Our lawyers can help with the debt collection procedures in Luxembourg, especially the amicable debt recovery phase or the pre-court one. To make sure that you do not have to go to court, our Luxembourg attorneys will take any measure to ensure that the debt is recovered in a short time and with the least amount of legal implications.
| Quick Facts | |
|---|---|
| Applicable law | Civil Law |
|
Other specific regulations that apply (YES/NO) |
Law of 18 of April 2004 on interests on late payment of invoices and other EU Directives |
|
Types of debts that can be chased in Luxembourg |
Commercial and non-commercial debts |
| Availability of out-of-court procedures (YES/NO) | Yes, amicable procedures are available in Luxembourg. |
| Availability of court proceedings (YES/NO) |
Yes |
| Debt collection stages in Luxembourg |
The amicable procedure which starts with contacting the debtor, settlement of the debt, or court proceedings, if the payment is not made. |
| Court in charge of debt collection procedures |
– Magistrate’s courts for claims below EUR 15,000, – district courts for debts above EUR 15,000 |
| Existence of a minimum claim for court proceedings (YES/NO) |
Yes, EUR 15,000 |
| Requirements before taking a debt collection case to court (if any) |
The claimant must make sure the defenadant is not bankrupt. |
| Duration of amicable debt recovery process in Luxembourg (approx.) | Amicable procedures can be completed in a matter of days depending on how soon the parties agree on the payment. |
| Duration of debt recovery through court application (approx.) |
The procedure can take between 1 and 3 months, depending on whether appeals are made. |
| Recognition of foreign court orders related to debt collection (YES/NO) |
Yes |
| Possibility to use the services of debt collection agencies/lawyers (YES/NO) |
Yes, it is possible to work with debt collection agencies. |
| Debt collection services available (YES/NO) |
Yes, you can rely on our law firm in Luxembourg for support in debt recovery. |
| Types of services provided by our Luxembourg lawyers | Our lawyers can assist in both amicable and court proceedings. |
Debt recovery stages in Luxembourg
There are two ways of collecting a debt in Luxembourg:
- the amicable or out-of-court procedure;
- the judicial process.
The first procedure is usually employed for claims below EUR 10,000. For amounts exceeding this amount, there are various courts a claimant can file for debt recovery with. Our law firm in Luxembourg can offer representation in both situations.
Amicable debt collection in Luxembourg
In Luxembourg, out-of-court procedures can be initiated by the creditor. However, such a debt collection may end up without the desired result, especially when the amount to be recovered is small. For this purpose, claimants can use the services of:
- debt collection agencies;
- lawyers in Luxembourg.
An important aspect to consider about amicable debt collection in Luxembourg is that the measures that can be taken to obtain an outstanding amount of money are limited. The process implies:
- trying to reach the debtor by traditional mail, e-mail, and phone;
- sending dunning letters.
If the debtor replies, an agreement for the payment of the debt can be negotiated in favor of both parties. When this procedure fails, the creditor can file a complaint with one of the courts dealing with such matters. At this stage, you can ask for the support of our attorneys in Luxembourg.
Legal proceedings in debt collection in Luxembourg
There are two types of legal procedures that can be initiated against an individual or company failing to pay debts. They are:
- the payment order, which is the simplest and fastest debt recovery court procedure;
- the summons or procedure on merits and takes longer to complete.
No matter the type of procedure to undertake, the claimant must first ensure the defendant is not bankrupt. Our lawyers in Luxembourg can assist with due diligence checks for this purpose.
Payment orders are usually issued for debts resulting from various contracts. The respective agreement must contain specific information about the amount to be recovered.
Summons apply when:
- the case is complex and there is no precise way of determining the outstanding amount;
- the debt was challenged by the defendant.
In both cases, legal representation is required, as proceedings will also imply hearings. Our Luxembourg law firm can offer court representation.
We also have an infographic on this topic:
The debt collection process
Any debt collection claim in Luxembourg needs to take into consideration the specific and unique situation that has led to debt accumulation and also the reasons of both the claimer and the debtor.
