New law in Belgium on collecting debts of consumers

On 1 September 2023, new regulations regarding consumer debt collection (Book XIX WER: “debts of consumers”) entered into force. For businesses contracting with consumers, there are essential points to be aware of. For all entrepreneurs engaging with consumers, vigilance is required from this date forward. It might be necessary to first notice of default letter. Ambos Lawyers can help you with that.

The introduction of Book XIX WER, "Consumer Debt," brings about new obligations in the context of debt collection from consumers. Failure to meet these obligations may result in the inability to claim a compensation, collect your invoice and/or collect (increased) default interest from the consumer.

To be eligible for (increased) default interest and fixed compensation, you must now comply with the following obligations:

1. The first notice of default should be free of cost and should include: 
   • The outstanding amount and the amount of the penalty in case of non-payment within fourteen calendar days after the letter.
   • The name and company number of the creditor.
   • A description of the product or service giving rise to the debt and the due date of this debt.
2. A waiting period of at least 14 days should be followed before taking any other action. 

Only after sending the first reminder and if the debt remains unpaid after the 14-day period a company is entitle to claim interest and/or fixed compensation from the consumer.

Next to this, the law establishes maximum limits for penalty clauses:

1. The contractual interest rate must not exceed the interest rate of the Law of 2 august 2022 (commercial debts interest rate). 
2. The fixed compensation amount must not exceed: 
   • 20 EUR if the outstanding balance is equal to or less than 150 euros. 
   • 30 EUR, plus 10% of the amount owed between 150.01 and 500 euros if the outstanding balance falls between 150.01 and 500 euros. 
   • 65 EUR, plus 5% of the amount owed above 500 euros, with a maximum of 2000 euros if the outstanding balance exceeds 500 euros.

Agreed default interest and fixed compensation exceeding these maximum limits are considered null and void. Traditional clauses, such as specifying a penalty of 10% of the principal amount with a minimum set amount, are no longer valid. Again, this only applies to consumers.

A last important element is the application in time: the law also applies to any overdue and unpaid consumer debt arising from an agreement concluded before 1 September 2023 when the payment default occurs after 1 September 2023.

If you have any questions on this topic, contact our specialists on debt collection and they will be more than happy to assist you.