Debt Relief Act for Natural Persons / Administrator
If your creditors do not agree to the partial forgiveness scheme that the municipal debt counseling services offered on your behalf, there is still a way to receive partial discharge of your debts. You can submit a request to the court to be admitted to the debt relief program under the Debt Relief Act for Natural Persons.
The court does not grant all requests. If the judge denies your request, you have 8 days to file an appeal. A lawyer is required to file an appeal. So, take immediate action if your application has been rejected.
If the court grants the request, the court will also appoint a Debt Relief Administrator, also known as a Trustee. This administrator is appointed on behalf of the creditors, but they will also take your interests into account. The administrator,together with the supervisory judge, determines what part of your income you can keep monthly. We call this the Free Allowance Amount. Anything you receive more than that amount must be paid into the estate account. Sometimes assets must be sold, such as a house or an expensive car. The proceeds go to the estate account.
During the debt relief program, you must comply with many rules and conditions. The most important are the following:
- Work obligation: You must in principle work 36 hours per week
- Obligation to apply for work: If you work less than 36 hours per week, you must in principle apply for other work or additional work
- Payment obligation: All your income in excess of the Free Allowance Amount must be paid into the estate account
- Information obligation: You must inform your administrator about your income, your expenses, your personal situation and sometimes your medical situation.
Every three months, the administrator writes a report on the progress of the debt relief program. After a 18 months, the administrator will advise the court on the clean slate. If the administrator believes that you have done everything right, the administrator will advise in favor of discharging the remaining debts. With a positive advice from the administrator, it is very likely that the court will grant you a clean slate and you will be relieved of your debts.
If the court finds that you do not comply with all the rules and obligations of the debt relief program, the court may decide that your program will be terminated without a clean slate. Before the court makes this decision, you will be invited to a court hearing. If the hearing concerns a premature termination – which is always without a clean slate – or a normal termination but without a clean slate, you qualify for financed legal aid. Law Firm Elbertse can help you in these cases. If the hearing concerns only a simple interrogation without the immediate threat of losing the clean slate, no financed legal aid is provided.
If you missed out on legal assistance at this stage, you still have a second chance. The court’s decision to terminate the debt relief program without a clean slate is subject to an appeal period of 8 days. So, take immediate action if you receive such a decision.
In some cases, you do comply with the rules and conditions, but it is the debt relief administrator who makes mistakes or doesn’t do their job properly. In such cases, you should first discuss this with the administrator. Maybe you can find a solution together. If the complaint is not resolved, you can turn to the supervisory judge. You can ask the supervisory judge to order the administrator to fix their mistakes or you can ask for another administrator. A lawyer is not mandatory for these types of requests. Financed legal aid is only available if there is significant financial damage.
What is the difference between all those different administrators?
The term administrator often refers to different officials. Here is a list of the most common administrators:
Protective Administrator / Financial Guardian (Book 1 of the Civil Code): This administrator handles the income and expenses of the person under financial guardianship. The administrator also makes payment arrangements with creditors. This administrator represents the person under administration, for example in legal proceedings.
Debt Relief Administrator (Debt Relief Act for Natural Persons): The administrator collects all income from the person under administration in excess of the ‘Free Allowance Amount’ and can also sell some of the assets. The administrator saves this amount for the creditors. This administrator checks whether you comply with all obligations. If you meet all the requirements, the administrator will advise the judge to give you a clean slate. If the judge grants a clean slate, all old debts will be forgiven.
Suspension of Payments Administrator (Bankruptcy Act): If a company is about to go bankrupt, a suspension of payments can be requested from the court. During a suspension of payments, the suspension of payments administrator examines whether the company can still be saved financially and takes the necessary measures. Most suspensions are converted into bankruptcy.
Testamentary Administrator (Book 4 of the Civil Code): If someone with a lot of assets dies, that person may have stipulated in their will that their inheritance will be managed by a testamentary administrator. The heirs will then not be able to access the money and assets themselves. If an heir wants to receive part of the money, they can submit a request to the administrator. The administrator then decides whether and, if so, how much money will be paid out to the heir.