The Act of May 4, 2023, inserting Book XIX “Consumer Debts” into the Belgian Economic Code, B.S. May 23, 2023 (hereinafter the “Consumer Debts Act“) aims to update the rules on amicable collection of consumer debts, directly by the creditor company or through the intervention of a third party.

The Consumer Debts Act governs any late payment of a debt by a consumer to a company (B2C) and replaces the law of December 20, 2002, on the amicable collection of consumer debts, which is abolished (lex generalis). The Consumer Debts Act does not alter any preexisting specific sectorial rules (e.g., telephony, Internet, etc.) (lex specialis).

The legislator wants to prevent the creditor companies, or third parties in charge of collection, from taking advantage of the consumer’s late payment of his debts by claiming excessive and/or unjustified costs.

Relevant (mandatory) legal provisions

• Free of charge first reminder and standstill period of 14 calendar days

When the consumer has not paid his debt by the due date and a compensation clause is applicable, this clause may only be applied after:

• the sending of a notice of default (“first reminder”), for which no cost may be charged; and
• after the expiry of a waiting period of 14 calendar days, during which no costs, compensation or interest may be charged.

In the case of contracts covering the regular supply of goods or services, only reminders relating to three unpaid instalments per calendar year are free of charge.

• Minimum required references in the first reminder

The first reminder must contain, among other things, at least the following information: the balance due and the amount of the compensation clause that will be claimed, a description of the product underlying the debt as well as the deadline by which the debt must be paid before any costs, interest or compensation may be claimed.

• Capped interest and compensation clauses.

If, after the 14-day waiting period, the consumer still (partially) fails to pay, the company may (if contractually provided for) start claiming interest from that moment on. It should be noted that the law provides for an exception in favor of SMEs: the interest may start to accrue from the day on which the 14 calendar days period starts to run.

The interest rate may not exceed the rate provided for in the law of 2 August 2002 on combating late payments in commercial transactions. (i.e., 10.5% for the first half of 2023);

The Consumer Debts Act sets maximum amounts of damages that can be claimed from consumers (as long as this possibility is contractually stipulated) in the event of late payments. These maximum amounts are determined at a flat rate based on the value of the debt. Clauses with higher amounts cannot be applied and are deemed unwritten.

• The verification obligation and the debt collector’s mandatory prior notice of default

The debt collector (lawyer, bailiff, collection agency) has an obligation to verify compliance with the provisions regarding the amounts claimed from the consumer.

Thereby, prior to any measure or act of amicable collection, the debt collector must send a formal notice, which must contain at least the following mandatory references: information on the procedure to be followed if the consumer contests the debt, information on the consumer’s right to request payment facilities and information on the consumer’s right to request all supporting documents. In addition, this formal notice sets a deadline of 14 days before any measure or action of amicable collection may be taken.

• Additional consumer protections

The Consumer Debts Act provides 3 additional protections for consumers. Hence, no other measure or action of amicable collection may be taken when the consumer within 14 calendar days:

• Requested an installment plan;
• Initiated an application for debt mediation with an amicable debt mediator or when he applies for a procedure of collective debt settlement, as long as no decision has been made on his application or 45 calendar days have passed since the application.
• Disputes its debt in a reasoned manner in accordance with the procedure provided for this purpose in the Consumer Debts Act.

Sanctions

The Consumer Debts Act provides sanctions in the event of non-compliance with the provisions of the new Book XIX of the Belgian Economic Code.

Most notably, the Consumer Debts Act expressly states that the consumer is exempted from the payment of the compensation clause in case of non-compliance by the company with the obligations regarding the first reminder, the capping of the compensation clauses and the fact that amicable collection of the debts from a person who is not the debtor is prohibited.

Moreover, the clauses that deviate from the aforementioned provisions are null and void and are deemed unwritten.

Entry into force

The Consumer Debts Act takes effect from Sept. 1, 2023, for new agreements.

It shall apply from Dec. 1, 2023, to any amicable claim arising from an agreement concluded before the entry into force of the law, when the amicable claim is executed after the entry into force of the law.