Wednesday, 14 March 2018
Procedures to Follow on Debt Collection
A recovery procedure begins with an amicable phase: reminders by mail and telephone made directly by the creditor or by a professional recovery mandated. If necessary, it can continue with an order to pay (a solution reserved for small amounts), or even by seizure of the courts. It also happens that the unpaid is finally qualified as bad debt.
Amicable recovery procedure
If payment of an invoice has not been made at the end of the payment period defined in the general conditions of sale, the creditor, via his commercial or accounting department, contacts the debtor to make him aware of the situation. It may be a simple oversight or an administrative error.
If the appeal remains unfulfilled, it is time to start a real amicable recovery procedure (ie without going to court). This work is usually done by a company specializing in debt collection , but it is entirely possible to manage it internally, provided you devote sufficient time to it.
Plan dates in advance for sending a first reminder and then a letter of formal notice if nothing moves. These two shipments can be separated from two weeks for example.
An amicable procedure well conducted must meet the following 4 qualities:
Firmness: It is necessary to be insistent and persuasive with some interlocutors who lack good will
Organization: establish a schedule detailing the dates and the nature of the actions to be undertaken, especially if several recovery procedures are in progress simultaneously
Negotiation: Firmness is not incompatible with the spirit of negotiation. On the contrary, it must allow the opening of a discussion and the search for a compromise solution. It will always be in the interest of a creditor to close a recovery procedure during the amicable phase.
Obligation to pay: If the amicable reminders and the formal notice do not give results, the creditor initiates a judicial recovery procedure.
The first step is a hybrid action: The order to pay . If the debtor has not yet been summoned to court, the amicable stadium is still overridden. This is an expedited procedure to quickly obtain an enforceable title from the courts.
After filing a complete application with the registry of the competent court (usually the Commercial Court of the debtor's region), the title can be granted in less than two months, provided that the debtor does not complete opposition proceedings.
The creditor then delivers the enforceable title to a bailiff, who thus obtains legal legitimacy to operate a financial or material seizure transaction with the debtor.
The payment order is perfectly suited to receivables whose amount remains limited.
If the debtor formally objects to the injunction, the case is hot in the courts. A real judicial recovery procedure is then launched. It can last several months, even several years. A recovery file brought to court must be carefully prepared, hence the need for a lawyer.
Any injunction or judicial recovery proceedings may be preceded by a request for protective attachment . The latter makes it possible to preserve the repayment capacities of the debtor in the event that the final judgment gives reason to the creditor. Once a precautionary measure has been requested, the procedure must be launched with the courts in the following month. The conservatory seizure is concretized by the action of a bailiff.
Some claims are irrecoverable. This is particularly the case when:
The debtor is placed in judicial liquidation: the judgment can define a share of the debt which will not be paid to the creditor
Any trace of the debtor was lost: There are accounting and tax advantages to demonstrating the uncollectability of a debt for the creditor:
- The amount lost may be deducted from the taxable profit for the year
-VAT linked to the transaction is recoverable
Beware, however, that the creditor can claim to benefit from these compensations only if he provides proof that the claim is definitely irrecoverable , and this, despite sufficient actions to obtain reimbursement
Traditionally, in the event of failure of the recovery procedure, a certificate of uncollectability is issued by the professionals appointed by the creditor to manage the file: collection company, bailiff, etc. This certificate constitutes proof of irrecoverability with the tax authorities.
AMICABLE DEBT RECOVERY
Creditors will, by their own means or with the assistance of a professional, seek recovery of sums due in an out-of-court procedure, ie without any judicial procedure, whatever it may be.
This debt recovery procedure initially involves telephone calls to the debtor to pay the invoices due, then by reminders by simple mail or registered letter, in order to serve the debtor that he is liable for certain are.
The sending of registered mail is often acclaimed because it ensures a traceability that can be useful in case of evolution of the procedure. In the absence of effects, the creditor may call on an external party to take charge of this recovery phase. It can be a company specialized in this type of procedure, or even a bailiff. If this phase is finally doomed to failure, it is possible to take more draconian measures and under the guise of justice, which will no longer give the possibility of a settlement amicably.
RECOURSE TO JUSTICE
In order to better guarantee the recovery of debt, the creditor can appeal to the courts to ask the court to proceed with what is called a provisional measure, the aim being that the debtor does not hide any of his assets in the eyes. of Justice.
These procedures are various and give authority subsequently to the bailiffs to proceed for example to the realization of a seizure attribution directly to the bank accounts of the debtor. This procedure is legally supervised and is intended to protect the creditor; in summary, it gives an inventory of the debtor's assets at a time T, which will therefore have no possibility of evading what he owes by concealing assets or transferring them to a third party to contest the property.
This procedure paves the way for obtaining an enforceable title, which will enable the bailiff to proceed with the execution of the payment of the sums due. For large claims, the establishment of an enforceable title is imperative through judicial process and gives rise to an assignment. Small claims can be waived and the procedure is simplified.
REMEDIES FOR THE DEBTOR
In the face of all these proceedings against him, the debtor can fully contest the existence of a claim. It is up to him to prove the validity of this dispute by producing all the necessary documents, such as the exchange of letters and any receipt proving that the payment has been paid.
This dispute is possible regardless of the nature of the dispute: unpaid invoices, late rents, the debtor can contest if he is able to prove that he is in his right. This challenge procedure can be implemented from the moment the debtor receives a formal notice to pay. He has one month to assert this right. Since this injunction is issued by the court, he will have to use the same way to make his appeal heard. The dispute may be contested by registered letter with acknowledgment of receipt, either directly to the registry of the court, on presentation of all the evidence required.
The trial is not called into question, however, since the judge upholds the order to pay and the summons of both parties; it gives itself the possibility to study the arguments of the ones of the others before possibly questioning the injunction to pay and to validate the contestation of the debtor.
As these procedures are cumbersome, time-consuming and strictly regulated by law, it is possible to call a professional, such as a detective, to conduct a solvency investigation that will allow the creditor to know more about the actual financial health of the client. his debtor. These elements can be decisive when a legal proceeding is launched and when the debtor shows bad faith on the composition of his assets and his patrimony whatever it is.