What is collective debt settlement?
In collective debt settlement, a debt mediator works out a repayment plan to repay all or part of your structural debts. Despite high debts and the pressure that comes with them, this way you can still live a dignified life.
Today, collective debt settlement only applies to private individuals and therefore not to companies.
Specifically, the collective debt settlement procedure works as follows:
- You file a petition with the labour court of the district where you live, listing your income, expenses and debts.
- The court appoints a debt mediator.
- Together with the debt mediator, you agree on your living expenses and the plan to pay off your debts.
- If your creditors accept this repayment plan, it is officially confirmed by the court. If they do not accept it, the court will propose a settlement itself.
- The debt mediator receives your salary. With that, he pays your living expenses and pays off your debts. In principle, a collective debt settlement lasts a maximum of 7 years. What is not repaid by then is usually cancelled. However, some debts such as maintenance and penal fines cannot be cancelled.
Do I need a lawyer?
A lawyer will help you prepare a petition to initiate collective debt settlement proceedings before the labour court. This is because they know the procedure and the court.
Usually, the court also appoints a lawyer as debt mediator. Sometimes this is a PCSW representative. This debt mediator will further guide you in paying off your debts according to a repayment plan.
Is it getting too much for you and do you not see it all clearly with the many papers or do you not understand them all? Then you can always go to your local legal advice for free.
Also know that in certain cases you can get a (completely) free lawyer or are entitled to assistance. This is certainly interesting to check out.