Debt counseling in The Netherlands Albert Luten November 26, 2010

National Institute for Budgetinformation Consumers information –Website –Leaflets, software –Call center –Press Professionals –Courses –Software

Debt regulation Amicable debt settlement –Social banks –Social services –Others,.. Legal debt settlement –Court –Since 1999 > After three years a fresh start

Repayment capacity Early nineties: 3 methods –Detailed budget method –Global budget method –‘Legal method’ > Unification was needed!

1999 Legal phase All courts used the legal method But many differences in interpretation Sometimes large differences in outcomes

Recofa Commission Develop one method / interpretation of the legal method Simply: it must work for 95% of the cases Develop software Maintain the method

Law art. 475 d Not seizable income: –90% of the social minimum –Correction for rent –Correction for health insurance premium –Plus a ‘nominal amount’

Social minimum In The Netherlands we have one social minimum: –1300 euro per month for a couple. –90% for lone parents –70% for singles Else: you have to make one: –Focusgroups (FBU, Un. of York) –Reference budgets –Other method: budget method

Rent correction Rent700 Rent in social minimum 220 – Rent subsidy350 – Correction for rent:130 - with a maximum - service costs: partly

Housing costs High rent: move or an extra (temporary) correction Own house: sell it or same correction as rented house Boarding money, children with an income

Correction health insurance Total premium200 In social minimum 45 - Healthsubsidy Correction 35 Own risk: payed from the estate when used

Legal part Total net income % social minimum 1170 Corr. rent 130 Corr. health ins. 35 Total corrections> 1335 Repayment capacity 165

Nominal part The judge is free to decide upon this The commission made rules for this part, so everybody is treated ‘equal’ Specific points: individual solution

Corrections nominal part All costs that cannot be paid by the social minimum plus legal corrections: - Corrections for subsidies - Corrections for income earning costs - Other costs

Corrections for subsidies Households with a minimum income have higher subsidies: correction for households in debt advice that are also on a minimum level, but with a higher taxable income Child allowance: say 120 at minimum, 80 with income 1500 Correction: 40

Corrections income earning costs Standard 5% for people with work (stimulus) Travel costs Costs of childcare Car: depends Study costs: depends

Other costs Costs of a handicap To visit a hospital... Not: Donations to f.e. church Transfers abroad

Nominal part 5% extra for workers Extra rent costs Car Childcare Child allowance Study costs Alimony Handicap Other

Income Only incomes that can be attached: wages, social benefits, tips, pensions, et cetera Not: child allowance, subsidies, orphan benefit

E N D European Consumer Debt Network: ECDN gmbh.at/ecdn/index.phphttp:// gmbh.at/ecdn/index.php