Unwillingness orinability to pay
October 22, 2024Author: Roeland Zwanikken
Legal Instruments for Creditor
Have you ever secured a court title against a debtor but faced the frustrating reality of non-payment despite this clear legal mandate? Many creditors encounter this hurdle where the opposing party ‘bluntly’ refuses to fulfill their obligations, leaving the creditor both disgruntled and (sometimes) financially strained. This article delves into the legal tools at your disposal.
Under Article 3:276 of the Dutch Civil Code (CC), a creditor has the right in principle to recover their claim from all assets of the debtor. At first glance, this legal provision appears promising from a creditor's perspective. However, how does this play out in practice?
It is not uncommon for creditors to hold a claim against a debtor and yet struggle with enforcement. The debtor may assert an inability to pay or ignore demands altogether, sometimes even after a court ruling has been served by a bailiff. Thus, creditors often face two situations: genuine financial hardship or deliberate refusal to pay.
What options are available to the creditor in that situation?
Court ruling on disclosure obligations and statutory provision in the Netherlands
In 1991, the Supreme Court ruled (1) that in principle, a debtor is obliged to provide information about their income and assets, as well as any seizable goods, to a creditor who has obtained a judgment against them for a sum of money. In the Netherlands, this rule is codified in Article 475g of the Code of Civil Procedure (Rv).
Legal disclosure requirements also applicable in Sint Maarten
While Sint Maarten lacks an identical statutory provision, the Antillean Court of Appeal ruled on May 20, 2011 (2) , that under Article 6:1 CC, a debtor is generally required to provide information about their income and assets to a creditor holding a monetary judgment. It is deemed neither reasonable nor fair for debtors to evade payment obligations arising from a binding legal relationship
Based on this precedent, the court can order the debtor to disclose information about income sources (such as employment, dividends, investments, etc.), bank accounts, ownership of movable or immovable property, or claims against third parties.
A creditor can request the court to mandate the debtor to provide this information, potentially under penalty of fines or (in extreme cases) via enforceable detention (in Dutch: ‘lijfsdwang’). This measure aims to prevent a malicious debtor from concealing assets or documents.
In the context of debt collection, 'lijfsdwang' (enforceable detention) is a severe measure that courts can use to compel a debtor to comply with a disclosure order. It involves detaining the debtor until they fulfill the obligation to provide information about their assets, effectively ensuring that the debtor cannot evade payment by withholding key financial details. This measure is typically considered a last resort and is only implemented under stringent legal scrutiny to safeguard against abuse.
How much information must be disclosed, and in what form?
Is a debtor obliged to convince the individual creditor by providing extensive documentation on their income and assets? Must they also submit a complete accounting record spanning several years?
In the 1991 case, the Supreme Court rejects such an extensive requirement. An individual creditor seeking such a thorough disclosure of financial matters has, under our legal system, only one option: to petition for the debtor’s bankruptcy, however to be able to successfully file such a petition, support from at least one additional creditor is required.
Concluding section
In conclusion, while debtors are obligated under the principles of reasonableness and fairness to disclose their financial position, navigating the complexities of enforcement can be challenging. In addition, creditors are generally not entitled to receive detailed supporting documents.
Navigating these legal complexities can be challenging. If you are dealing with uncooperative debtors, don't navigate these waters alone. Contact BZSE Attorneys at Law / Tax Lawyers today to ensure you're taking the right steps to enforce your claims effectively.
Sint Maarten, 18 October 2024
Roeland Zwanikken
Managing partner BZSE Attorneys at Law / Tax Lawyers
(1) HR 20 sep 1991: ECLI:NL:HR:1991:ZC0338
(2) ECLI:NL:OGHACMB:2011:BQ8989
Disclaimer:
This blog provides general information and is not intended as legal advice. BZSE strongly recommends seeking personalized legal advice based on your specific circumstances before making any decisions or taking action.
More articles →
Have you ever secured a court title against a debtor but faced the frustrating reality of non-payment despite this clear legal mandate? Many creditors encounter this hurdle where the opposing party ‘bluntly’ refuses to fulfill their obligations, leaving the creditor both disgruntled and (sometimes) financially strained. This article delves into the legal tools at your disposal.
Under Article 3:276 of the Dutch Civil Code (CC), a creditor has the right in principle to recover their claim from all assets of the debtor. At first glance, this legal provision appears promising from a creditor's perspective. However, how does this play out in practice?
It is not uncommon for creditors to hold a claim against a debtor and yet struggle with enforcement. The debtor may assert an inability to pay or ignore demands altogether, sometimes even after a court ruling has been served by a bailiff. Thus, creditors often face two situations: genuine financial hardship or deliberate refusal to pay.
What options are available to the creditor in that situation?
Court ruling on disclosure obligations and statutory provision in the Netherlands
In 1991, the Supreme Court ruled (1) that in principle, a debtor is obliged to provide information about their income and assets, as well as any seizable goods, to a creditor who has obtained a judgment against them for a sum of money. In the Netherlands, this rule is codified in Article 475g of the Code of Civil Procedure (Rv).
Legal disclosure requirements also applicable in Sint Maarten
While Sint Maarten lacks an identical statutory provision, the Antillean Court of Appeal ruled on May 20, 2011 (2) , that under Article 6:1 CC, a debtor is generally required to provide information about their income and assets to a creditor holding a monetary judgment. It is deemed neither reasonable nor fair for debtors to evade payment obligations arising from a binding legal relationship
Based on this precedent, the court can order the debtor to disclose information about income sources (such as employment, dividends, investments, etc.), bank accounts, ownership of movable or immovable property, or claims against third parties.
A creditor can request the court to mandate the debtor to provide this information, potentially under penalty of fines or (in extreme cases) via enforceable detention (in Dutch: ‘lijfsdwang’). This measure aims to prevent a malicious debtor from concealing assets or documents.
In the context of debt collection, 'lijfsdwang' (enforceable detention) is a severe measure that courts can use to compel a debtor to comply with a disclosure order. It involves detaining the debtor until they fulfill the obligation to provide information about their assets, effectively ensuring that the debtor cannot evade payment by withholding key financial details. This measure is typically considered a last resort and is only implemented under stringent legal scrutiny to safeguard against abuse.
How much information must be disclosed, and in what form?
Is a debtor obliged to convince the individual creditor by providing extensive documentation on their income and assets? Must they also submit a complete accounting record spanning several years?
In the 1991 case, the Supreme Court rejects such an extensive requirement. An individual creditor seeking such a thorough disclosure of financial matters has, under our legal system, only one option: to petition for the debtor’s bankruptcy, however to be able to successfully file such a petition, support from at least one additional creditor is required.
Concluding section
In conclusion, while debtors are obligated under the principles of reasonableness and fairness to disclose their financial position, navigating the complexities of enforcement can be challenging. In addition, creditors are generally not entitled to receive detailed supporting documents.
Navigating these legal complexities can be challenging. If you are dealing with uncooperative debtors, don't navigate these waters alone. Contact BZSE Attorneys at Law / Tax Lawyers today to ensure you're taking the right steps to enforce your claims effectively.
Sint Maarten, 18 October 2024
Roeland Zwanikken
Managing partner BZSE Attorneys at Law / Tax Lawyers
(1) HR 20 sep 1991: ECLI:NL:HR:1991:ZC0338
(2) ECLI:NL:OGHACMB:2011:BQ8989
Disclaimer:
This blog provides general information and is not intended as legal advice. BZSE strongly recommends seeking personalized legal advice based on your specific circumstances before making any decisions or taking action.
More articles →