A debt collection claim starts after a client sends the necessary information about the debtor and the supporting documentation that will provide all the necessary details referring to the payment, the conditions in which the business partnership took place and other details. Our lawyers in Luxembourg will start by sending a demand letter or debt collection letter to persuade the debtor to make the necessary payments.
If the debtor does not offer a response, usually within 60 days, our attorneys in Luxembourg can commence any necessary legal action. The complaint is served to the debtor and our lawyers in Luxembourg will see that the trial date is set and the necessary arrangements are made to enforce the final court decision.
Simplified debt collection proceedings
Before the judgment in front of the court, the creditor may choose the simplified debt recovery in Luxembourg by application procedures. For this, the request is sent directly to the competent court in a printed or downloadable form. The court orders the debtor to pay the amount claimed. The last one can object to the decision of debt enforcement. The objection is made in writing and the case is argued in open court if the creditor or the debtor requests the convening of the parties to the court to make a decision.
If the simplified procedures are not accepted, the creditor may proceed by way of summons before the magistrate (Justice of Peace) or assignment before the district court to summon the debtor to the public hearing.
Summons in debt recovery in Luxembourg
In the first case, when the disputed amount is below 15,000 EUR, the case is ruled by the Justice of Peace through the Magistrate’s Court. The creditor submits an application or payment in Court and, if the request appears to be justified, the magistrate orders the debtor to pay the claimed amount. A conditional payment order is served to the debtor by the Registry which sends a copy to the creditor.
If the application does not seem justified, the magistrate rejects it through an order of dismissal which is not subject to appeal.
Within 15 days of notification of the conditional payment order, the debtor may: either pay the claimed amount or make an objection against the decision. The latter is made by a written or oral statement at the office of Justice of the Peace who initially made the provisional order of payment. The application contains a summary of the means of the debtor. In this case, the parties are summoned to the hearing by the court. If the debtor fails to appear, the court will make a judgment without the possibility of defending its case. If, without good reason, the creditor does not appear, the debtor may request a ruling on the merits, without the possibility for the judge to refer the case to a later hearing. If neither party appears, the judge may strike the case by a decision not subject to appeal after a final notice to the parties or their representatives. If the doubt is well founded, the conditional payment order is considered void. If the contradiction is partly founded, the magistrate convicts the debtor for the portion of the receivable recognized.
The creditor has a period of six months from the notification of the conditional payment order to the debtor to request the respective order to be enforced. This process is done by simply verbal or written communication with the office of the Justice of the Peace, which makes the provisional order for the payment statement. After this period, the conditional payment order will be considered void, which means that the creditor must start the procedure again if it intends to act against the debtor.
Enforcement of a court decision in Luxembourg
The judicial system of Luxembourg includes:
- the Superior Court of Justice (composed of the Supreme Court, Court of Appeal, and the Attorney General’s Office);
- the district courts;
- the Justices of the Peace.
The enforcement of the decisions taken by these courts is made by the State Attorney who is responsible for the execution of sentences imposed by criminal courts and the general direction and supervision of prisons. It directs and controls the conditions of the enforcement application.
In commercial matters, such as the recovery of debts in Luxembourg, the court that will make a decision related to the matter is determined by the principal amount of the debt. The Justice of the Peace is competent for less than EUR 15,000 debt, while the district court has jurisdiction over EUR 15,000 debt.
The collection of receivables to a sum of money exceeding EUR 15,000 may be prosecuted before the president of the district court or by the procedure of unilateral query. The latter is possible only when the debtor is domiciled or resident in the Grand Duchy of Luxembourg. The application must be accompanied by all documents required to prove the existence and amount of the debt and establish the merits (eg purchase order, invoice, reminder, etc.).The application and supporting documents must be sent by post or filed with the competent district court, in 5 copies. The request must state the qualities of the plaintiff and defendant (full name, full address, and, if a married woman or widow, the name and maiden name), respectively the legal form of the plaintiff and defendant if society and its statutory body or its legal representative.
