A small debt can have major consequences, ‘just figure it out with your mortgage, we heard’

‘I was really sick of it,’ says Sharon van der Put (33) from Zoetermeer. She and her boyfriend had been looking for a house for a year. They found an “80s home” with “playful wood mezzanines.” In January they applied for a mortgage, which was rejected. Her boyfriend appeared to have a negative BKR registration since 2012 because of an outstanding debt with Wehkamp. Collection agency and debt buyer Vesting Finance had taken over the debt of almost 1,500 euros and registered Van der Put’s friend as a defaulter with the BKR.

After contacting her financial advisor, Van der Put paid the outstanding amount and asked Vesting Finance to remove the code by telephone. The collection agency refused. Van der Put: “The reaction was, to put it roughly: figure it out with your mortgage.” Even after full payment of a payment arrears, the negative registration is maintained for five years in the register of Bureau Krediet Registratie (BKR). Whether the debt was 300 or 50,000 euros: no distinction is made.

The BKR foundation was founded in 1965 by banks and financial institutions and registers almost all loans taken out by consumers: from credit card to lease car, from mobile telephone subscription to Wehkamp purchases on installment. According to the BKR, the aim of the BKR is to protect consumers against taking out loans that they may not be able to repay.

At the same time, the registration is intended to provide financial institutions with insight into the financial situation of a potential customer. More than eight million Dutch people are included in this credit database – the BKR is the only one that offers this system. You can check a registration yourself online on the website of the BKR. Lenders are obliged to record every loan above 250 euros in the BKR register, as are any payment arrears.

Phone subscription

A negative registration can lead to a credit provider not wanting to offer a loan. This can be money for a car, a credit card, or a telephone subscription including a telephone. Or a mortgage, as Sharon van der Put noted. In fact, it is difficult to obtain a mortgage in the event of a negative registration, ie up to five years after the payment arrears have been rectified. Lawyer Martijn Foolen, who specializes in BKR cases, says that most of his clients with a negative registration are “immediately rejected” for a mortgage. “Many mortgage advisers say: ‘it will be fine’, but that is sheer nonsense. It is practically impossible to get a mortgage with a claimed payment arrears.”

Once you have been entered in the BKR register with payment arrears – in 2021 that were 594,000 Dutch people – it is therefore difficult to get a credit. They are by no means all notorious defaulters, sees director Deepak Thakoerdien of legal service provider Dynamiet Nederland. His company specializes in challenging negative BKR registrations and, in its own words, handles two thousand cases every year.

“A large group of our customers is behind due to an incident,” says Thakoerdien. “They miss a payment due to a divorce, lost child or illness.” In addition, there is another group, he says: victims of fraud. According to Thakoerdien, it is easy to place online orders in the name of someone else. “Every day I speak to people who did not know that purchases were made in their name.”

Sharon van der Put and her boyfriend also experienced this. The two had no knowledge of the purchase of “men’s socks, nail hardener and lip balm” at Wehkamp. That’s why he never paid the bill. My friend didn’t order that. We bet that a roommate at the time, who left for Curaçao with the northern sun, bought the stuff.” In the ten years since the purchase, Van der Put says he has never seen a reminder or bailiff from Vesting Finance. “I am very strict about paying everything on time. Even if it had slipped my mind, we lived with my father. He always has his paperwork in order. He must have seen a warning.”

deep pockets

Due to the impact of negative BKR registrations, the Supreme Court ruled in 2011 that they must comply with “the principles of subsidiarity and proportionality” under the then Personal Data Protection Act. Since then, lenders have been obliged to compare the interest of the consumer with the social interest of a BKR register that is as complete as possible. Already paid off (small) debts can be removed from the register on the basis of such a consideration.

On paper, every customer can go to his lender and request such a balancing of interests. In 2017, then Minister of Finance Jeroen Dijsselbloem (PvdA) gave the BKR a slap on the wrist because, after tightening the regulations, it made it practically impossible for consumers to weigh up interests. In 2022, that balancing of interests still seems difficult. Invoking the regulations of BKR, lenders rarely remove codes at the request of customers, sees Thakoerdien. The BKR itself also writes this on its website: “Good to know: it is not often that a credit provider actually adjusts a registration.”

We work hard for our money and then you get this on your roof

Sharon van der Put about the BKR

The result is that those who want to get rid of a negative BKR registration are regularly faced with legal costs. “Litigation costs a lot of money and banks have deep pockets,” says lawyer Martijn Foolen. Thakoerdien: “Some banks do not even read the request for removal and always send the same response: ‘no’.”

