Solve your debts with the debt flowchart

Can you no longer pay your debts now or in the near future? You have several options to possibly get rid of your short-term and long-term debt. The 'Debt Flowchart' offers insight into the available options. For example, an amicable settlement, the Natural Persons Debt Rescheduling Act (Wsnp), the homologation private agreement in bankruptcy Act (WHOA), bankruptcy, and suspension of payment. Which scheme suits your situation and what does this mean for you? Go through the Debt Flowchart and see what options there are to tackle your money problems.

This flowchart (see image) offers you an overview of the different routes. It is a simplification of reality. Below the image we explain what the concepts and situations in the flowchart mean.

What are problematic debts?

You have problematic debts if you are no longer able to meet your financial obligations in the short and long term. This situation is also known as insolvency.

In a problematic financial situation, you can get help from, for example, a bookkeeper, accountant, or lawyer. Or contact the KVK Advice Team for information, brief advice, or referral. The Entrepreneurs Sounding Board can also advise and coach you.

Has someone else filed for your bankruptcy?

Has someone filed for your bankruptcy? You can defend against the bankruptcy petition. You have to prove with a statement of defence that you have not stopped paying. In the notice of hearing, you find the terms for delivering the statement of defence and the appendices. Were you not present at the hearing and the judge has declared you bankrupt? Then take action quickly. You have 2 weeks to object after the day of the court decision. Were you present at the verdict and you did not agree with the judge? Then you have 8 days to appeal.

What legal structure do you have?

In addition to your financial situation, the legal structure of your company also influences what possibilities are open to you for debt settlement. We distinguish 2 groups of legal forms:

  1. Natural persons: Sole proprietorship, general partnership, limited partnership, partnership.
  2. Legal persons: Private company, public limited company, association, cooperative and mutual insurance company, foundation.

The options listed below indicate if a route is suitable for natural persons and/or legal persons.

Amicable settlement

In an amicable settlement, you try to reach agreements with your creditors about repayment. This is done outside the court. You can then continue with your business.

The amicable settlement is a voluntary arrangement. You can set up this amicable settlement yourself by making agreements with your creditor or through a debt counsellor. Based on the Municipal Debt Assistance Act (Wgs, in Dutch), municipalities are tasked with helping entrepreneurs that are a 'natural person' with their problematic debt situation. You pay back as much debt as possible within 36 months. If any debt remains after 36 months, it can be waived by the creditors.

  • For whom: natural and legal entities.
  • Costs: There are consulting fees and legal fees for guiding a WHOA process. For a sole proprietorship, the total cost is estimated at around €8,000. For the other legal forms, it is over €10,000. There may be additional accountant fees and costs for valuation/appraisal of your assets.
  • What if the amicable settlement fails or is not possible? Then you can still apply for Wsnp or bankruptcy yourself.

Natural Persons Debt Rescheduling Act

The Natural Persons Debt Restructuring Act (Wsnp) is a statutory debt restructuring process to resolve your debts. The Wsnp is only for natural persons. You ask the court in your place of residence for admission to the Wsnp. Conditions apply. For example, the municipality can help you with a statement showing that an amicable settlement has not been successful. Such a statement is a condition for admission to the Wsnp.

If the judge admits you to the Wsnp, the court will draw up a plan to restructure your debts. This plan states the amount that you must repay. Usually, you must repay in 3 to 5 years. You will then be assigned an administrator. Often, the administrator will close down the (your) business. If you comply with all the obligations of the Wsnp, you will receive a clean slate from the court at the end of the agreed period. This means that you no longer have to pay any remaining debts.

  • For whom: natural persons. Even if a creditor petitions for your bankruptcy, you can request the court to convert it to Wsnp.
  • Costs: the costs for an administrator are settled in your debt repayment plan. The final amount depends on the complexity of the case.
  • What if Wsnp fails? If you do not comply with the obligations of the Wsnp, the court can declare your bankruptcy.

Court Approval of a Private Composition (Prevention of Insolvency) Act (WHOA)

Since 1 January 2021, with the introduction of the Court Approval of a Private Composition (Prevention of Insolvency) Act (WHOA), companies with large debts will no longer have to be declared bankrupt. The WHOA helps companies that are in danger of going bankrupt due to high debts. If bankruptcy is imminent, you can start this process yourself. The costs of the process can be a problem for small(er), self-employed businesses. Creditors, shareholders, employee representatives, or the works council can also start the process. A WHOA process can take 5 to 6 weeks, but can also take several months. You can read all about the ins and outs of such a process here (in Dutch). There are 2 types of WHOA agreements: a reorganisation agreement and a liquidation agreement.

