Collecting an unpaid invoice from a consumer

A consumer invoice that remains unpaid is a recognizable and frustrating scenario for any business owner. The uncertainty about what steps to take, allowable costs and legal risks is high. A wrong approach can not only complicate recovery, but also lead to severe financial penalties, including the loss of the entire debt.

The law of 4 may 2023, which inserted Book XIX “Consumer Debts” in the Code of Economic Law (CEL) inserted, fundamentally changed the ground rules for the recovery of consumer debts in Belgium. This law replaces the old law of December 20, 2002 and introduces a strict, mandatory roadmap that leaves no room for improvisation. Below we explain clearly and practically the procedure, the financial limits and the severe penalties.

The new rules of the game: an overview of Book XIX CEL

To correctly apply the strict rules of Book XIX, it is essential to understand the legislature's underlying objectives. The law is not a mere modification, but a paradigm shift that replaces the former freedom of contract with a mandatory procedural straightjacket. The focus shifts from what the parties agree to to what the law imposes. Companies can no longer rely solely on their general terms and conditions; the entire collection process must be actively adapted to this legal template.

The legislature's threefold objective

The legislator is balancing on a thin tightrope between three, sometimes conflicting, objectives:

1. Consumer Protection: The primary goal is to protect consumers, considered economically weaker parties, from spiraling debt. Prior to the law, consumers often faced unreasonable damages clauses and unlimited recovery costs that significantly increased the original debt.
2. Rights of the Business: The law does not seek to deny the company the right to “fair compensation” for damages suffered due to non-payment. It provides a clear and predictable framework of what can and cannot be done, which also creates legal certainty for companies.
3. Legal harmonization: The law creates a uniform and generally applicable framework for all sectors, where previously fragmented, sectoral rules existed.

Scope: for whom and for what?

The rules of Book XIX apply to any late payment by a consumer to a business. This scope is very broad:

• People: It applies to any B2C relationship. For B2B relationships, the law of 2 August 2002 on combating late payment in commercial transactions remains in force.
• Debts: It includes both contractual debts (e.g., purchase of goods, contracting work) and regulatory or legal debts (e.g., parking fees, unpaid transportation tickets). The law applies only to money debts, not value debts.

Structure of the law: two logical phases

Book XIX is logically divided into two titles reflecting the two stages of the recovery process:

• Title 1: Payment of debts by consumers to businesses: Settles the consequences of late payment itself. These are the steps to be taken by the creditor-company itself.
• Title 2: Amicable recovery of consumer debts: Regulates the amicable collection activity. These are the rules for third parties who are engaged, such as collection agencies, attorneys or bailiffs.

A critical note is the legal definition of “amicable recovery.” The law defines this as any act to obtain payment, excluding recovery based on an enforceable title already obtained (e.g., a judgment). A sharp legal analysis shows that this implies that the summons itself - the act of obtaining an enforceable title - technically falls under the definition of “amicable recovery.” This leads to the absurd and unworkable conclusion that a bailiff serving a summons should first send a free reminder and, upon service, issue a letter stating that it is not a court proceeding. This legal carelessness, carried over from the old law, creates a real risk of procedural errors and annulments.

Stage 1: The first steps after an unpaid invoice (Title 1)

This is the most crucial phase for any business owner. The steps the business itself must take immediately after the due date of an invoice are strictly regulated. Mistakes at this stage have immediate and far-reaching consequences.

Step 1: The mandatory first free reminder

Before any cost, interest or damages may be charged, the company must send an initial reminder that is completely free of charge to the consumer. This reminder, which must be sent on a durable medium (e.g., paper, e-mail, text message), legally counts as a notice of default.

The reminder must contain, under penalty of sanctions, the following information, at a minimum, as stipulated in Article XIX.2 CEL:

1. The balance due and the amount of damages clause that will be claimed after the waiting period.
2. The name or designation and corporate number of the creditor-company.
3. A description of the product or service that gave rise to the debt, as well as the date on which it became due. The mere mention of an invoice number is not sufficient for this purpose.
4. The deadline by which payment must be made to avoid the application of the damage clause.

The crucial 14-day waiting period

After sending the free reminder, a mandatory waiting period of at least 14 calendar days starts. Only after the expiration of this period may the company apply the contractual damage clause. The calculation of the start date of this period is crucial and differs depending on the method of delivery:

• When sent by mail: The 14-day period starts on the third business day after the day of dispatch. Business days are all days except Sundays and legal holidays.
• In the case of electronic transmission (e.g., e-mail): The deadline starts on the calendar day following the day of transmission.

