1.1 Amicable phase
Accounts Receivable Netherlands is dedicated to providing a professional and amicable collection experience to all of our clients and the debtors we pursue. During the amicable phase of collection, we contact debtors via telephone and via written correspondence to their primary residence or business address. If necessary, Accounts Receivable Netherlands will negotiate payment plans or settlements in the interest of recovering at least some portion of the outstanding balance. This will only be done after consulting with our client.
During a dispute, Accounts Receivable Netherlands will examine all contractual documents to proceed with the best solution for both parties. Our in-house legal team will always be consulted during this process.
1.1.2 Local agent
Accounts Receivable Netherlands does not provide in-person agent visits to debtors, but does provide clients with a large network of highly skilled attorneys. Those attorneys can conduct some visits to debtors during the amicable and legal phases of the collection process. In addition, all debtors are allowed and encouraged to visit our offices at any time to discuss their financial situation or payment arrangements with one of our professional collection agents.
Accounts Receivable Netherlands charges a flat interest rate of 12 percent per annum to debtors. This amount is a bit higher than permitted by European Union regulations, but is within the limitations set by local law in The Netherlands. Interest is charged during the amicable collection phase, as well as during any legal procedures initiated by the creditor or the debtor.
Interest is considered a justified demand in court, especially for accounts that are severely past due. Courts will often demand 12 percent per annum in cases where no other interest rate has been agreed upon.
1.1.4 Debt collection costs
Collection costs can be charged to debtors in The Netherlands. This rate is generally set at 15 percent of the outstanding balance of the debt, though it may be higher or lower based on contractual agreements between the parties. It is the goal of Accounts Receivable Netherlands to always collect the maximum amount of interest permitted by local laws and contractual agreements.
It is also possible to recover even more collection costs during legal proceedings against the debtor, though this will depend on the judge’s ruling during the lawsuit. This can be rather complicated, but creditors frequently pursue it when the debtor owes a very large balance.
For commercial debts, the statute of limitations lasts up to five years, lasting from the date of the first past due invoice. This period can be extended up to an additional five years by announcing such an extension to the debtor and providing proof to a bailiff that such an extension has announced in written form. Transport claims are subject to a far shorter limitation period, as outlined in the CMR Treaty.
1.1.5 Accepted and most common payment methods
Most debts are satisfied via a bank transfer from the debtor. For international debts, cheques are frequently used.
1.1.6 Types of companies
Two groups of companies exist in the Netherlands, with the first being known as “persons” companies. These companies include those with a sole proprietary, or companies with several partners involved in a limited partnership. In these partnerships, each partner is liable for the company’s debts; this liability covers the company’s assets and the partners’ private assets.
The second group of companies is known as “limited” companies. In these organizations, the company’s shareholders, partners, or directors, are liable for the company’s debts only up to the amount of capital held by the organization. Private assets cannot be used to pay for any debts held by the company unless there is documented proof of mismanagement.
1.1.7 Sources of information
Accounts Receivable Netherlands maintains a close partnership with several information agencies in the country, allowing us access to a network of bailiffs who can investigate and evaluate the solvency of debtor companies. This is done by using public financial information, information about booked goods, estates, and assets, and through public registers that are accessible via the Internet.
The investigation of a debtor’s financial information is a key way to determine the best course of action when recovering a debt, and whether legal action may or may not be worth the time and cost associated with it.
1.2 Retention of Title
Retention of Title is heavily tilted toward creditors in the Netherlands, so long as any ROT stipulations are placed in the original contractual agreement between the creditor and the debtor. A court must accept these stipulations in order to be enforced, and a debtor has the right to appeal any such decision. Creditors must file for Retention of Title within six weeks of the invoice being past due.
There are two kinds of Retention of Title:
Basic Retention of Title states that any goods supplied remain the property of the creditor until an invoice has been paid in full. The creditor is able to get any goods returned as soon as payment has become past due.
In cases known as Increased Retention of Title, the goods delivered to a debtor in an open account agreement remain the legal property of the creditor until the open account is completely paid off and satisfied. This is the most common form of Retention of Title.
If a debtor does not willingly release goods under Retention of Title, it will be necessary to pursue legal action in order to get them back. A bailiff will be assigned to the case and will be responsible for their return.
1.3 Safeguarding measures
It is possible to seize assets from a debtor before pursuing legal action in the Netherlands. The seizure is essentially done in order to secure the debt, and the debtor must pursue legal action against the creditor within 14 days of the seizure taking place. If not, the seizure will be considered expired and the goods will be returned. Seizures may also expire if the debtor is declared bankrupt.