According to Foolen, there is a turning point in the case law surrounding BKR cases: “The Amsterdam court in particular now recognizes that it is very difficult to get a mortgage with a BKR registration and takes this into account in the weighing of interests between citizen and lender.”

In such cases, financial institutions and the BKR refer, if citizens want to have their BKR registration removed early, to the Financial Services Complaints Institute (Kifid) – which has been settling disputes surrounding BKR registrations since the end of last year. That procedure takes several months and involves several ‘written rounds’.

“The response time from lenders to takedown requests has been disproportionately long lately,” says Foolen. Where previously two to three weeks was usual, he sometimes waits more than two months for a response. The legal term is one month. “I cannot explain to my client, whose purchase agreement is expiring, that he is not getting a response.” Threatening with a lawsuit is effective, according to Foolen. In half of the cases, this leads to removal before the hearing, he estimates.

This was also the case with Sunny Ganpat (31), who works as an application manager at Erasmus MC. He became a father of twins in August 2018. With an ICS credit card, Ganpat bought “baby stuff for the boys” and made holiday expenses. “My girlfriend and I decided to watch our money and divide it into jars so we could see what we were spending.” He stopped the direct debit so that he could transfer money “loose”. However, due to carelessness, he missed a number of payments. In 2019, Ganpat received a bailiff’s letter about an outstanding debt of 300 euros.

“I was shocked,” he says on the phone three years later, “because I don’t like debt and thought: why haven’t I heard of it before?” He paid the amount right away. “I thought it was finished.” However, there was still a registration of the former arrears in his name for five years. That prevented him from getting a mortgage. He approached CoderingVrij, a legal service provider that, like Dynamiet, helps with the removal of encryption.

The legal aid cost Ganpat 700 euros. “A nice amount, but then I’ll get rid of it.” On May 11, Ganpat heard that his request, before the case “came to court”, was granted by ICS and his BKR registration was removed. A week later, he was able to attend the introductory meeting for a new construction project in the area.

Financially healthy

“You have to expose your butt,” says Sharon van de Put about the file needed to challenge a BKR coding. Pay slips, annual statements, current living situation, rejections of brokers and mortgage lenders. They are all necessary to convince the judge that you are financially healthy and that you are hindered by the BKR registration. “You must be able to explain everything.”

After four weeks, the request for removal via Dynamiet received a negative response from the collection agency. “They said: just because you have an income of so many thousand euros and have no debts, does not mean that you are financially healthy. We also look at the expenditure picture.”

Van der Put and her boyfriend asked the broker of their dream home for a postponement. He initially agreed, but then threatened to sell the house to someone else, unless they would pay 1,500 euros more. Together with the costs for the lawsuit, which she paid herself on the advice of her lawyer, the interest accrued in ten years and other legal costs, she lost more than 7,000 euros to have the BKR registration removed.

Her case did come to a hearing. Vesting Finance’s lawyer claimed in court that Van der Put had not yet received a rejection for a mortgage when she requested the collection agency to remove the code. A WhatsApp conversation with her financial advisor, which she showed to the judge, proved otherwise. Vesting Finance subsequently removed the code within three days, while it had previously refused to do so.

“Then my clog really broke,” says Van der Put. “They have given up the matter! It didn’t even have to start.”

Unfair

The companies that assist BKR registered financial institutions find financial institutions “rigid”, because the negative registration is maintained for a long time, even if it concerns a small debt, or when payment has not been successful due to an error or carelessness.

According to the BKR, the retention period of five years is necessary. “Large arrears often start small,” says BKR policy advisor Sjaak van Leeuwen. “If someone is unable to pay a small arrears, that is an indication of the seriousness of the financial situation.” According to the BKR, one in ten people with a previous payment arrears will have problems paying bills again within a year.

According to Sharon van der Put, the BKR can do more to warn people with negative codes. “The BKR is a good system for people who take out a loan everywhere and nowhere and do not pay,” says Van der Put. “But not for someone who has everything in order. We both work hard for our money and then you get something like this on your roof. It feels very unfair.”

Also read: BKR is no longer allowed to operate in no man’s land

Also read: Unfortunately, no new house thanks to BKR

A version of this article also appeared in the newspaper of August 2, 2022