DEBT COLLECTION AND CONSTITUTIONAL COURT, WORRISOME JUDGMENT

What was the question?

The law of 23 May 2013 amending article 2244 of the Belgian Civil Code attributed an interrupting effect of the limitation period to the letter of formal notice from the lawyer, the bailiff, or the trade union representatives.

It led ABR-BVI to introduce, in 2013, an appeal to the Belgian Constitutional Court to obtain the right to use this tool (interrupt the limitation period). The Constitutional Court rendered a judgment on December 10, 2014 (judgement 181/2014). It confirms the exclusion of collection agencies from this right.

The analysis below shows how far the justifying convolutions of our highest jurisdiction can be from logical, legal, and public interest reality.

1. The ethical argument: wrong

The judgment says it wants to “reserve this possibility for professional categories which, as is the case of lawyers, bailiffs or trade union representatives, respond to rules of ethics specific to the status of each of these professions”.

The Constitutional Court did not seem to know (!) that the trade union representatives were not subject to any ethics specific to their status in 2014. If such an ethics existed, it was not published in an accessible manner.

The code of ethics of debt collection companies has been published since 1997 and served as the basis for the 2002 law on this debt collection activity.

The field of application of this law of 2002 had to be extended in 2009 to the professions of lawyer and judicial officer precisely because the ethics of these professions, which had been used in 2002 to exclude these professions from the law, was eventually found to be defective.

2. The professionalism argument: wrong

The judgment says it wants to reserve this possibility for professional categories “who, as legal professionals, …”

However, trade union representatives are not necessarily “legal professionals”. They are elected or appointed without any requirement for graduation, professional qualification or experience of any kind being required.

See also:

“The widening of the field of application decided by the Chamber of Representatives opens the interruptive effect to a plethora of heterogeneous people, who do not bring together the qualities of the legal profession and who do not act, moreover, to the account of a third party but for that of the institutions which employ them. The basic principle of the initial proposition is therefore completely discredited.

Thus, for example, unlike lawyers, these people are not subject to the principle of confidentiality, necessary to carry out a negotiation which may subsequently fail. » (Amendment nr. 12 van mevr. DEFRAIGNE en de heer COURTOIS, Parl.St. Senaat 2012_13, nr. 5-145 / 10, 2)

The concept of “legal professionals” is furthermore not defined either by law or by the text of the CC judgment in question.

In addition, since 2002, collection companies have been subject to a law based on the profession’s pre-existing code of ethics. Art 3 of this law begins with “In matters of amicable debt collection, any behaviour or practice which infringes the consumer’s privacy or could be misleading, as well as any behaviour or practice which involves violation of human dignity ”and later in the same article, prohibits“ any communication involving inaccurate legal threats, or false information on the consequences of default of payment ”. These articles and several other articles of this law obviously requires and implies legal competence, professionalism, and ethics from the collection company.

3. The legal certainty argument: wrong

The judgment says that it wants to reserve this possibility for professional categories who “are able to assess, on the basis of a thorough examination of the case submitted to them, the risks of prescription of the debt for which they are seeking payment; and the behaviour which should be adopted in order to avoid such a prescription. ”

There is no problem of legal prescription technicality mentioned in the Judgment, in the law in question or elsewhere. Prescription is, in fact, a relatively simple mechanism that leaves little room for creativity or incompetence.

It is irrational to say that only “legal professionals” (indefinite concept) can assess the risk of prescription of a debt. This allegation is not based on any practical study or analysis. Any creditor assesses prescription risks regularly for his receivables; alone or with freely chosen assistance, professional or not.

This assertion assumes that, as prescription is a matter governed by law, it could only be understood by legal professionals. This reasoning could be claimed by other professions. Some might argue, for example, that shopkeepers are unable to give back change to their customers because they are not ‘professionals of mathematics’.

This assertion implies that debt collection agencies, whose profession is precisely and solely to collect debts, would be incapable of understanding the risks of prescription and the measures to be adopted. The daily reality of these collection companies shows the opposite.

