Enforcement and collecting a debt
If a debtor fails to pay his or her debt voluntarily, the creditor can request enforcement.
Some bills, such as tax bills and certain insurance bills, are directly enforceable, i.e. the creditor can request enforcement without a court’s decision on the matter. If the debt is not directly enforceable, the creditor must first apply for a decision or a ruling from the District Court. This is done by filing an application for a summons with the District Court. The District Court will establish the creditor’s right to collect the debt and order the debtor to pay it.
If the debtor fails to abide by the District Court’s decision voluntarily, the decision can be executed through enforcement. The court’s decision will not be enforced automatically, and instead the creditor must submit an application for reinforcement to the enforcement authorities, accompanied by the court’s decision.
Once an unpaid bill or debt has progressed to enforcement, the enforcement authorities will generally send a notification of pendency to the debtor. The notification will instruct the debtor to contact the enforcement authorities.
The debtor will also usually receive a final demand for payment to allow him or her to pay the debt voluntarily. The enforcement authorities can also decide to agree on a payment schedule with the debtor to enable the debt to be paid without distraint proceedings, but without weakening the rights of the creditor.
If the debtor fails to pay the debt voluntarily, his or her income or assets will need to be seized. Distraint proceedings can usually be executed even if an appeal has been filed against the District Court’s decision.
The general rule is that movable assets are seized before immovable assets. In most cases, it is the debtor’s earnings, pension or business income that will be seized. Customary household effects are never seized.
The creditor can also decide to limit the scope of enforcement by requesting limited enforcement. In the case of limited enforcement, only the debtor’s earnings, pension or other income, receivables or assets that do not need to be separately liquidated can be seized.
A debtor can be ordered to provide an enforcement declaration in which he or she must give full details of all of his or her current and former assets. Failure to provide the information can carry the penalty of a fine. Providing false information and concealing information are criminal offences.
As a general rule, only up to one-third of a debtor’s earnings, pension, unemployment benefit or maternity allowance can be seized. The maximum amount that can be seized will be calculated on the basis of the debtor’s net income. Social support and benefits, such as housing allowance and child benefit, cannot be seized. Income is never seized beyond what is termed the protected earnings rate, which is the amount that is considered necessary for the debtor and his or her family to live on.
A debtor is usually served an advance notification of distraint proceedings, which will include information about the debt to be collected, the protected earnings rate and the time when his or her assets will be seized.
The enforcement authorities do not keep a register of credit information themselves but will forward the details of any debtors whom they know to be insolvent and report any unidentified insolvent debtors to the Credit Information Register.
Long-lasting enforcement proceedings have been grounds for making a payment default entry against a debtor in the Credit Information Register since April 2012. A payment default entry will be made in the Credit Information Register if distraint proceedings concerning a debtor’s earnings, pension or other regular income have continued or if a payment schedule agreed instead of distraint proceedings has been in force for a total of at least 18 months during the previous two year