Dealing with debt yourself: is that a good option?

Outstanding invoices, reminders, and sleepless nights. Problematic debts cause stress. This is why business owners prefer to pay off debts as soon as possible, for instance by using savings or borrowing money. Gé Sletterink, business advisor at KVK, sounds a note of caution: “Think carefully about such a choice. Debts can rise further because of it.” He also explains that you can make your own payment arrangements with your creditors, known as a private or amicable agreement.

Most business owners try to pay off debts themselves. This ranges from taking a part-time job, reducing staff costs and economising, to asking for payment deferrals and making temporary payment arrangements. Sletterink says: “In some cases, it is fine to agree to pay later or pay off debts with a loan. As long as it is a one-off and your business quickly returns to sufficient turnover. When this is not the case, you keep filling gaps and the situation worsens. Then you will not have any money at all with which to pay off debts.” 

Resolving debts without debt restructuring 

Sletterink recommends creating an overview of all of your finances to see whether you can pay off your debts without debt assistance. “When in debt, take immediate action, but take time to make right choices. Make a liquidity budget. This will give you a realistic picture of your financial situation in the coming months. You can then better assess whether it is wise to borrow money to pay off debts or use savings, for example. You should avoid getting into trouble privately because, for example, you use all your 'money for later'. Enlist help if you find it difficult to prepare a liquidity estimate.” 

Borrowing money for debt 

Repaying debts with a loan, is it wise? “If it turns out that you are short of money for a short period of time, taking out a loan or applying for a credit such as a bridging loan or Bbz credit is an option. Experts can help you make a good assessment. When the problem is bigger, but your business is still viable, a private debt settlement might be a solution.” 

Private agreement 

In a private agreement, you yourself make payment arrangements with the organisation(s) with whom you have debts, your creditors. You try to pay off debts with the money you have left. For example, creditors, such as suppliers with whom you have outstanding bills, will agree to payment of 50% of the outstanding amount. This approach is also called the amicable route. Sletterink explains why creditors might agree: “If your company goes bankrupt, creditors usually get nothing or a small percentage of the outstanding amount. In this case, it is a matter of 'better something than nothing at all'. Especially if you run into financial difficulties due to unforeseen circumstances, there is a chance that creditors will meet you halfway. It is important to have a good plan and story before you go to your creditors. The municipality where you live can help you with this free of charge. You can also contact one of the organisations yourself to help you with this, sometimes for free. I always advise business owners to hire an expert who supervises this kind of process more often.” One such expert is Hajo Valk (in Dutch), a business owner and a volunteer at Over Rood who helps business owners with financial problems. 

How to sort things out yourself 

In the KVK webinar, business owners Ingmar Bruinsma and Boris Wielinga tell how they solved their debts themselves. 

KVK Webinar Hoe kan ik mijn schulden zelf aanpakken?

If you cannot sort things out yourself 

Sletterink explains what the next steps might if creditors do not agree to a payment proposal, or if you do not manage to settle your debts yourself by some other means. “In that case, you can look at whether a municipal or legal route to resolving your debts is a solution. It is important to always work honestly and transparently when trying to come to a private agreement yourself. In fact, if you cannot come to an agreement, an official debt assistance process requires you to show what you have done yourself to pay off your debts. The most important thing is to avoid additional debt. So get help as soon as you can if you are in debt and cannot manage on your own. That first step can be tricky, but is crucial if you want to head off more misery.” 


Read how business owner Jurjen Hesseling successfully went through the legal debt assistance process, the WHOA (Court Approval of a Private Composition (Prevention of Insolvency) Act) and initially tried to arrange a private settlement with his creditors himself.