If the creditor receives a favorable verdict or judgment during the legal action, the seized goods will be liquidated and used as payment toward the amount owed to the creditor. Debtors are able to offer voluntary securitization, like mortgages or assets, without being subject to a seizure, so long as they’re cooperative during the safeguarding process.
1.4 Legal Procedures
The Dutch Civil Code and the Civil Process Code govern lawsuits between companies and individuals. A lawsuit can be initiated against a debtor without a formal written warning, though this is not common in the Netherlands. Courts will require evidence to be delivered by the creditor during pre-court procedures as a way to either obtain payment or reach a settlement without pursuing legal action. If this procedure is followed, a written notification to the debtor is typically sent.
1.4.2 Legal System
The County Court system handles debts up to 25,000.00 EUR. Larger cases are handled by the District Court, where an obligatory representative is prescribed to the case. Our own LDC network manages these procedures.
1.4.3 Required documents
To begin the legal dunning procedure, we’ll need the following documents:
– Copies of the contract
– Copies of invoices
– Copies of account statements
If legal dunning moves into a more traditional lawsuit procedure, further documentation will be required. Clients should then provide the following:
– Copies of the contract
– Copies of order confirmations and delivery notices
– Copies of correspondence
– Names of witnesses and experts, if relevant
Every document submitted must be part of a writ of summons. Additionally, names and full addresses of witnesses must be submitted to us and then delivered to the court before those witnesses can be called in the case.
1.4.4 Legal dunning procedure
Legal dunning is not a known term in the Netherlands, though a similar process is often used. This process involves using a very specific legal procedure in order to pressure the debtor into making full payment immediately, or within a brief payment plan. Typically, this is done by filing a bankruptcy petition and utilizing that as leverage to force payment before a traditional lawsuit is pursued. This is generally very efficient, and can take less than one month in most cases.
Legal proceedings always arise as the result of a dispute filed on behalf of either party. A Power of Attorney document is not required, as written approval from the client will suffice.
Before initiating a lawsuit, Accounts Receivable Netherlands assesses the debtor’s financial situation and decides whether any lawsuit will be able to enforce payment and execute any judgment or verdict. If those things are possible, the process proceeds and the necessary documents are collected from the client. If additional evidence is needed, the legal collector utilized by our offices will request them from the client.
Once the case can proceed, a summons is issued to the debtor via the legal collector or the appointed LDC. A bailiff serves the summons. The debtor is permitted to defend himself or herself in County Court. Those cases that go before the District Court will require the debtor to have representation.
The debtor will need to file a writ of defense. After it has been filed, a hearing will be called and both parties must be present. This hearing is primarily conducted to gather further evidence in the case, as well as to attempt an agreement between the parties that will result in payment. If no agreement can be reached, legal action will continue according to the Civil Code.
Appeals are permitted for cases involving a debt larger than 1,750.00 EUR, prompting the case to go to the court of second instance. A second appeal will take the case to the Supreme Court, where the focus will be on the enforcement of statutes rather than the validity of the debt.
The losing party is liable for all court costs, as well as a fee based on a percentage of the outstanding balance. A complex, tariff-based structure is used to determine other costs throughout the legal process, including any costs incurred by pursuing more complex legal procedures or appeals through the judicial system’s higher courts. Further fee variations arise if a creditor requires the services of an LDC rather than a legal collector. Costs will be estimated on a case-by-case basis.
1.4.8 Expected timeframe
Lawsuits last anywhere from eight months to 18 months, based on the complexity of the case and the availability of the judges and representatives involved. Bankruptcy petitions can take between four and six weeks to be filed and processed.
1.4.9 Interests and costs in the legal phase
All interest charged during amicable and legal collection procedures can be charged to the debtor. The losing party always bears legal costs, however. If a settlement is reached, the costs will be paid by each side in proportion to their financial win or loss in that settlement.
1.5.1 Enforcement in debt
Only bailiffs are permitted to enforce a judgment against a debtor. Salaries can be seized or garnished, and debtor bank accounts can be blocked. Claims against tax offices can also be blocked. The debtor’s life insurance, business shares, or other claims, can also be seized or garnished.
To seize financial accounts and assets, very specific information is required. Without that information, enforcement can be very difficult or even impossible.
