Steep drop in debt restructurings in 2008

The number of court orders for debt restructuring in the Netherlands declined by nearly 40 percent in 2008 relative to 2007. The steep drop occurred across all provinces and is mainly caused by an amendment to the law.

Annual number of court orders for debt repayment

First decline since December 1998

Last year, 9.2 thousand debt restructuring agreements were pronounced, i.e. 5.7 thousand down on 2007. The number declined across the board, among persons with one-man businesses (-32 percent) and persons without one-man businesses (-39 percent).

This is the first year since the Act on Debt Restructuring Natural Persons (WSNP) was introduced in December 1998 that the number of court orders for debt restructuring declined relative to the preceding year. The obvious explanation is that more strict criteria for access to legal debt restructuring schemes apply since 1 January 2008.

Increase recorded only in Limburg and Friesland

On the level of provinces, the number of debt restructurings only increased in the provinces of Friesland (+5 percent) and Limburg (+7 percent). The municipalities of Heerlen and Kerkrade made a considerable contribution to the increase in Limburg.

With 96 per 100 thousand residents, the number of court orders for debt restructuring was also proportionally high in Limburg. The ratio for the whole country was op 56 per 100 thousand residents.

Just as in the preceding years, the province of Flevoland tops the list with a stunning ratio of 182 per 100 thousand residents. This is mainly due to the relatively high number of debt restructurings in the municipality of Lelystad (322 per 100 thousand residents), nearly six times as high as the nationwide average.

Court orders for debt repayment 100 thousand inhabitants

Fewer bankruptcies, more clean slate agreements

The share of debt restructurings ending in bankruptcy was reduced notably in recent years, as it dropped from 17 percent in 2007 to 5 percent in 2008.

There is a remarkable increase in the number of restructured debts ending in a clean slate for the debtor. Last year, 73 percent ended in cancellation of the debt, as against 62 percent in 2005.

Debt restructurings by way of termination

Wim Vissers and Vinodh Lalta