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Consumer debt under the microscope: tightening recovery rules

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From September 1, 2023, new stricter rules will apply when you, as a company, wish to recover (overdue) invoices from your customers-consumers. The new law will apply to new agreements originated after September 1, 2023 as well as to past due and unpaid debts concluded before that date if the arrears arose after its enactment.  


1 First reminder is 'at cost of business'

From now on, the first reminder you send out as a company must be 'gratuitous' are. That is, there are no damages or interest in delay may be charged against the principal amount due. Thus, only the principal amount due may be recovered. Also, no additional fees may be charged for sending the first reminder.

In addition, the notice of default must include a Grant additional payment period of 14 days. The 14-day period begins to run: (i) on the third business day after the reminder is sent to the consumer if the formal notice is sent physically or (ii) on the same day if it is sent by electronic means (e.g., e-mail).

The cost of additional reminders should not exceed EUR 7.50.


2 Mandatory entries in the first notice of default

Moreover, the first notice of default should contain at least the following elements, with the intention of awakening the consumer to catch up:

  • The principal amount due as well as the amount of any damages clause that will be claimed in the event of non-payment after fourteen calendar days;
  • The name and corporate number of the corporate creditor;
  • A description of the origin of the debt (e.g., service rendered or good sold) as well as the maturity date of the debt;
  • Granting an additional payment period of 14 days before any cost, interest or compensation is charged.


3 Limitation of damages clause and interest

Any applicable negligence interest be capped in accordance with the law on late payment in commercial transactions. To date, the rate is 12%.

Also, any damage clauses are limited, according to a tiered system depending on the size of the debt e.g. for debts less than EUR 150 the maximum damages clause is EUR 20. Damages clauses are capped at 2,000 EUR in any case.


4 Sanction(s)

Corporate creditors who flout these rules can face draconian consequences. For example, a judge may rule that a payment obtained in violation of the new law is considered a valid payment AND must still be refunded to the consumer.

In addition, criminal fines are imposed that range from 26 to 10,000 EUR or up to 4% of total annual turnover of the last completed fiscal year.

So it's crucial to make sure your billing terms are drafted correctly.


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