If you are no longer able to pay your debts and you are a sole trader, partner in a partnership (maatschap or vennootschap onder firma) or a freelancer/self-employed professional, then you are personally liable for your business’s debts. It is possible that you are no longer capable of paying your business’s debts. In the Netherlands it is possible to be debt-free after a period of three years of saving money for your creditors.

There are two ways to apply for debt restructuring:

• You can appeal to the debt restructuring facility of your municipality
• You can appeal to court for debt restructuring, with the help of a debt restructuring counsellor of your municipality or with a lawyer.

The first option is called in Dutch ‘minnelijk traject’. Your municipality appoints a debt restructuring counsellor who will try to make an so-called ‘voluntary payment arrangement’ with all your creditors to pay of a percentage of your debts.  If all your creditors agree to a voluntary payment arrangement and you have done your best to pay back as much as possible within three years, the rest of the debt will be let off. If one, or a few creditors do not agree with the voluntary payment arrangement and their refusal to agree is not reasonable, you can ask the court a compulsory settlement (so-called ‘dwangakkoord’).

The second option is the court appeal for debt restructuring through the Natural Persons Debt Restructuring Act (‘Wsnp’). The Wsnp is a legal debt restructuring arrangement, guided by the court and an appointed Wsnp-administrator, that makes it possible for you to be debt-free within three years. When you appeal to the Wnsp, you will almost certainly have to end your business. If you have an owner-occupied home, you have to sell this home.

The conditions of getting in the Wsnp are:

• You have a statement from your municipality counsellor or your Wsnp lawyer that voluntary debt restructuring failed
• You have not made use of Wsnp in the past ten years
• You have not cause debts on purpose in the past five years, through fines, fraud or reckless spending and you have a decent administration
• None of your debts was incurred through crime
• If you do not have adequate knowledge of the Dutch language, you have help in translating all correspondence

If the court rejects your application, you can appeal to the Court of Appeal within 8 days! For this you will require a lawyer.

During the Wsnp – which will take 3 to 5 years - you have a lot of strict obligations. You have to work a full-time job or actively search for a full-time job. The appointed Wsnp-administrator will calculate which amount of money you can keep every month for your rent, insurances and groceries (so-called ‘VTLB’). Everything above this amount will be saved for your creditors. You have to inform your Wsnp-administrator every month about everything. Finally, you are of course not allowed to make new debts.

If you have met all the Wsnp obligations the judge will grant you a clean slate (so-called ‘schone lei’) at the end of the 3 to 5 years. You will not have to repay the remaining debt.