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  • pg 1
Seeking legal solutions to
     debt problems
      Dr. Geert Lankhorst
       Ministry of Justice
    The Hague, Netherlands

         IEEI Dubrovnik 14 / 15 - 05 2009
  A short survey - two topics
1. Dutch legislation on consumer
insolvency since 01-12-1998
2. Recommendation 2007/8 of the Council
of Europe

             IEEI Dubrovnik 14 / 15 - 05 2009
Chapter 3 of the Dutch Bankruptcy
Contains a special procedure for overindebted
private persons,
who are granted access to a court procedure of
three years, under supervision of a court
appointed trustee / administrator.
If the debtor can explain that he is in good faith,
and if he fullfills his obligations for three years
(=maximum effort to pay off the debts)…
… the debtor can obtain in the end a discharge
(amnesty) of the remaining debts

                 IEEI Dubrovnik 14 / 15 - 05 2009
     current Dutch approach
obligation to have a central register of (serious)
debts, including consumer credit and house rent
debts and mobile phone debts.
obligation to check before lending
not checking - or checking and finding a bad
result - and lending anyway while debtor is
overindebted = breach of duty to provide the
credit “in good faith”
striking a fair balance = not only focussing on
the debtor being in good faith when entering a
consumer credit contract

                IEEI Dubrovnik 14 / 15 - 05 2009
encouraging & enforcing out-of-
      court settlements
since January 1st 2008, insolvency judge
can force a creditor - who opposed an
amicable debt settlement in an
unreasonable way - to agree with the
proposed debt settlement (new article
287a of the Dutch Bankruptcy Act)
Unreasonableness = judge made law

             IEEI Dubrovnik 14 / 15 - 05 2009
      Stand still judgment
New article 287b Dutch Bankruptcy Act
In an urgent situation of an overindebted
household, (for example a house eviction)
the insolvency judge can give a court
order to creditors to reach a stand still
for a maximum period of six months.
If an amicable debt settlement could

             IEEI Dubrovnik 14 / 15 - 05 2009
 Monitoring the policy results
each year the Minister of Justice sends a
monitoring policy report to Parliament
70% of the applicants who are granted
access by the judge obtain after three
years the discharge of debts
the new provisions appear to be quite a
success: strong incentive for creditors to
solve “their own” debt problems out of

              IEEI Dubrovnik 14 / 15 - 05 2009
overindebted households also in
member states that only recently
 discovered free credit market
Not a specific western European problem,
but unfortunately a common problem…
…that has worsened since the credit crisis
26th Conference of European Ministers of
Justice-Helsinki (April 2005) defined it as a
common concern: adoption of Resolution
on Seeking Legal Solutions to Debt
Problems in a Credit Society

              IEEI Dubrovnik 14 / 15 - 05 2009
Resolution on Seeking Legal Solutions to
   Debt Problems in a Credit Society

What is the value of this Resolution?
   A political and international recognition of the
    need to find solutions to solve debt problems
    in European societies
   Aim: a European Recommendation,
    generating ideas for an acceptable minimum
    level of consumer protection

                   IEEI Dubrovnik 14 / 15 - 05 2009
Resolution on Seeking Legal Solutions to
   Debt Problems in a Credit Society

   Follow up to the Resolution: an expert report
    (September 2005) on legal solutions to debt
    problems in a credit society, drafted by the
    Department of Law of the University of Umeä,
    Sweden (Prof, Kiesilainen)

                 IEEI Dubrovnik 14 / 15 - 05 2009
      The Kiesilainen Report
Recognises that over-indebtedness causes a lot of
suffering, social and health problems and exclusions for
families. Link to education, social cohesion.
The legal development in European states has been
very different. Need for harmonisation.
Prevention of debt & debt-adjustment procedures,
Suggests the drafting of a Recommendation on the
policies in the field of over-indebtedness
Need to establish, examine and share good practices
(legal and practical)
Strike a fair balance between the responsibility of the
creditor and the debtor

                   IEEI Dubrovnik 14 / 15 - 05 2009
  Multidisciplinary approach
Debt problems cover wide variety of social,
financial, legal and psychological problems, too
vast to define within the limits of a legal
close link to poverty and social exclusion
(vulnerable group that has little interest in a
European level playing field on credit)
legal solutions are powerful, but have a limited
…so they must be embedded within a wider set
of multidisciplinary measures.

                IEEI Dubrovnik 14 / 15 - 05 2009
   4 Types of measures in
Recommendation & Explanatory
Prevention measures
Measures to alleviate the effects of
Measures to facilitate rehabilitation of
overindebted households and promote
their reintegration into society
Implementation / follow up measures
              IEEI Dubrovnik 14 / 15 - 05 2009
   COE – Recommendation &
     Explanatory Report
First European legal instrument on
consumer debt problems
starting point for discussion on national,
regional and local levels
Accepted by the Committee of Ministers
20th June 2007 (Recomm. 2007, 8 )
towards a European minimum level of
policy combatting overindebtedness ?

              IEEI Dubrovnik 14 / 15 - 05 2009
           What to do now ?
•   Member states need not re-invent the wheel
    again - but use the preparatory work of the
    COE in their legislation and policies
•   Linking the Council of Europe’s pioneer work
    to other initiatives, sharing expertise such as
•   www.coe.int / activities/legal affairs/legal
    cooperation/recommendation nr. 2007-8.

                  IEEI Dubrovnik 14 / 15 - 05 2009

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