Moreover, this assertion implies that the professionalism of the clients of these collection offices would be severely deficient as they would all call on incompetent people. However, there are thousands of clients using debt collectors, in all sectors, including that of ‘legal professionals’ (law firms, particularly big ones, entrust their debts to collection companies) but also banks, and large multinationals.

The “behaviour which should be adopted in order to avoid such a prescription” is very well described in the law and does not conceal any complexity.

The Judgment assumes that “legal professionals” would do a “thorough examination of the case submitted to them”. This assertion is not based on any practical analysis. It ignores the many collection factories that operate under the guise of bailiff or lawyer. Yet the balance sheets of these companies are self explanatory (and you don’t even have to be an ‘professional in the economy’ to understand this fact).

4. The nature of collection office activity argument: wrong

The judgment justifies that “the nature of [the activity of collection offices] reasonably justifies them being excluded from the scope of the impugned law. Indeed, as indicated by the preparatory work for the law of 20 December.”

The ‘nature’ referred to finds its source in preparatory work prior to 2002 asserting that “such agencies have in principle little interest in an amicable settlement since their remuneration is a commission on the amounts they recover”.

There are two stages in debt collection: amicable and judicial. The most logical reasoning is that the debt collection office, not having access to the courts, has every interest in succeeding in the amicable phase; and this unlike lawyers and bailiffs who are also paid in the judicial phase. The fallacy included in the judgment wrongly reverses this evidence.

Belgian legal reality also opposes this reasoning. Courts are slow and expensive. Better a good deal than a bad trial. This finding pushes creditors to call on professional debt collection for its ability to resolve these disputes amicably, by listening to the debtor’s complaints (delivery problems, quality, etc.; but also temporary financial difficulties) and feedback to creditors (which prevents other potential litigation, and correspondingly reduces the cost of running justice; and meets the goal stated by the legislator in the law in question). It is very rare that collection companies are confronted with a solvent and bad faith debtor, which explains why less than 3% of the debts entrusted to them go through the courts.

Moreover, commission pay is not the prerogative of collection offices. Many lawyers and bailiffs participate in public contracts where, in one form or another, the remuneration is directly linked to the collection made. In addition, all the financial directors of large and medium-sized companies know – having been approached by judicial officers – that the latter have been offering solutions, for decades, that are coupled with ‘no-cure-no-charge’, including the legal phase. The CC Judgment ignores this widespread though illegal reality.

5. The Many Complaints Argument: Spurious

The judgment recalls that “it is also on the basis of the observation that numerous complaints were made against the practices of these agencies that the legislator intended to regulate their activities. ”

The “numerous complaints” which led to legislation in 2002 have never been analysed. What were these many complainants complaining about? How many complaints were there and for which aspects of the collection? There are no statistics available. But back then, the legend of the complaints didn’t matter; all stakeholders wanted a law. So, no one has done a reliable job on these complaints.

In any case, refer to unverified assertions, all emanating from a source with vested interest (Chamber of Bailiffs), over 14 years old and to which the legislator responded 12 years earlier by a law coupled with close control and extremely severe penalties is an insult to the efficiency of the legislator. No reference is made to developments after 2002.

It would have been more reasonable and useful to refer to recent studies by consumer protection organizations. These report complaints about bailiffs. Debt collectors have far less issues with collection companies.

Cfr parliament bill DOC 54 0702/001 (2014, and same in 2020):

“2. Abuses acknowledged: It is evident that a small number of bailiffs accounting for a large part of amicable bailiff debt collection have a very peculiar interpretation of the Law. Some don’t mind acting bluntly illegally where others act more subtly however abusively with the view to boost their personal income.”

