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Czechdebtcollection.eu

Debt Collection in Czech Republic

Updated on Sunday 05th January 2014

The Czech Republic is one of the most stable and economically developed country of the post-Communist states and it scored a growth of over 6% per year, before the recent global economic crisis, which effected several companies and lead to the incapacity of payment and, implicitly, to a growth of Czech debt collection proceedings.

After the fall of communism, most economic sectors have been privatized, including banks and telecommunications. The economical development was also closely related to exports to the European Union, Germany in particular, and foreign investment, but also to the increasing domestic demand.

Since 2004 The Czech Republic is part of the Schengen Area, leading to free borders to its neighbors: Austria, Poland, Germany and Slovakia and in 2007 it became a member of the World Trade Organization.

In Czech Republic, when a creditor is not willing to a pay a debt, the first step is trying to reach to an amicable situation between the two parts, the creditor and the debtor.  In this case there are analyzed the contracts, the invoices and the delivery notes and the two parties find a convenient rescheduling of the payment form, including interest rates which are the same for all business relations, the percent being prescribed by Civil Law.

After sending an original invoice, the period of prescription is after 3 years for business-to-consumer claims, respectively after 4 years for business-to-business claims and can be interrupted if the creditor begins the legal procedure of debt collection.

Before the court proceedings, the debtor can receive reminders for payment, but the law does not perceive these documents as being mandatory. Despite this, the reminders are a useful instrument for collecting money in amicable way. Another measure that can be adopted between the two parties is the negotiation of an arbitration clause or a particular court’s local competence clause. When these clauses are not agreed upon, the case goes in charge of the District Court of the debtor.

When the amiable procedure fails, the creditor can ask the court for payment order. It is not necessary a court hearing for issuing this document and the payment can be executed only if the debtor does not file a complaint.

The next step in the debt collection procedure, in case the debtor files a complaint, is the judgment, known as the remedial action, in which the court calls a hearing. The decision, the payment and also the remedial action can be appealed against.

The debtor receives a summons with a 15 days dead line to comply, after this period the creditor can initiate the debt collection procedure in court.  

The court fees for the debt collection procedure account for 5% of the disputed amount, the minim sum is 600 CZK and the maximum can go up to 1 million Czech Crowns, which means about 35.000 euro. The interest is a separate tax, perceived in additional to the court fee. The arbitration fees are another fees to be paid, these are set by a special arbitration rule. The taxes are paid by the party who loses the process and the amicable debt collection in Czech Republic is free of taxes.

When the case goes into the court procedure, the solving time can take 12 months or more, depending on the complexity of the case in the debt collection procedure. 

Debt Collection in Czech Republic

The Czech Republic is one of the most stable and economically developed country of the post-Communist states and it scored a growth of over 6% per year, before the recent global economic crisis, which effected several companies and lead to the incapacity of payment and, implicitly, to a growth of Czech debt collection proceedings.

After the fall of communism, most economic sectors have been privatized, including banks and telecommunications. The economical development was also closely related to exports to the European Union, Germany in particular, and foreign investment, but also to the increasing domestic demand.

Since 2004 The Czech Republic is part of the Schengen Area, leading to free borders to its neighbors: Austria, Poland, Germany and Slovakia and in 2007 it became a member of the World Trade Organization.

In Czech Republic, when a creditor is not willing to a pay a debt, the first step is trying to reach to an amicable situation between the two parts, the creditor and the debtor.  In this case there are analyzed the contracts, the invoices and the delivery notes and the two parties find a convenient rescheduling of the payment form, including interest rates which are the same for all business relations, the percent being prescribed by Civil Law.

After sending an original invoice, the period of prescription is after 3 years for business-to-consumer claims, respectively after 4 years for business-to-business claims and can be interrupted if the creditor begins the legal procedure of debt collection.

Before the court proceedings, the debtor can receive reminders for payment, but the law does not perceive these documents as being mandatory. Despite this, the reminders are a useful instrument for collecting money in amicable way. Another measure that can be adopted between the two parties is the negotiation of an arbitration clause or a particular court’s local competence clause. When these clauses are not agreed upon, the case goes in charge of the District Court of the debtor.

When the amiable procedure fails, the creditor can ask the court for payment order. It is not necessary a court hearing for issuing this document and the payment can be executed only if the debtor does not file a complaint.

The next step in the debt collection procedure, in case the debtor files a complaint, is the judgment, known as the remedial action, in which the court calls a hearing. The decision, the payment and also the remedial action can be appealed against.

The debtor receives a summons with a 15 days dead line to comply, after this period the creditor can initiate the debt collection procedure in court.  

The court fees for the debt collection procedure account for 5% of the disputed amount, the minim sum is 600 CZK and the maximum can go up to 1 million Czech Crowns, which means about 35.000 euro. The interest is a separate tax, perceived in additional to the court fee. The arbitration fees are another fees to be paid, these are set by a special arbitration rule. The taxes are paid by the party who loses the process and the amicable debt collection in Czech Republic is free of taxes.

When the case goes into the court procedure, the solving time can take 12 months or more, depending on the complexity of the case in the debt collection procedure.