Three thousand people were admitted to the statutory debt restructuring in 2020. That is the smallest number since the start of the Natural Persons Debt Restructuring Act at the end of 1998. It is also about a third less than in 2019. The number of people admitted to legal debt restructuring has been declining since 2011.
The Central Bureau of Statistics (CBS) reports this on Friday. In 2020 there were almost fourteen thousand people in the statutory debt restructuring. According to Statistics Netherlands, the number of people in debt restructuring may decrease because the Municipal Debt Assistance Act was introduced in 2012. Under this Act, the municipalities have the freedom to organize debt counseling themselves and to impose requirements on residents if they ask for help.
Statistics Netherlands cannot say whether municipalities provide better assistance to their residents and therefore fewer people end up in debt restructuring, or whether they set too strict requirements so that fewer people can be helped.
In addition, until the start of the corona crisis, economic conditions continued to improve. According to Statistics Netherlands, this may also have contributed to the fact that fewer and fewer people needed to be restructured.
It appears that the corona crisis itself had a limited effect on the inflow into debt restructuring. In March 2020, the influx was equally low because physical court hearings, which are necessary to be admitted to debt restructuring, were hardly or not at all possible. In the months that followed, those lawsuits were caught up and the influx was slightly higher again.
Inflow into debt restructuring again lower
Pay off debts in a few years
Anyone who enters into debt restructuring will be given the opportunity to pay off his debt within a few years. First, an attempt is made to reach a settlement with the creditors, and then the court must give permission to start the process. Anyone who has accrued debts by committing fraud or a crime, or by irresponsible purchasing behavior, may not, for example, make use of debt restructuring.
People in debt restructuring are then given three to five years to pay off their debts. During that period they receive an amount to live on, and all the other money is used to repay.
Anyone who is in debt restructuring must also adhere to a number of rules during that period, such as an obligation to apply for a job. Those who adhere to those rules will be given a clean slate after three years.