Redemption right: why pay bailiff for instalments?

What’s in a name isredemption right? You might think this is about the right to pay off debts in pieces. And a right is usually perceived as something positive. Indeed, it has to do with shortening debts. But the ‘right’, or in other words the benefit, lies with the bailiff. Redemption right is the right of bailiffs to charge costs on any repayment to them under a repayment plan.

Current legal framework

This redemption right, like the collection right, islegallycontained inthe Royal Decree of 30 November 1976 establishing the fee for acts of bailiffs in civil and commercial matters and the fee for certain allowances.

The collection rightis the cost paid by the debtor when he pays the total amount of his debt to the bailiff.The redemption rightis the cost received by the bailiff for each partial payment made by the debtor.

The report Poverty and Justice (2022)by FPS Justice and PPS Social Integration articulatesthe percentagesas follows: “Article 8 of the aforementioned Royal Decree of 30 September 1976 The collection right is set at 1% of the amount of the debt in principal and interest with a maximum of EUR 12.67 and a maximum of EUR 125.67, plus VAT at 21%. The redemption right varies according to the amount of the deposit. For example, for an amount between EUR 0 and EUR 24.99, that duty is EUR 2.61 plus 21% VAT (2021 rate).”[1]

Criticism

The law governing all these charges is more than 40 years old. Several bodiescriticise the justification and relevance of these costscharged by bailiffs. They areno longer in line with the reality of the effective costs incurredby bailiffs. Bailiffs now make greater use of automated work processes, which significantly reduces the workload and thus the cost of work.

In addition, the above-mentioned report also rightly points out that “the redemption right, which is calculated based on the amount of deposits made, extends the repayment period, imposes significant costs anddisadvantages debtors who make small deposits“.[2]

 Proposed legislation

The bill of 16 September 2019 amending the Royal Decree of 30 November 1976 setting the rate for deeds of bailiffs in civil and commercial matters and the rate of some allowances relating to collection rights and redemption rightsproposes to:

Reduce the collection rights by half to 0.5% instead of 1%, being neither lower than EUR 6 nor higher than EUR 60;
Receive no redemption rights for instalments less than EUR 50.[3]

Amicable follow-up of payment plans via a collection agency

We do not charge creditors or debtors any collection or administration feeswhen following up files and payment plans. This is regulated both deontologically for B2B and B2C debts, and legally for B2C debts via the “Law on the amicable recovery of consumer debts of 20 DECEMBER 2002”.

Some debtors do not seem to understand the difference betweena costly follow-up of payment plans via the bailiffanda free amicable follow-up via us as a collection agency. When we negotiate payment plans, we take into account the debtor’s effective financial situation and the creditor’s realistic expectations. If necessary, we try to obtaina payment plan that is respectable to both debtor and creditor.

So not every proposal will be accepted just like that. Debtors often respond that bailiffs accept the smallest payment plans without any justification. However, they often do not realise thata bailiff has everything to gain from keeping a payment plan running as long as possible. The longer the repayment plan runs, the more a debtor will pay (extra) at the end.

For more info on our help in collecting unpaid bills or our operation, do not hesitate to contact us at s.dereze@tcm.be or 0498292914.

[1]Armoede en justitie in België (2022), p. 299 https://justitie.belgium.be/sites/default/files/Boek%20Armoede%20en%20Justitie_Web_DEF_NL.pdf

[2]Armoede en justitie in België (2022), p. 299 https://justitie.belgium.be/sites/default/files/Boek%20Armoede%20en%20Justitie_Web_DEF_NL.pdf

[3]https://www.stradalex.com/nl/sl_news/document/sl_news_article20200129-1-nl?access_token=db5d68b112c6daf33b4ff4b373fdd3f13787f25e

20/01/2023