  • For whom: natural and legal persons.
  • Costs: consultancy costs and legal costs for supervising a WHOA process. For a sole proprietorship, the total costs are estimated at approximately €8,000. For the other legal structures, they will amount to more than €10,000. Additional audit fees and costs for the appraisal of your assets may be added to this.
  • What if WHOA fails? Then bankruptcy follows.

If you use the WHOA, you can also apply for a TOA credit of up to €100,000. This is a loan for the restart, expansion, or adjustment of your company.

Bankruptcy

Bankruptcy is usually the last option. You can file for bankruptcy yourself at the court, but a creditor can also do this.

The judge will determine if you have stopped paying your debts as an entrepreneur. During a hearing, the judge determines whether the bankruptcy petition is justified. You can defend yourself during the hearing. Once the bankruptcy has been declared by the court, you can no longer claim any form of debt restructuring.

In bankruptcy proceedings, the judge appoints a curator who takes over all decision-making and your financial affairs. Bankruptcy proceedings can take years. The curator makes a proposal to the creditors. Then there are 2 options:

  1. The creditors agree to the curator's proposal. This is called a bankruptcy agreement.
  2. The creditors or the court do not agree with the curator's proposal. The court then declares insolvency. This means that you cannot pay. The curator sells your assets to pay the creditors. At the end of the bankruptcy, creditors can demand that you pay any unpaid part of their claim.

If you have too few assets to pay the costs of a bankruptcy curator and the administration of the bankruptcy, the bankruptcy ends. However, your debts remain. In the future, creditors can still apply for claiming debts.

  • For whom: Natural and legal persons.
  • Costs: There are consultancy costs and legal costs for supervising a WHOA process. For a sole proprietorship, the total costs are estimated at approximately €8,000. For other legal forms, this is more than €10,000. Additional audit fees and costs for valuation/appraisal of your assets may be added to this.
  • What if WHOA fails? Then bankruptcy follows.

If you use the WHOA, you can also apply for a TOA credit of up to €100,000. This is a loan for the restart, expansion, or adjustment of your company.

Bankruptcy

Bankruptcy is often the last option. You can file for bankruptcy yourself at the court, but someone who still receives money from you can also do this.

The judge will determine ifyou have stopped paying your debts as an entrepreneur. The judge determines during a hearing whether the bankruptcy petition is justified. You can defend yourself during the hearing, which is also called a 'defence'. Once the bankruptcy has been pronounced by the court, you can no longer claim debt restructuring. 

In bankruptcy proceedings, the judge appoints a curator who takes over all decisions and your financial affairs. Bankruptcy proceedings can take years. The curator makes a payment proposal to the creditors. There are then 2 possibilities:

  1. The creditors agree to the bankruptcy trustee's proposal. This is called a bankruptcy agreement. The creditors will then be paid part of their claim. After the bankruptcy, the creditors cannot enforce payment of the unpaid portion of their claim.
  2. The creditors of the court do not agree with the curator's proposal. The trustee sells your assets to pay the creditors. After the bankruptcy, creditors can demand that you pay the unpaid portion of their claim.

If you have too few assets to pay the costs of a bankruptcy curator and the administration of the bankruptcy, the bankruptcy ends 'for lack of income'. Your debts still exist. Creditors can still make a claim in the future.

  • For whom: Natural persons and legal entities
  • Costs: You pay the curator with the money that is still available or comes from your company. For example, by selling your stock and estate. Or by collecting outstanding bills, or your debtors. The court determines the curator's salary. The basic hourly rate (in Dutch) of a curator has been set at €229.60 on 1 January 2022.

Suspension of payment

Suspension of payment is not included in this flowchart, because the success rate of this scheme is highly limited. And usually, bankruptcy follows after this process fails. The WHOA is a better alternative.

You can ask the court for a suspension of payment. If the court grants this suspension, your creditors will not be able to claim their debts for a maximum period of 1.5 years. A judge appoints you an administrator. An administrator manages your property and arranges all financial matters.

Debt assistance

Do you have problematic debts or are there signs that your business may soon be in trouble? Then contact KVK, your municipality or a debt assistance agency to talk about your situation and learn more about what options you have to solve your problems. A debt counsellor can help you further.

Getting started with debt

Do you have problematic debts? Talk about it and act as soon as possible. View the step-by-step plan.

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