It would have been useful to refer to the findings of the FPS Economy which, since 2002, has been collecting complaints on the basis of the 2002 law which imposes “Art. 6.§ 1st. Any amicable debt collection must begin with a written notice to the consumer. This formal notice must contain… the contact details of the supervisory administration with the Federal Public Service for the Economy, P.M.E., Middle Classes & Energy; …”

It should be noted that as regards the heads of collection offices, none has ever had to answer for criminal charges in connection with the collection activity. The same cannot be said of lawyers and bailiffs. And we are only talking about criminal actions aimed at their professional behaviour and resulting in a conviction followed by imprisonment; after 2002. In addition, some of them, in both professions, retained their profession during and after serving their sentence; without being otherwise worried by their supervisory bodies. These are material facts, not guesses. (Example: lawyers Liebaers & Berquin, Antwerpen; bailiff Marc Guiot).

To base a judgement on mysterious 14+-year-old complaints and to ignore proven, serious, and more recent facts raises questions.

Conclusion

The objective pursued by the legislator was, according to the persistent rumour, to provide a competitive advantage to attorneys, at their request. The bailiffs, having fully understood the proposed advantage, invited themselves to the party.

This rumour makes sense. In fact, as explained in the Judgment, this law has the cost of justice as sole concern. However, if this extension of prescription timing was really intended to unclog the courts, it would have been enough to extend the legal limitation period by some period in certain matters. The parties legitimately interested first and foremost, the creditors, would have had a simple, effective, and therefore reassuring situation. The decongestion effect of the courts could have been achieved more certainly than by making it dependent on recourse to a third party.

This law is of little interest to creditors and debtors. Nor does it seem to have had a de-congestion effect on the courts. The obvious aim of this law was to strengthen the monopoly of “legal professionals”.

It is impossible to accord this judgment with societal reality or even with purely legal reasoning.

This judgment impoverishes society (adds costs for the creditor, without benefit for the debtor), to favour some “legal professionals” well introduced to the Constitutional Court. Shameful!

The judgments of the Constitutional Court, one of our highest instances, are final and without appeal. It doesn’t make them all correct. This does not strengthen confidence in the rule of law in a time troubled by the surprising liberty-killing covid measures.

11 May 2021

DEBT COLLECTION AND CONSTITUTIONAL COURT, WORRISOME JUDGMENT

What was the question?

The law of 23 May 2013 amending article 2244 of the Belgian Civil Code attributed an interrupting effect of the limitation period to the letter of formal notice from the lawyer, the bailiff, or the trade union representatives.

It led ABR-BVI to introduce, in 2013, an appeal to the Belgian Constitutional Court to obtain the right to use this tool (interrupt the limitation period). The Constitutional Court rendered a judgment on December 10, 2014 (judgement 181/2014). It confirms the exclusion of collection agencies from this right.

The analysis below shows how far the justifying convolutions of our highest jurisdiction can be from logical, legal, and public interest reality.

1. The ethical argument: wrong

The judgment says it wants to “reserve this possibility for professional categories which, as is the case of lawyers, bailiffs or trade union representatives, respond to rules of ethics specific to the status of each of these professions”.

The Constitutional Court did not seem to know (!) that the trade union representatives were not subject to any ethics specific to their status in 2014. If such an ethics existed, it was not published in an accessible manner.

The code of ethics of debt collection companies has been published since 1997 and served as the basis for the 2002 law on this debt collection activity.

The field of application of this law of 2002 had to be extended in 2009 to the professions of lawyer and judicial officer precisely because the ethics of these professions, which had been used in 2002 to exclude these professions from the law, was eventually found to be defective.

2. The professionalism argument: wrong

The judgment says it wants to reserve this possibility for professional categories “who, as legal professionals, …”

However, trade union representatives are not necessarily “legal professionals”. They are elected or appointed without any requirement for graduation, professional qualification or experience of any kind being required.

See also:

“The widening of the field of application decided by the Chamber of Representatives opens the interruptive effect to a plethora of heterogeneous people, who do not bring together the qualities of the legal profession and who do not act, moreover, to the account of a third party but for that of the institutions which employ them. The basic principle of the initial proposition is therefore completely discredited.

