Due to the recent economic context, many entrepreneurs are unable to pay their liabilities and put their creditors in a difficult position.
The creditors are trying to solve these issues amicable in order to avoid supplementary expenses. This process consists in sending written notifications to the customer after the invoices becomes due. Usually in this notification are stipulated the due amount, terms of payments, the contact details for additional information. If this first step is not working, the creditor is usually calling the debtor and tries to reach an agreement and face the debtor with the possibility of being contacted by a debt collection agency or a law firm.
If these two steps are not having the desired result, the creditors are advised to hire a debt collection agency which is more experienced with cases like this and which can have a satisfying result.
The advantages of collaborating with this type of agency are numerous: once a debt collection agency is involved, the debtors has the tendency to pay faster their claims, in certain cases the agency is paid only it succeeds, by reducing the amount of debts the company’s cash flow is increased, the creditor is having more time while the agency is taking care of the situation.
In the beginning the debt collection agency is trying to convince the debtor to cover its liabilities. Written notifications and phone calls are the two used methods of persuasion. Usually, the debtor is more cooperative with the debt collection agency because he’s facing a legal procedure if the claims are not covered this time.
The agency or the law firm can reach a settlement with the indebted, if the creditors agree. As a result, the obligations can be paid in installments or the term for paying it can be extended.
The legal procedure is usually initiated in two ways depending on the liability size and the availability of the documents: payment order at court or the ordinary procedure.
For the payment order the following documents are usually required: an acknowledgement of debt and other relevant documents usually required by the debt collection agency. In the case of a regular lawsuit procedure, copies of all of the contractual documentation are necessary (invoices, delivery notes, orders, etc.)
The Court of First Instance or the Justice of Peace is responsible for the procedure of payment order depending on the amounts claimed. After checking the documents, if the Court decides in favor of the creditor will issue a Payment Order no later than 60 days immediately enforceable if the debtor accepts it without appeal. Usually a term of 15 days is allowed for depositing the objections from the debtor. If there are objections, the ordinary legal procedure can begin. The process takes around 8-12 weeks.
The legal procedure begins with filing a writ with all the details of the debt. If there are no written proofs of the contract between the party, witnesses or an affidavit can be used. If one claim totals more than 80000 EUR, the complaint is heard by three judges of the District Court. When the dispute amount is under 80000 EUR claims have to be settled with a judge.
The legal procedure takes around 12 months and even more, depending on the size of the claim and if the initial decision is contested or not.