Debt collection under a receipt or loan agreement

Basically, debt obligations between the creditor and the debtor are formalized by concluding a loan agreement or by issuing an IOU in the name of the creditor by the debtor. In this regard, the collection of debt under a receipt or under a loan agreement has a number of features.

So, when collecting a debt under a receipt or a loan agreement, the procedure for processing and the form of drawn up debt documents is of great importance.

Main types of debt documents

The main common debt documents by which debt obligations are drawn up are a loan agreement and an IOU.

The essential difference between a debt receipt and a loan agreement is that the loan agreement is a separate independent type of agreement, which formalizes contractual debt legal relations between the parties. The general provisions of civil contract law shall apply to the loan agreement, including in terms of the existence of essential terms of the agreement, such as the subject matter, terms, price of the agreement.

At the same time, an IOU in its essence and form is not only a loan agreement, but an agreement at all.

According to the current civil legislation, namely Article 1047 of the Civil Code of Ukraine, an IOU is a document that confirms the conclusion of a loan agreement, as well as the fact of the transfer of funds of a certain amount from the creditor to the debtor.

A loan agreement and an IOU can be drawn up both together, complementing each other, or separately, while each, independently of each other, is an independent document, which confirms the existence of debt obligations and their conditions.

A loan agreement, like an IOU, can be drawn up in a simple written form, as well as in a written form certified by a notary.

As practice shows, the written form of a loan agreement or an IOU, certified by a notary, significantly increases the chances of collecting a debt under a receipt or a loan agreement.

What affects the collection of debt under a receipt or loan agreement?

Of course, the success of debt collection under a receipt or a loan agreement is affected by the correct execution of debt documents, regardless of which document is being collected, whether it is an IOU or a loan agreement.

Undoubtedly, an important role in collecting a debt under a receipt or a loan agreement is played by the presence of a notarized certification of debt documents, since when certifying a loan agreement or a receipt, the notary at least checks, and often prepares himself, the text of the debt document, which basically fully complies with the requirements of the law and is weakly subject to appeal in court.

A notarized debt document allows you to collect a debt from a debtor out of court by imposing a notary’s writ of execution, which significantly speeds up the collection process, and also minimizes the risk of declaring debt documents invalid in court.

Ways to collect debt under a receipt or loan agreement

Of course, the first step in collecting a debt under a receipt or a loan agreement is to negotiate with the debtor in order to minimize the time, financial and human resources spent on debt collection. Sometimes, with proper preparation, negotiations with the debtor bring good results and the conflict is resolved before it occurs. If the negotiations did not bring the desired result, the creditor needs to move on to more effective methods.

So, quite effective is the way of collecting a debt under a receipt or a loan agreement through the imposition of a notary’s executive inscription on a debt document with its further transfer to the state executive service or to a private executor. This method is possible only with notarial certification of debt documents, and therefore this method does not work with loan agreements and IOUs drawn up in a simple written form.

If the debt relationship is formalized in a simple written form, meaning a written loan agreement or a receipt drawn up without notarization, then in this case, in fact, the only effective method of collecting a debt under a receipt or a loan agreement is to file a claim for debt collection under a receipt or loan agreement to the competent court.

The success of debt collection under a receipt or a loan agreement through the court certainly depends primarily on the correct execution of debt documents, as described earlier.

It is worth noting that through the court it is possible to collect debts under a receipt or a loan agreement, which are drawn up both in a simple and in a notarized form, while the presence of a notarized form of an agreement significantly increases the chances of success.