Inclusion of Book XIX, “Consumer Debts,” in the Code of Economic Law

In our blog post dated April 21, 2023, we already informed you about the draft bill of February 7, 2023, concerning the insertion of Book XIX “Consumer Debts” into the Code of Economic Law and the associated reforms regarding the amicable collection of consumer debts. On April 27, 2023, this bill was passed by the Chamber of Representatives, meaning that the proposed changes will soon take effect.

From now on, your company must send a free initial reminder regarding the unpaid debt before it can claim late-payment interest and/or compensation from the consumer. Only after a period of fourteen (14) calendar days has elapsed since the first reminder was sent may your company charge these additional costs. 2. Damages must be expressly stipulated before the start of the agreement between your company and the consumer, and these damages are capped by law. Specifically, this means that in the case of collecting an invoice for 150 euros, the flat-rate damages may not exceed 20 euros.

For example, these may not exceed the interest rate set forth in the Act of August 2, 2002, on Combating Late Payments in Commercial Transactions. For the first half of 2023, this rate is 10.5%. The law also provides a further framework for the activity of amicable debt collection. For example, companies tasked with collecting unpaid debts (such as bailiffs, attorneys, and collection agencies) are required to verify the “legality” of the claimed damages before initiating any action or procedure related to amicable debt collection. For example, a consumer cannot be declared in default if a bailiff determines that the payments claimed do not comply with the legally established limits as cited above. In addition, anyone attempting to collect a debt from a consumer—whether a bailiff, an attorney, or a debt collection agency—is required to actively inform the consumer: - of their right to obtain all documents substantiating the debt; - to request payment arrangements; - about the procedure to be followed in the event the debt is disputed. If the consumer disputes the debt, this suspends the amicable debt collection procedure, and the debt collector has thirty (30) calendar days to decide whether or not to file a lawsuit. If the debt collector takes longer than thirty (30) calendar days to make this decision, the accrual of late-payment interest ceases during this period.

The new rules will take effect on the first day of the fourth month following their publication in the Belgian Official Gazette. We cannot yet provide an exact date, but the new legislation is expected to take effect later this year. The law applies to:

• All debts arising on or after the effective date, regardless of whether they have a contractual or other legal basis. Parking fees and/or hospital costs are also included within the scope of application.
• All debts arising from an agreement entered into prior to the effective date, but for which the payment arrears occur after the effective date. For this latter category of debts, the effective date is set for the first day of the seventh month following publication in the Belgian Official Gazette.

The new rules will, of course, have a significant impact on the agreements you enter into (or have already entered into) with consumers and on the content of the notice of default you intend to send to your debtor. Crowe Legal would be happy to assist you in reviewing your general terms and conditions, contracts, and draft notices of default to ensure they comply with the new legislation.