The burden of proof for correct dispatch, the content of the reminder and compliance with the waiting period lies entirely with the company.

Step 2: Applying interest and a damages clause

If the consumer has still not paid after the 14-day waiting period, the company may apply the contractually stipulated default interest and lump-sum compensation. However, this can only be done within the strict legal limits set forth in Article XIX.4 CEL.

• Limit for default interest: The interest rate cannot exceed the reference interest rate determined by the Law on Late Payment in Commercial Transactions.
• Limit for lump-sum compensation: The law provides for a graduated system based on the outstanding balance. The amounts are intended to cover both default interest and all costs of amicable collection.

The maximum flat fee can be summarized as follows :

Balance due	Maximum flat fee	Calculation method
Less than or equal to 150 euros	20 euros	Fixed amount
Between 150.01 euros and 500 euros	30 euros + 10% on the disk above 150 euros	Eg. for debt of 300 euros: 30 + 0.10 x (300 - 150) = 45 euros
Higher than 500 euros	65 euros + 5% on the disc above 500 euros	E.g. for debt of 1,000 euros: 65 + 0.05 x (1,000 - 500) = 90 euros
Absolute maximum	2,000 euros	Total compensation should never exceed 2,000 euros

It is vital to realize that these caps do not unfair terms in Book VI of the CEL continue to apply in full. This means that a damages clause that respects the legal limits of Book XIX may still be considered illegal by a judge if, in the specific context of the contract, it is ’clearly disproportionate to the prejudice that may be suffered by the company“ (Art. VI.83, 24° CEL). Thus, companies cannot blindly include maximum amounts in their general terms and conditions; a proportionality test remains necessary.

In addition, for contracts that involve a regular supply of goods or services (e.g., subscriptions), a specific rule applies. The first three reminders per calendar year must be free of charge. From the fourth default in the same year, additional reminders may be charged a cost of up to 7.50 euros (plus postage). This imposes a significant administrative burden on companies with subscription models, which must monitor the number of defaults and reminders sent per customer and per year.

Stage 2: The amicable recovery by a professional (Title 2)

When the company engages an outside party - an attorney, bailiff or collection agency, called a ‘debt collector’ by law - the Title 2 rules take effect.

Duty of verification and formal notice of default

The debt collector may not act blindly. The law imposes two crucial starting obligations on him:

1. Verification duty: Before taking any action, the debt collector must verify that the amounts claimed by the creditor (interest and damages clause) respect the legal limits of Article XIX.4. He thus becomes the ‘gatekeeper’ of the law and bears joint responsibility for his principal's mistakes. This increases the pressure on the creditor to perfectly comply with the rules of Phase 1.
2. Formal notice of default: The debt collector must send its own formal notice of default. This must comply with an extensive list of nine mandatory notices (Art. XIX.7 CEL), which goes far beyond the first reminder. Crucial elements include:
   • The identity of the original and any new creditor.
   • The contact information of the supervisory authority (FPS Economy).
   • A precise and detailed breakdown of the amounts claimed.
   • The procedure to contest the debt.
   • The ability to request payment facilities.
   • If the collector is an attorney, ministerial official or judicial officer, the explicit, boldface statement in a separate paragraph: “This letter is NOT a subpoena to court or attachment. It is not a proceeding of judicial collection.“.

After this default notice, a second waiting period of 14 calendar days starts. If the creditor has skipped Phase 1, the debt collector must still go through it before starting Phase 2. This creates a double waiting period that structurally delays the collection process, a factor that must be taken into account in cash flow planning.

Consumer rights: suspension of recovery

The consumer can further have recovery suspended after the debt collector's notice of default in three specific cases, as regulated in Article XIX.9 CEL:

1. Request for an installment plan: Recovery is suspended until a decision is made. If the debt collector or creditor does not respond within 30 days, the delay interest stops running until a decision is made.
2. Reasoned dispute of debt: The same rule as for the request for an installment plan applies.
3. Application for debt mediation or collective debt settlement: Recovery is suspended until there is a decision, or for a maximum period of 45 calendar days.