Thus, for example, unlike lawyers, these people are not subject to the principle of confidentiality, necessary to carry out a negotiation which may subsequently fail. » (Amendment nr. 12 van mevr. DEFRAIGNE en de heer COURTOIS, Parl.St. Senaat 2012_13, nr. 5-145 / 10, 2)

The concept of “legal professionals” is furthermore not defined either by law or by the text of the CC judgment in question.

In addition, since 2002, collection companies have been subject to a law based on the profession’s pre-existing code of ethics. Art 3 of this law begins with “In matters of amicable debt collection, any behaviour or practice which infringes the consumer’s privacy or could be misleading, as well as any behaviour or practice which involves violation of human dignity ”and later in the same article, prohibits“ any communication involving inaccurate legal threats, or false information on the consequences of default of payment ”. These articles and several other articles of this law obviously requires and implies legal competence, professionalism, and ethics from the collection company.

3. The legal certainty argument: wrong

The judgment says that it wants to reserve this possibility for professional categories who “are able to assess, on the basis of a thorough examination of the case submitted to them, the risks of prescription of the debt for which they are seeking payment; and the behaviour which should be adopted in order to avoid such a prescription. ”

There is no problem of legal prescription technicality mentioned in the Judgment, in the law in question or elsewhere. Prescription is, in fact, a relatively simple mechanism that leaves little room for creativity or incompetence.

It is irrational to say that only “legal professionals” (indefinite concept) can assess the risk of prescription of a debt. This allegation is not based on any practical study or analysis. Any creditor assesses prescription risks regularly for his receivables; alone or with freely chosen assistance, professional or not.

This assertion assumes that, as prescription is a matter governed by law, it could only be understood by legal professionals. This reasoning could be claimed by other professions. Some might argue, for example, that shopkeepers are unable to give back change to their customers because they are not ‘professionals of mathematics’.

This assertion implies that debt collection agencies, whose profession is precisely and solely to collect debts, would be incapable of understanding the risks of prescription and the measures to be adopted. The daily reality of these collection companies shows the opposite.

Moreover, this assertion implies that the professionalism of the clients of these collection offices would be severely deficient as they would all call on incompetent people. However, there are thousands of clients using debt collectors, in all sectors, including that of ‘legal professionals’ (law firms, particularly big ones, entrust their debts to collection companies) but also banks, and large multinationals.

The “behaviour which should be adopted in order to avoid such a prescription” is very well described in the law and does not conceal any complexity.

The Judgment assumes that “legal professionals” would do a “thorough examination of the case submitted to them”. This assertion is not based on any practical analysis. It ignores the many collection factories that operate under the guise of bailiff or lawyer. Yet the balance sheets of these companies are self explanatory (and you don’t even have to be an ‘professional in the economy’ to understand this fact).

4. The nature of collection office activity argument: wrong

The judgment justifies that “the nature of [the activity of collection offices] reasonably justifies them being excluded from the scope of the impugned law. Indeed, as indicated by the preparatory work for the law of 20 December.”

The ‘nature’ referred to finds its source in preparatory work prior to 2002 asserting that “such agencies have in principle little interest in an amicable settlement since their remuneration is a commission on the amounts they recover”.

There are two stages in debt collection: amicable and judicial. The most logical reasoning is that the debt collection office, not having access to the courts, has every interest in succeeding in the amicable phase; and this unlike lawyers and bailiffs who are also paid in the judicial phase. The fallacy included in the judgment wrongly reverses this evidence.

Belgian legal reality also opposes this reasoning. Courts are slow and expensive. Better a good deal than a bad trial. This finding pushes creditors to call on professional debt collection for its ability to resolve these disputes amicably, by listening to the debtor’s complaints (delivery problems, quality, etc.; but also temporary financial difficulties) and feedback to creditors (which prevents other potential litigation, and correspondingly reduces the cost of running justice; and meets the goal stated by the legislator in the law in question). It is very rare that collection companies are confronted with a solvent and bad faith debtor, which explains why less than 3% of the debts entrusted to them go through the courts.

