=== **Budget**
management. **===**
The second option is budget
management. Equal as the guidance, the debtor learns to control his incomes and
outcomes, but social service is in control. They make sure that every bill is
paid, it is their responsibility, not the one of the debtor anymore. The social
worker receives the incomes and pays the bills, as planned in the budget plan.
So the debtor loses a part of his financial freedom by ‘letting’ the social
worker control his money and receive his incomes. In return, the bills will be
correctly paid and the debt will decrease incrementally (Eerste hulp bij
schulden).

=== **Collective**
debt settlement **===**
This third option, is a legal
procedure for structural debt problems. This settlement aims at the repayment
of the debt while living a dignified life (Eerste hulp bij schulden). To start
this procedure, the debtor has to get the permission at the labour court, yet
it is not initiated by an executive title (a verdict of court, notarial deed,
…). When admitted, a debt conciliator is named. He tries to succeed in an
amical settlement. The debtor needs to deliver a detailed and current balance
of his incomes, available goods of his family and his costs, debt. The judge is
appointed to secure the dignified life of the debtor. The conciliator
negotiates with the creditors, trying to find an agreement for a debt
settlement. If the creditors and conciliator achieve an agreement, this deal
must be ratified by the judge. The conciliator will still guard the
implementation of the agreement and the incomes of the debtor. The debt should
be neutralised within 7 years, if not, a part of the debt can be remitted (FOD
Economie, 2013).

If the conciliator cannot achieve an
agreement after a year, a legal consequence should be taken. The judge imposes
a settlement, which the debtor and creditors need to obey. The debt should be
neutralised within 5 years, the rest of the debt will be remitted. But the
judge can obligate the debtor to sell his house, car, television, … in reality,
this only happens when the debtor has some valuable goods left. The conciliator
will still receive the incomes and control the outcomes of the debtor (Eerste
hulp bij schulden).

From the moment of acceptance of
this procedure, the debtor will not receive his own incomes anymore. He will
only get a daily amount of money to pay his primary needs.

In 2014 OCMW Gent had 174 active
collective debt settlement procedures. 131 dossiers with an amical settlement,
2 with a legal settlement and 41 cases were expanded with some extra years
(O.C.M.W. Gent, 2014).

The statistics of the OCMW in 2015
show that the majority of the people in the situation of over-indebtedness,
94.67%, never been a part of a collective debt settlement. 5,33% of the debtors
have been a part of a collective debt settlement before.

=== **Debt**
mediation **===**
The last option is debt mediation. A
conciliator will try to make an agreement with the creditors about the payment
of your debt. So the conciliator will negotiate your debt and will check your
debt on credibility, prescription and legality. But the creditors can still
refuse this mediation (Eerste hulp bij schulden).

The government interferes again in
the payment of the conciliator. For the people in debt, it is almost impossible
to lower their debt when they have to pay a legal advisor. So the government
founded a fond, ‘Fonds ter bestrijding van de Overmatige Schuldenlast’. The
federal department of Economy is qualified for the payment of the fees of the
conciliators, but only under some exceptional circumstances. This is in the
case of total emission of the debt, partly emission of the debt. But it is also
possible without emission of the debt. When the income of the debtor is not
capable of paying the fees, then interference of the federal department of
economy is possible. This does not mean that the FOD of economy repays debts,
it is not an equivalent of a judge and it does not interfere in the settlement
between the conciliator and the creditors (FOD Economie).

The social workers and the
conciliator decide on which part of the income the debtor can use for paying
for his primary needs and which part he has to ‘save’ to repay his creditors.
To decide on the living wage, the social workers use a reference budget. On the
base of the composition of the family, a certain budget is captured for
clothes, kids, food, … the debtor can use this as a reference for his outcomes
and costs.