Enforcement and Bankruptcy Law

Many people hold a perfectly valid document and still cannot collect what they are owed for years. The reason is usually not that the right is missing but that the process was set up badly: the wrong type of proceedings chosen, an objection filed too late, an attachment placed too slowly. Enforcement law does not decide whether a right exists; it governs how an existing right is turned into money.

On the creditor's side Enforcement proceedings with and without a judgment, proceedings specific to negotiable instruments, actions to annul or to remove an objection, attachment of assets, sale of movable and immovable property, actions to set aside a debtor's disposal of assets, requests for precautionary attachment. The type of proceedings is chosen at the outset and is hard to correct later: going down the general attachment route while holding a cheque or a promissory note means giving up the speed that instrument-specific proceedings offer.

On the debtor's side Objection to the proceedings, objection to the debt and to the signature, negative declaratory and restitution actions, suspension and annulment of the proceedings, protection of assets that cannot be attached, review of the limits on salary attachment. An objection made in time halts proceedings brought without a judgment automatically. Once the deadline passes the proceedings become final, and the existence of the debt can then be raised only through a negative declaratory action.

Attachment, sale and complaints Carrying out an attachment, objecting to the valuation, requesting a sale and following the electronic auction process, setting aside an auction, third-party ownership claims. Where an act of the enforcement office is alleged to be unlawful, a complaint may be made to the enforcement court; the complaint is subject to a narrow time limit, save for matters touching on public order.

Composition with creditors and bankruptcy Applications for composition with creditors (konkordato) for businesses in financial difficulty, following the provisional and definite moratorium periods, objection to the project and notification of claims on the creditor's side; bankruptcy proceedings, direct bankruptcy applications, objection to the ranking list. Since the postponement of bankruptcy was removed from the legislation, composition with creditors is the main route open to a business in difficulty.

Frequently asked questions

How many days are there to object to enforcement proceedings? In proceedings without a judgment brought through the general attachment route, the objection is filed with the enforcement office within seven days of the payment order being served. In proceedings specific to negotiable instruments the period is shorter, and the objection goes to the enforcement court rather than the enforcement office. Proceedings based on a judgment have no objection procedure at all; there, a stay of enforcement may be requested.

I missed the deadline to object. What can I do? A debtor who was prevented from acting through no fault of their own may use the late objection procedure, exercised within a short period from the moment the obstacle is removed. Apart from that, a debtor who says the debt does not exist may bring a negative declaratory action; where the debt has already been paid, recovery is sought through a restitution action.

What is the difference between annulling an objection and removing it? Removal of an objection is a fast route heard by the enforcement court, available where the creditor holds a document of the kind listed in the law, and it proceeds on documents alone. Annulment of an objection is a claim brought before the general courts, where every kind of evidence including witnesses can be discussed and which produces a final judgment on the merits. The two differ in both their time limits and their court.

Can the whole of a salary be attached? No. Only the proportion of a wage or salary set out in the law may be attached, and maintenance claims fall outside that limit. Retirement pensions cannot, as a rule, be attached without the debtor's consent. Household goods needed for daily life and the tools of the debtor's trade are also outside the reach of attachment.

When should a sale be requested after an attachment? If no sale is requested within the period the law allows after an attachment, the attachment lapses and the process has to be built again from the start. A separate period runs for requesting an attachment once the payment order has become final. These two are the deadlines creditors miss most often.

Can I challenge an auction? Those concerned may ask for an auction to be set aside on the ground that it was not conducted properly, that the valuation was wrong, or that there were defects in the announcement or in service. The request goes to the enforcement court within a very short period from the auction date; if it is rejected, a fine calculated on the auction price may follow.

Time limits and procedures

• Objection to a payment order: seven days through the general attachment route; five days in proceedings specific to negotiable instruments, and to the enforcement court.
• Removal of an objection: six months from service of the objection, to the enforcement court. Annulment of an objection: one year, before the general courts.
• Third-party ownership claim: seven days from learning of the attachment. Setting aside an auction: seven days from the auction date.
• Complaint: seven days from learning of the act; the situations where a complaint may be made without a time limit are reserved.
• Action to set aside a disposal of assets: a five-year forfeiture period from the date of the disposal.
• Competent court: the enforcement court for removal of an objection, complaints, setting aside an auction and third-party ownership claims; for annulment of an objection, negative declaratory actions and actions to set aside a disposal, either the civil court of first instance or the commercial court of first instance depending on the nature of the claim.

In enforcement and insolvency files the outcome depends on the document the claim rests on, the state of the debtor's assets, and steps taken within their time limits. No undertaking can be given as to whether a debt will be collected.