Practical limitations on recovery activity

The law also imposes strict practical restrictions:

• Home visits (art. XIX.10 CEL): Home visits are prohibited between 10:00 pm and 8:00 am. The visitor must identify himself at the start and provide a document with all the details of the debt. This document must state at the top, in a separate box and in bold letters, that this is an amicable collection and that the consumer is not obliged to undergo the visit and can end it at any time.
• Telephone calls (art. XIX.11 CEL): Also prohibited between 22:00 and 08:00.
• Costs (art. XIX.13 CEL).: The debt collector may never charge the consumer any fee for his own intervention. His fee must come entirely from his principal, the creditor.

The heavy penalties: what if the rules are not followed?

The consequences of non-compliance with Book XIX are extremely severe. The penalties are clearly punitive and deterrent in nature and go far beyond mere reparation for the mistake made.

Sanction 1: Automatic exemption from the damage clause

In case of non-compliance with the rules around the first free reminder (Art. XIX.2), the maximum amounts (Art. XIX.4) or the prohibition on third-party recovery (Art. XIX.5), the consumer is exempted by operation of law from the payment of the entire damages clause (both interest and lump sum). The term ‘by operation of law’ is crucial: the penalty takes effect automatically, without the need for a court order. The company irrevocably loses its right to any compensation for the late payment.

Sanction 2: The ‘double’ sanction of repayment and remission

This is the toughest and most feared sanction in the law, enshrined in Article XIX.14 CEL. If a payment is obtained in violation of a series of crucial articles (including XIX.2, XIX.4, XIX.7, XIX.10), the court may impose a double penalty:

1. The payment is considered a valid payment of the debt. Thus, the consumer is freed with respect to the creditor.
2. The amount received must be repaid in full to the consumer by whoever received the payment (the creditor or debt collector).

The net result is draconian: the consumer gets his money back AND his debt is cancelled. The company loses not only the damages clause, but the entire principal sum. This punitive character is a remarkable break in the trend in Belgian private law and underlines the deterrent effect intended by the legislator.

The use of the word “may” in the legislative text gives the judge discretion. This is an improvement over the old, automatic sanction because it allows the judge to nuance the sanction for a mere minor procedural error. However, this also creates legal uncertainty: companies do not know in advance how a judge will assess a specific error. Even minor errors can thus pose an existential threat to the claim, which argues for a ‘zero tolerance’ policy on procedural errors.

The role of the judge: the risk of ex officio application

Although Book XIX is purely Belgian law and therefore not subject to the European obligation of ex officio application, there is a very real chance that Belgian courts will nevertheless apply the rules ex officio, especially around damages clauses (Art. XIX.4). The reasoning is that, based on the facts alleged by the plaintiff (the contract, the amounts claimed), the judge is obliged to apply the mandatory rules of law. Thus, a judge is likely to check for himself whether the limits have been respected, even if the consumer does not raise a defense (e.g., in default).

Frequently asked questions about Book XIX CEL

Does this also apply to my old contracts?

Yes, with an important nuance. The law has a phased entry into force. Since September 1, 2023, the law applies to all new agreements. Since December 1, 2023, the law also applies to existing contracts (entered into before September 1, 2023) as soon as a new payment delay occurs. Damage clauses in those old contracts that exceed the new limits are subject to a transitional regime: they are not automatically annulled, but are reduced by the court to the legal limits, unless the clause was unlawful anyway (e.g. not reciprocal).

What if a consumer pays only part of the bill?

The rules of Book XIX apply to “any late payment,” including partial non-payment. Limits for lump-sum compensation are calculated on the balance still owed, not on the original invoice amount.

Is it okay to charge for the fourth reminder in a year?

Yes, but only for contracts for regular delivery of goods or services (e.g., subscriptions). For the first, second and third default within one calendar year, each reminder is free of charge. From the fourth default, additional reminders may be charged a cost of up to 7.50 euros plus the then current postage costs (Art. XIX.2, § 2 CEL).

Conclusion

Book XIX CEL is more than a new law; it is a binding procedural manual for the recovery of consumer debts in Belgium. The emphasis is on strict, chronological compliance with the steps, with no stage to be skipped. Even minor procedural errors can result in disproportionately severe financial penalties, including the loss of the entire debt.

A proactive approach is therefore essential. Companies cannot afford to wait until they are faced with a dispute. It is crucial to analyze and update general terms and conditions, standard reminder letters and the internal collection process now to ensure full compliance.

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