The Dutch government is proposing a significant overhaul of its debt collection system to prevent individuals from falling into unmanageable debt spirals. State Secretary Teun Struycken presented a plan to Parliament aimed at fostering a “more social” approach by debt collectors and enabling debtors to request collective repayment plans without incurring extra charges.

The core objective is to safeguard individuals with initial debts from spiraling into hopeless financial situations. The proposal seeks to address the systemic issues that contribute to the rapid escalation of debt.

The urgency of this reform is illustrated by the story of Chantal, a single mother from Rotterdam. Her financial difficulties started with an unexpected energy bill, which led to further unpaid bills and rapidly mounting collection costs, causing her debt to balloon to approximately 30,000 euros.

Under the proposed system, creditors would be obligated to participate in a collective repayment plan. This plan would be managed by an independent party responsible for assessing the debtor’s repayment capabilities and distributing funds proportionally among creditors. Crucially, no additional costs would be incurred by the debtor.

Debt collectors would also be mandated to prioritize guiding debtors toward debt assistance services before initiating legal proceedings. This proactive approach aims to provide individuals with the necessary support and resources to manage their debt effectively.

Nadja Jungmann, a debt lecturer at the Hogeschool Utrecht, views these plans as a crucial turning point. The broader societal impact of problematic debt is substantial, costing the Netherlands an estimated 8.5 billion euros annually.

Chris Bakhuis, chairman of the Royal Professional Organization of Court Bailiffs, supports the initiative to prevent rapid debt escalation. He notes that bailiffs frequently encounter distressing situations during home visits and prefer to avoid court intervention whenever possible.