How does debt collection work?

Pre-court debt collection: This stage lasts from 2 to 4 weeks. During this time, the debtor is located, contacted, and an attempt is made to reach an amicable agreement or set up a mutually acceptable repayment schedule.

Court debt collection: If an agreement cannot be reached, we proceed to court. Depending on the debt amount, a state fee is required for submitting the documents.

• Simplified procedure: To save time and costs, we first apply using a simplified procedure. This process takes 1 to 3 months. Once the court issues an enforceable document, we reach out to the debtor once more before starting forced recovery.

• Full legal process: If the debtor disputes the debt, we must file a full claim in court. This requires more resources and time, depending on the case's complexity. After evaluating the potential costs and success chances, we consult with the client about further steps.

Forced debt collection: With an enforceable court decision, we can initiate asset seizure. Mandatory enforcement costs depend on the debt size but are later reimbursed by the debtor. The debtor's bank accounts, vehicles, and other assets are frozen. These assets are sold through public auctions, and the recovered funds are distributed to creditors involved in the process.

Initiation of bankruptcy proceedings (for legal entities): If seizing the debtor's accounts and assets does not recover sufficient funds, we can apply for bankruptcy proceedings. This is an effective pressure tactic, especially if the debtor's company engages in questionable practices or has disorganized accounting. Facing bankruptcy, the debtor may pay the outstanding debt to avoid insolvency.

Certificate of hopeless debt: If a debt is over a year old, recovery actions have been taken, and the debtor has no assets or has gone bankrupt, we can issue a Certificate of Hopeless Debt. Your accountant submits this document to the tax authority (VMI), which reimburses the taxes paid on the irrecoverable debt. This allows you to recover part of the loss and write off the remaining amount.

So that you can focus on what you do best, leave the debt collection process to us. After all, work done by experienced professionals is always completed faster. If you’re dealing with a debtor, don’t wait—contact us today!