1.5.2 Enforcement in movable goods
A bailiff will visit a debtor and seize any movable goods on the premises that are not directly related to daily life or business activities. Any seized goods will then be liquidated at auction and the resulting proceeds will reduce the amount of the debt owed to the creditor. This method of enforcement is typically used to put pressure on a debtor, rather than to actually seize all of the debtor’s movable goods.
1.5.3 Enforcement in immovable goods
Debtors who own immovable goods, like real estate, can have that real estate seized and offered up for public sale. The proceeds from that sale will reduce or eliminate the amount of debt owed. Proper notification is required beforehand, and debtors who cooperate often avoid such public sales. It should be noted that this process is exceedingly long and expensive. Most creditors prefer not to pursue enforcement in immovable goods.
1.5.4 Expected timeframe
Enforcement is very time consuming, and can take anywhere from three months to three years.
1.6 Insolvency Proceedings
Insolvency proceedings are split into bankruptcy, suspension of payment, and composition. In bankruptcy, companies or private individuals can be declared bankrupt at their own request or at the request of a creditor. Proper evidence must be provided to the court, however. Bankruptcy is considered to be a collective enforcement, meaning that all creditors with a claim against the debtor can file a claim with the court for a share of the proceeds resulting from liquidation.
During suspension of payment, a debtor is released from their payment arrangements and is able to make a plan that will restructure the company. Suspension can last from two to six months, and the court will demand a restructuring plan at the end of the suspension period. If approved, it immediately becomes enforceable and the company must begin meeting their obligations to creditors as set forth in the plan.
Composition in the Netherlands allows for partial payment and settlement of debts, so long as a good faith effort is made on behalf of the debtor to restructure, reduce debts, and make payments to each creditor. This procedure is only applicable to naturalized citizens and local companies formed in the Netherlands.
An insolvency professional is appointed in all three cases. During composition and suspension of payment, that appointed professional is charged with helping the debtor create a new plan for repayment of their obligations. This will be done by analyzing the debtor’s obligations, assets, and capital, and drafting a plan that satisfies all three areas of the business. The plan will then be submitted by the appointed trustee to the creditors and the courts. Creditors must vote majority approval of any such plan.
During bankruptcy, an appointed liquidator is assigned to the proceeding. This appointee liquidates assets and manages the acceptance or rejection of claims filed by creditors. The appointed liquidator will pay out a dividend of between 4 and 9 percent to those claims that have been accepted. Rejected claims can be resubmitted one time, and must be reviewed by a judge. The appointed liquidator will also oversee the return of goods under local Retention of Title regulations.
1.6.3 Required documents
To lodge a claim during an insolvency proceeding, the following documents must be provided:
– Copies of invoices
– Copies of contracts
– Copies of conditions of sale, if relevant
– Original Power of Attorney, signed
1.6.4 Expected timeframe and outcome
There is no deadline for filing a claim, but creditors should not waste time when preparing and submitting such a claim to the appointed liquidator or trustee. Bankruptcy itself typically lasts between one and five years, while suspension of payment lasts between two months and two years. Composition generally takes about three years.
1.6.5 Limited companies
Limited companies typically file for bankruptcy due to an inability to pay. Creditors will file bankruptcy against limited companies as a way to efficiently force payment.
1.6.6 Unlimited companies/individuals
Bankruptcy is not typically requested of the partners or individual debtors within a company. Filing a petition in this case is merely used as a collection tool.
1.6.7 Pool of creditors
No laws exist that allow for a pool of creditors to be formed. Creditors, however, often make a pool on their own. This is done to advocate for payment of the debt and the issuance fair dividend. The pool will consult with the appointed trustee or liquidator throughout the process.
Any disputed legal acts within one year of insolvency can be indemnified by the appointed trustee. This includes payments, which will be refunded by the appointed trustee or liquidator. The balance owed to the creditor will be changed to reflect a new balance based on a refund of the debtor’s payment.
1.7 Arbitration and Mediation
Arbitration and mediation are both permitted in the Netherlands. Both options are far quicker, more efficient, and less expensive, than pursuing a traditional lawsuit procedure. An impartial, third party arbitrator conducts arbitration. Any decision reached by the arbitrator is immediately enforceable by both parties.
During mediation, an impartial mediator will preside over the drafting of an agreement between the creditor and the debtor. Any agreement reached is considered a contract, rather than a judgment, and can be enforced in court at a later time if either party fails to adhere to its terms.To get started today, call us at321-710-3530 to speak with an associate