The President of the competent district court examines the merits of the application in light of the delivered documents. If the request appears to be justified, the President of the competent district court orders the debtor to pay the amount claimed by the creditor. The Registry will deliver a conditional order and a copy of the request to the debtor. It also notifies a copy of the order to the creditor. If the application does not seem justified, the President of the District Court rejects it through an order of dismissal which is not subject to appeal.
Within 15 days following notification of the provisional order provision, the debtor either pays the claim or contradicts it by declaration to the court. The declaration is made by a written statement with the clerk of the district court that made the provisional order provision. It contains an indication of the grounds on which it is based and is accompanied by all documents to justify the contradiction. The judges will hear both parties and can take one of the following decisions: if the doubt is well founded, the provisional order is considered void, if the contradiction is partially founded, the President shall declare the conviction for the portion of the debt well founded or can declare the debtor’s conviction if the doubt is not founded.
If the debtor is not resident in the Grand Duchy of Luxembourg, it is necessary to proceed by way of summons in chambers provision.
The bailiff in debt collection cases in Luxembourg
The procedure of seizure begins with the elaboration of a notification to the debtor which contains the names and addresses of the parties and the bailiff, the date of entry of the notification, the owned amount, an order to pay the amount, the consequences of non-payment, the address of domicile in the municipality where the execution should be. At least one day after the notification, the bailiff will draw up a report of seizure. He will be assisted by two major Luxembourg witnesses or relatives of the parties.
The bailiff can start the procedures of enforcement in case the debtor is still not paying the debt. If the bailiff finds the doors closed, he can require the Justice of the Peace or a police officer having territorial jurisdiction to assist in the process of opening these doors.
After that, the bailiff elaborates on the minutes of seizure which contain: the payment order, the inventory of the property seized the names and addresses of witnesses, if any, of the officer who attended the opening doors, and the day of the sale. The seized assets are put under the supervision of a guardian in order to avoid their misuse.
In case the debtor was subject to another entry made by another bailiff, it cannot be subject to another entry. The second bailiff can only capture the effects which were omitted in the first notification.
The last step of seizure is selling the assets and covering the liabilities. If the furniture seized from the property belongs to a third party it can be claimed before the auction.
Seizure of assets in Luxembourg
When a debtor refuses to pay its debts, the creditors can initiate legal action and try to enforce the payment. As a result, the court may decide to seize assets. This is applicable only to tangible property.
This seizure, a very common in practice, allows in principle, to capture all the tangible assets. These assets may be animals, furniture, merchandise, and more generally anything that can be transported from one place to another without any deterioration in the possession of the debtor.
Certain assets cannot be subject to seizure such as:
- clothing and essential laundry used by the debtor and his family;
- the necessary furniture for storage;
- a washing machine and iron;
- the appliances used for heating the family home;
- the tables and chairs used by the family to have meals;
- household utensils necessary for the debtor’s family;
- furniture for storing tableware and household utensils;
- devices used for preparing hot meals and for storing food;
- the objects used for dependent children who live under the same roof;
- pets;
- objects and products necessary for personal care and maintenance of premises;
- tools necessary for the maintenance of the garden;
- books and others necessary for the pursuit of studies or vocational training;
- objects used for religious worship;
- food and fuel needed for a month.
The seizure of assets is formed by three actions: a notification, minutes of seizure, and sale.
Here is also a video on this subject:
Debt collection timeframes in Luxembourg
Debt collection procedures in Luxembourg can span over various periods of time, depending on the proceedings followed. Here are some of them:
- in the case of amicable debt recovery, the average time to settle is around 90 days;
- in the case of the rapid procedure, the payment order is issued in 30 days;
- summons can take up to 2 years, depending on whether the case is appealed or not.
Our lawyers offer various legal services, including to Luxembourg nationals and foreign citizens. For the latter, our packages also cover solutions for immigration to Luxembourg.
You can contact our law firm in Luxembourg if you want to know more about debt collection or need any credit management services.