The mandatory payment arrangement coming up

 

The mandatory payment arrangement coming up

In the fight against problematic debts, outgoing Minister of Legal Protection Dekker intends to give judges the power to impose a payment arrangement on parties. [1]

 

Cause

The reason for giving the court this power is that research shows:

“that there is a significant group of creditors who reject debtors' requests for payment arrangements. Even if the debtor demonstrates that the non-payment is due to inability to pay.” [2]

Furthermore, debtors appear to be too hesitant and do not contact the creditor. [3] The result of this is legal proceedings, of which 70-80% are cases in absentia, which in turn leads to many extra costs for the debtor (court fee, attorney's salary, bailiff's costs and subsequent costs). This increases the debtor's indebtedness.

 

Deviation

This authority means an amendment to the statutory regulation of Article 6:29 of the Dutch Civil Code. This article provides that a debtor may pay the claim in installments if the creditor agrees. The court can therefore only impose a payment arrangement if the creditor agrees. An example of this is the alternative rental hearing procedure before the Amsterdam subdistrict court (this is the continuation of the pilot rental cases ).

 

Bill

The Council for the Judiciary is in favor of the new jurisdiction and does not expect any problems, because the judge has sufficient possibilities to request the necessary information from the parties. Pursuant to Article 22 of the Code of Civil Procedure, the court can oblige parties to provide certain information. This also applies to financial data. This is the reason for the minister to have a bill drawn up.

Because the judge will actually join the proceedings, I am very curious how this will be motivated in the explanatory memorandum to the bill. I had my doubts about the Rental Matters pilot in 2018 , but because it was not based on a legislative proposal, this has never been clarified.

 

Conditions mandatory payment arrangement

It is still unclear what the exact settlement will look like and under what conditions the court can impose an amicable settlement on the parties. That will be known when the bill goes into consultation. However, I am going to mention a few points that need attention.

- To show up

A first condition will have to be that the debtor appears in the proceedings. Because 70-80% is currently absent, the success depends to a large extent on the attracting effect expected by the minister once it becomes known that payment arrangements can be agreed or imposed at the hearing. [4]

– Target group for payment arrangement

In view of the reason for this measure, it seems to me that it must concern consumers who cannot pay. It should therefore not apply to consumers who do not want to pay (unwillingness to pay) and also not to companies. The minister indicates that payment schemes for people with problematic debts do not work, because they cannot comply with the scheme anyway. [5] It will therefore be necessary to consider carefully what exactly the target group is and how the court can determine whether a payment arrangement makes sense.

– Which judge?

The report referred to by the minister is subtitled “Promoting feasible payment arrangements with private creditors”. [6] Does this mean that the court does not have the power to impose a payment arrangement if the government is a creditor? That seems to me to be an unnecessary limitation, especially with the allowance affair still fresh in my mind. The question is whether the administrative court should also be given this power.

Finally, I am curious whether only the subdistrict court will have this power or whether all civil judges will be given this power, including judges from the civil sector (claim of more than € 25,000) and the counselors of the courts of appeal (for appeal procedures). The impression is created that only the subdistrict court will have this power. After all, the plan is to get more debtors to the hearing and you can only appear in person and without a lawyer before the subdistrict court. The Payment Arrangements report also appears to be based on proceedings before the subdistrict court. [7]

Undoubtedly to be continued...

[1] Payment Arrangements Policy Response dated June 18, 2021.

[2] Policy response payment arrangements dated June 18, 2021, p. 2.

[3] Policy response payment arrangements dated June 18, 2021, p. 2.

[4] Policy response payment arrangements dated June 18, 2021, p. 4.

[5] Policy response payment arrangements dated June 18, 2021, p. 3.

[6] Jungman et al, Payment Arrangements , June 2020.

[7] Jungman et al, Payment arrangements , June 2020, § 7.2.


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