What is debt collection?

Posted on

Debt collection is aimed at recovering debts from the debtor who is evading his obligations. Depending on the actions taken, one can distinguish amicable, judicial and bailiff debt collection.

Amicable debt collection – what is it about?

Amicable debt collection is based on negotiations between the lender and borrower. Its purpose is to determine the final and convenient date for paying the debt. In this case, both the creditor and a professional debt collection company may carry out debt collection activities. Regardless of the entity, however, this process usually follows the same principles.

The above scheme is an example, because each company, be it loan or debt collection, has its own debt collection policy. Some entities immediately refer the case to a debt collection institution, while others try to reach an agreement with the debtor through negotiations. There is no predetermined period and there are no accepted rules regarding amicable collection. Both the manner and time of its conduct depend on the will of the creditor.

One of the elements of amicable debt collection may be entering the debtor in the BIG register. In the case of natural persons, this may occur if the debt is higher than USD 200, and the debtor himself delays payment over 30 days. Often such information is contained in a request for payment sent to an unreliable borrower.

Legal debt collection – what is it about?

The creditor, not seeing the possibility of an amicable settlement of the case with the debtor, is most often forced to take the case to court in order to be able to recover the borrowed money by means of a court order for payment. This order has an enforcement clause. After obtaining it, the creditor directs him to a bailiff, who has the appropriate tools to recover outstanding debts.

A creditor does not need to use a law firm to obtain a payment order. In most cases, he or she can file a claim by way of e-court. The court will examine the documents, if it considers it justified to issue an order for payment, will send it to the debtor by post. If he does not object to the order within 14 days of receiving the letter, the order will receive an enforcement clause and the case will most likely go to a bailiff.

Debt collection – what does it look like?

Debt collection - what does it look like?

An order for payment which obtains an enforceability clause may be directed to a bailiff for enforcement. The bailiff is required to recover the outstanding claims at the creditor’s request. The application should indicate the method of enforcement, e.g. enforcement from the debtor’s bank account or remuneration, attachment of movable property or real estate.

It is also worth mentioning here that during enforcement proceedings the bailiff will not try to negotiate with the debtor in any way. He may not redeem him. An agreement is only possible directly with the creditor. In the event that the parties reach a settlement, the debtor may ask the creditor to submit a request to stay the enforcement proceedings.