Gjeldsordning: What You Need to Know About Debt Settlement

Sometimes, paying off a loan can be challenging. Defaulting on payments in many cases isn’t intentional. Job loss, poor health conditions, and accidents are some of the reasons why some individuals default on repayment.

Many people in such situations also end up feeling not only financially pressured but also mentally pressured. Thankfully, with a debt settlement (or gjeldsordning, as the Norwegians call it) scheme, you can get out of debt within a short time. If you’re wondering what this debt settlement is all about, you are reading the right article. In this piece, we’ll reveal what you need to know about this amazing debt-free strategy.

What is Debt Settlement?

Debt settlement is an agreement between the lender and the borrower to clear the borrower’s debt. This arrangement is usually undertaken by individuals with large and longstanding debts. The borrower must pay back the maximum amount they can afford within five years.

After this period, the borrower will no longer be in debt. While this arrangement is perfect for individuals with large and longstanding payment arrears, other better solutions might still exist. This is why you need to continue reading this article to find out if this solution is the best for you.

Types of Debt Settlement

This solution can either be compulsory or voluntary. We’ll begin with the second option, as it is the more common one. The voluntary type means that you initiate the process.

You’d have to contact your creditor with an agreement you’ve prepared. The creditor will then decide if they will accept your proposal. In many cases, they might choose to change some details that will be beneficial to them.

Once the agreement is reached, you can then begin to make payments according to the terms of the contract. Since you initiated the process, you must fulfill the terms of the arrangement. Another crucial piece of information about this process is that you can’t make a forced settlement application at the court without going through this first process.

The compulsory/forced option means the borrower received a legally binding agreement. In other words, the court sends this legal notice, and the borrower is mandated by the law to fulfill the terms of the agreement. The repayment period is five years. After this period, the debtor has fulfilled their financial obligations.

The amount that you’re required to pay depends mainly on your income. Sellable assets such as a car, home, chattel, and cottage are also factored into consideration. When a forced arrangement occurs, the lenders are typically left with a smaller portion of the loan debt than their initial entitlement.

Requirements to Secure a Compulsory Debt Settlement

When a creditor refuses the proposal of the debtor, the debtor is permitted by law to enforce a settlement. This is usually done via the District Court. What this means is that if the lenders reject the proposal, they’ll still have no choice but to obey the court order if the judgment goes in favor of the borrower.

What you need to enforce this settlement is that it must be proven that you cannot service the debt permanently. Furthermore, it must be proven that it is impossible to pay back the money shortly. Therefore, if you cannot pay back the money now but can do so in the next 10 or even 15 years, you won’t secure the compulsory debt settlement. If you can sell off assets to repay the loan, you won’t also secure this court order.

Another requirement is that the settlement must not be offensive or unreasonable to others. In other words, if someone else who was in the same situation as you wasn’t granted the debt settlement, you wouldn’t get it either. So, the representative of your creditors will do their best to look for cases where individuals with similar cases in the past didn’t get the court’s favor in a bid to throw out your case. Furthermore, you must also document that you tried the voluntary option first, but the creditors rejected your proposal.

Bear in mind that you won’t be eligible for the scheme if any of these issues are the reason why you can’t make payment:

  • Failure to pay duties and taxes when you could have paid them
  • Criminal relations
  • Unwillingness to pay the money when you had it

Who Administers the Settlement?

As we said earlier, you have to pass through the District Court to get the settlement. Therefore, the District Court’s bailiff is responsible for deciding whether you get the scheme or not. You can check here to learn more about the duties and responsibilities of a bailiff. They are also responsible for determining the terms of the agreement.

Furthermore, they’ll also create a budget to make sure you have sufficient money for housing costs and living expenses. The expenses will be kept at a reasonable amount, and the bailiff will determine subsistence rates using a different regulation. At the end of the day, whatever excess money you have must be paid to the lenders.

This scheme is perfect for individuals rather than business owners. Such business owners can only get the settlement under one condition. Less than 10 percent of the debt must be related to the operation of the business.

How to Apply for a Compulsory Debt Settlement

To apply for this scheme, the first thing you need to do is contact your district’s bailiff. You can then visit the police’s website for an overview of the things you need to do, the documentation you need, the format of the proceedings, etc. On the website, you’ll also find the application form, which you can download and print.

After filling out and submitting the form, you’ll receive a summons to meet with the district bailiff. Once all the required documentation is submitted, processing of the application will begin. Bear in mind that the agreement might take about four to six months before it is created.

Repercussions of a Compulsory Debt Settlement

If you force a settlement, you must be willing to part with your car, if you have one. It will be sold to pay back the creditors. However, if you use it for your business or work, or you need it because of a disability or illness, then you’ll be exempt from this.

Your home might also be sold. If you have a mortgage on it, the bank with the lien will get their money first. After that, your creditor will receive the profit. For a rented apartment, if the size and standard are reasonable, you get to keep it.

Assets such as a chattel or cottage might also be sold off. Other items that you can trade can also be sold. On the other hand, assets such as white goods, furniture, and clothes can be kept.


A debt settlement is a great solution for individuals who cannot service their debt. The inability to pay off the loan must be persistent. However, if it’s likely the situation might change 10 or even 15 years later, the agreement would not be sanctioned.

When you secure this arrangement, you are obligated to pay whatever surplus money that remains after your living expenses budget has been fulfilled to the creditors. Furthermore, you must not apply for a new loan within the stipulated period without getting approval from the bailiff. Finally, every year, you must submit your income information to your creditors so they can determine if you are complying with the terms of the agreement.

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