Last updated: 16 March 2017
Causing cash problems or litigations, unpaid debts are unfortunately quite often in a large number of activities. In this context, debt recovery procedures are essential for protecting the company against clients who are late in paying their bills. For this, a brief description of the procedures to be used in order to recover due receivables is useful. You will also find information on the documents needed in order to support your arguments during such procedures and to secure your actions.
REMINDERS
Obviously, before starting any litigation for debt recovery - essential to companies in their commercial or financial activities - the interest is to try to settle the matter amicably with the clients. This amicable reminder can be sent by e-mail, by mail or by phone calls. Depending on his interest, the creditor can propose to the debtor:
- A postponement of the receivable due date;
- A partial payment of the debt;
- Assignment of property as payment of the debt.
Even if such reminders are sent, it should be noted that it is desirable and often even mandatory for the creditor to issue a formal notice, either by registered letter with acknowledgement of receipt or by a bailiff.
If the debtor fails to pay the required amount until the deadline mentioned in the formal notice, there are three procedures that the creditor can follow, depending on the particular circumstances of the matter:
- Small amounts procedure;
- Payment order;
- Legal action under ordinary law.
SMALL AMOUNTS PROCEDURE
The legal framework of this special procedure is established by articles 1026 – 1033 of the Code of Civil Procedure. It concerns claims under 10,000 Lei at the date when the legal action was started, excluding interest, legal expenses and other additional income.
During this procedure, the file to be submitted by the creditor must contain:
- A standard application, whose form is approved in advance by an Order of the Minister of Justice;
- Copies of the documents the creditor intends to use in order to prove the claim;
- A rectification form, if the court requests additional information.
The court will render a decision within 30 days from reception of the entire information or, where applicable, from the pleading of the claim.
The decision rendered by the Court can be appealed.
However, please note that this procedure does not apply to certain matters, such as tax, customs or administrative matters.
PAYMENT ORDER
The legal framework of the payment order is established by articles 1014 – 1025 of the Code of Civil Procedure.
In this case, the receivable must be certain, of a fixed amount and due. Also, this procedure must concern the payment of sums due under a civil contract, including those concluded between professionals (traders) or with a contracting authority, acknowledged in writing or determined by a statue, a regulation or any other document, which was accepted by the parties by signature or by any other means allowed by the law. On the other hand, this procedure does not apply to receivables registered with the general body of creditors in an insolvency procedure.
Generally, the payment order procedure is auspicious because a decision is promptly rendered (45 days, if the debtor does not dispute it), it is less expensive (stamp duties of 200 Lei, namely approximately 44 Euros) and the judge’s decision (the actual payment order) is enforceable. In addition, if his claim is rejected, the creditor can assert his claims in a civil action under ordinary law.
On the other hand, only documents are allowed as evidence during this procedure. If other evidence is necessary, the judge may reject the claim. Furthermore, the judge can reject the claim if the debtor submits a serious and well founded challenge.
If the claim is allowed, the payment deadline established by the judge cannot be less than 10 days and cannot exceed 30 days from the communication of the order. If the court acknowledges only a part of the debt to be paid by the debtor, the creditor can file a legal action under ordinary law, in order to force the debtor to pay the remaining amount. Decisions rendered by the court in favor of the creditor can be subject to an action for annulment.
LEGAL ACTION UNDER ORDINARY LAW
Unlike the previous procedure, the legal action under ordinary law takes longer and is more complex. It can last more than a year, depending on the particular circumstances of the case.
This procedure is chosen when the receivable is disputed: for example, the debtor claims to have received fewer goods or that the goods have quality issues etc.
This procedure is also more expensive, as stamp duties are calculated depending on the amount of the claim, plus lawyer fees, expert fees, where applicable.
During such a procedure, the claim must be proven by clear documents (contract signed with the partner, delivery/performance documents, invoices etc.). If such evidence is not sufficient, an expert report, witness hearing, interrogations may also be required.
All such evidence must be well prepared, to better serve your arguments.