Debt collection through court proceedings

Applying to court to collect a debt from an individual or legal entity is a necessary tool in protecting the rights of creditors. Applying to court is possible if there are proper legal grounds and in one of the ways provided for by law – by filing a lawsuit or an application for a court order. In the article we will examine the main features of such procedures.

When can a debt be collected in court: basic conditions

The general conditions are:

• first, the existence of documented relations between the creditor and the debtor (for example, under a loan agreement, receipt);
• second, confirmation of the debtor’s failure to fulfill obligations under the agreement (by providing certificates of work performed, invoices, etc.).

The following can also be attributed to special conditions:

• observance of the statute of limitations of three years (for the collection of the principal amount of the debt) and one year (for the collection of additional penalties from the debtor) – for filing a claim;
• the amount of the debt must not exceed one hundred subsistence minimums (302,800 UAH) – for filing an application for issuing a court order;
• the claim is indisputable and based on obviously confirmed facts – for filing an application for issuing a court order.

Important: it is imperative to substantiate your claims on the basis of a written agreement signed by both parties, respectively.

Grounds for writing off debt from individuals and legal entities

Sometimes debt can be written off from individuals and legal entities when it is recognized by law as a “bad debt”. The main grounds for such writing off are as follows:

1. declaration of the debtor as bankrupt with simultaneous establishment of a lack of funds to fully repay the debt;
2. missing or death of an individual (receipt of an appropriate court decision in this regard);
3. being a wanted individual for more than seven hundred and twenty days;
4. termination (liquidation) of a legal entity.

Algorithm of actions for debt collection in court

Pre-trial stage

Prikhodko & Partners lawyers recommend that before directly applying to court, attempts be made to resolve the dispute with the debtor by submitting a written claim. Such a document must contain information about:

• the parties to the dispute and their contact details;
• the essence of the breached obligation;
• the amount of the debt (principal debt, penalties, interest);
• requirements for payment of the debt amount within a specified period.

Such a claim should be sent by registered letter with a description of the attachment and a notification of delivery, which will provide official confirmation of the fact of its receipt by the debtor. This will also demonstrate the creditor’s good faith attempt to resolve the conflict peacefully. For more detailed information, we recommend contacting a lawyer at Prikhodko & Partners for professional advice. Moreover, the specialist will also be able to advise on the cost of filing a claim against the debtor.

Option 1: statement of claim for debt collection

If an agreement could not be reached and there is a dispute in the case, then filing a claim with the court is one of the main ways to protect violated rights. A statement of claim for debt collection is drawn up in writing and must meet the requirements established by law, in particular, contain information on:

1. the parties involved – the plaintiff and the defendant (if necessary – third parties);
2. the price of the claim (the amount of debt that the plaintiff demands to be collected from the defendant);
3. the circumstances of the case under which the debt arose (references to relevant evidence are attached);
4. specific provisions of the law that are the basis for satisfying the claims.

The plaintiff is also obliged to pay a court fee, the amount of which is equal to 1% (for an individual or an individual entrepreneur) or 1.5% (for a legal entity) of the price of the statement in accordance with the provisions of the Law of Ukraine “On Court Fees“.

Important: the greatest attention should be paid to the evidentiary base. Appropriate evidence from the creditor’s side may include, firstly, an existing loan agreement (receipt) and a claim against the debtor, secondly, certificates of work performed, and thirdly, invoices or delivery notes.

Option 2: Application for issuance of a court order

Collection of debt through writ proceedings is a quick way to solve the problem. It is initiated when the amount of debt does not exceed the threshold amount (302,800 UAH) and there is no dispute about the existence of the debtor’s obligation. The procedure for obtaining such an order involves:

• submission of an application for issuance of a court order;
• consideration of the application, the term of which does not exceed five days from the date of submission of documents to the court;
• issuance of the order and sending a copy of it to the debtor;

Important: If within fifteen days from the date of receipt of a copy of the document the debtor does not file an application with the court for its cancellation, the court order becomes legally binding and is subject to execution with the involvement of the enforcement service.

How can lawyers “Prikhodko and Partners” help?

Lawyers of the law firm “Prikhodko & Partners” have been representing clients in court on debt collection issues for several years. Having the necessary qualifications and professional experience, they can provide comprehensive legal assistance at all stages of the procedure.

By contacting our law firm, interested clients can receive not only reliable consulting support in their case, but also:

1. assessment of the prospects for collection;
2. calculation of the maximum amount of debt that will be subject to collection (taking into account the provisions of the contract and the law, respectively);
3. preparation and submission of a legally substantiated claim;
4. negotiations with the debtor;
5. preparation of procedural documents for submission to the court (statements of claim, motions, responses, etc.);
6. representation at court hearings on behalf of the client;
7. appeal of court decisions (if necessary) to courts of second and third instance.
8. legal support for the implementation of the decision in the case;
9. preparation of draft settlement agreements (if necessary).

By contacting the lawyers of “Prikhodko & Partners” in cases of debt collection in court, you receive qualified legal assistance, protection of your rights at every stage of the process, and saving your time and effort. To find out the price of our lawyer’s services, fill out the form below.