Waiver of debt

Old vs. new law

As the old provisions no longer fully corresponded to the interpretation required by current practice, the provisions on this subject were amended in the new Civil Code.

The waiver of debt is included in the new Civil Code in Book 5, chapter 3, more specifically in articles 5.250-5.251. In the old Civil Code, articles 1282-1288 were applicable.

What are the characteristics of debt discharge?

Waiver of a debt means that a debtor no longer has to honour his commitment because the creditor has waived it. A waiver is usually a benefit to the debtor because he no longer has to do something, or is just allowed to do something that was previously excluded.

Nevertheless, a party may have an interest in ensuring that a legal relationship still remains. As a result, some assume that a waiver is an act of law to which both parties must consent. It would then only be possible if both parties agree (see also Article 5.162, §2,2nd paragraph, 1° BW). The majority of legal doctrine, on the other hand, disputes this and assumes that a party can also grant a waiver unilaterally, for example in a will.

It must be certain that the creditor actually intended to release the debtor from his obligation. Yet this remission does not have to be in writing. It can also be given orally and need not even be in so many words. If an act cannot be interpreted otherwise, there is an implied waiver.

An obligation can be remitted on condition that the other party provides compensation. But the waiver can also happen just like that, with or without the intention of donating something. When a landlord reduces the rent because he is keen to extend the lease, there is a waiver for which there is no counter-performance, nor is it intended as a gift.

The parties are free to decide what, when and under what conditions the remission takes place. In the first place, this can be total or partial (e.g. interest only). In addition, conditions can be attached to this, such as the expiry of a certain period of time or the occurrence or non-occurrence of a specific event.

The consequences of waiver of debt

The main consequence of a waiver is that the debtor is released from his commitment. The main commitment no longer exists, but so do the secondary matters to the main commitment. Secondary obligations can include a surety, a pledge or a mortgage. However, the reverse does not apply. It is not because a person no longer has to be a guarantor that the creditor has also renounced the principal obligation. The person claiming that the obligation is no longer due must prove this.

Several persons may be involved in an agreement. There may be several debtors and creditors, for example, as well as third parties who are guarantors (for the performance of an obligation).

First, there may be several debtors who are jointly and severally liable for the debt. This means that one person can be held liable for the whole but the debt is divided between the debtors. When a creditor grants discharge in respect of one debtor, it is presumed that all other debtors are also released. This presumption can be rebutted. If this is not the creditor's intention, he must say so explicitly. In that case, the share of the debtor who was granted a waiver will be deducted from the entire debt. If the creditor returns the title (for example, an agreement, notarial deed or judgment) to one of the (joint and several) debtors, it is certain that the remaining debtors have also been released.

Secondly, third parties may also be involved, for example guarantors. As mentioned, the release of the debtor will also release the guarantors. However, the release of the guarantor has more limited consequences. The principal debtor remains bound to its performance, as do the other guarantors. If the guarantor had to pay a sum of money to obtain a discharge, this amount will be deducted from the principal debt and benefit the other guarantors.