Moreover, commission pay is not the prerogative of collection offices. Many lawyers and bailiffs participate in public contracts where, in one form or another, the remuneration is directly linked to the collection made. In addition, all the financial directors of large and medium-sized companies know – having been approached by judicial officers – that the latter have been offering solutions, for decades, that are coupled with ‘no-cure-no-charge’, including the legal phase. The CC Judgment ignores this widespread though illegal reality.

5. The Many Complaints Argument: Spurious

The judgment recalls that “it is also on the basis of the observation that numerous complaints were made against the practices of these agencies that the legislator intended to regulate their activities. ”

The “numerous complaints” which led to legislation in 2002 have never been analysed. What were these many complainants complaining about? How many complaints were there and for which aspects of the collection? There are no statistics available. But back then, the legend of the complaints didn’t matter; all stakeholders wanted a law. So, no one has done a reliable job on these complaints.

In any case, refer to unverified assertions, all emanating from a source with vested interest (Chamber of Bailiffs), over 14 years old and to which the legislator responded 12 years earlier by a law coupled with close control and extremely severe penalties is an insult to the efficiency of the legislator. No reference is made to developments after 2002.

It would have been more reasonable and useful to refer to recent studies by consumer protection organizations. These report complaints about bailiffs. Debt collectors have far less issues with collection companies.

Cfr parliament bill DOC 54 0702/001 (2014, and same in 2020):

“2. Abuses acknowledged: It is evident that a small number of bailiffs accounting for a large part of amicable bailiff debt collection have a very peculiar interpretation of the Law. Some don’t mind acting bluntly illegally where others act more subtly however abusively with the view to boost their personal income.”

It would have been useful to refer to the findings of the FPS Economy which, since 2002, has been collecting complaints on the basis of the 2002 law which imposes “Art. 6.§ 1st. Any amicable debt collection must begin with a written notice to the consumer. This formal notice must contain… the contact details of the supervisory administration with the Federal Public Service for the Economy, P.M.E., Middle Classes & Energy; …”

It should be noted that as regards the heads of collection offices, none has ever had to answer for criminal charges in connection with the collection activity. The same cannot be said of lawyers and bailiffs. And we are only talking about criminal actions aimed at their professional behaviour and resulting in a conviction followed by imprisonment; after 2002. In addition, some of them, in both professions, retained their profession during and after serving their sentence; without being otherwise worried by their supervisory bodies. These are material facts, not guesses. (Example: lawyers Liebaers & Berquin, Antwerpen; bailiff Marc Guiot).

To base a judgement on mysterious 14+-year-old complaints and to ignore proven, serious, and more recent facts raises questions.

Conclusion

The objective pursued by the legislator was, according to the persistent rumour, to provide a competitive advantage to attorneys, at their request. The bailiffs, having fully understood the proposed advantage, invited themselves to the party.

This rumour makes sense. In fact, as explained in the Judgment, this law has the cost of justice as sole concern. However, if this extension of prescription timing was really intended to unclog the courts, it would have been enough to extend the legal limitation period by some period in certain matters. The parties legitimately interested first and foremost, the creditors, would have had a simple, effective, and therefore reassuring situation. The decongestion effect of the courts could have been achieved more certainly than by making it dependent on recourse to a third party.

This law is of little interest to creditors and debtors. Nor does it seem to have had a de-congestion effect on the courts. The obvious aim of this law was to strengthen the monopoly of “legal professionals”.

It is impossible to accord this judgment with societal reality or even with purely legal reasoning.

This judgment impoverishes society (adds costs for the creditor, without benefit for the debtor), to favour some “legal professionals” well introduced to the Constitutional Court. Shameful!

The judgments of the Constitutional Court, one of our highest instances, are final and without appeal. It doesn’t make them all correct. This does not strengthen confidence in the rule of law in a time troubled by the surprising liberty-killing covid measures.

11 May 2021