Recovering debts of under EUR 10,000

Unpaid invoices are a major risk for any business.

A company can put in place preventive measures in order to avoid unpaid invoices and limit their impact on the business.

When faced with a debtor who refuses to pay their debts, the creditor has several possibilities to recover their due:

  • extra-judicial procedures (amicable settlement of debts);
  • judicial procedures.

If the amicable settlement is unsuccessful, the creditor can engage in legal proceedings. A legal proceeding will vary depending on the amount of the debt and the complexity of the case.

Debts of EUR 10,000 or less fall under the jurisdiction of the magistrate's court of Diekirch, Esch-sur-Alzette or Luxembourg (depending on the domicile of the debtor).

There are 2 possible types of procedure:

  • order for payment: fast procedure;
  • summons: procedure on the merits.
Debts exceeding EUR 10,000 fall under the jurisdiction of the President of the district court.

Who is concerned

Any creditor, natural or legal person with a legal claim for a debt (eg.: unpaid invoice) of a person or company (the debtor) can initiate a recovery procedure against the debtor.

Prerequisites

Before initiating a debt recovery procedure, the creditor must ensure that they are not dealing with a debtor in bankruptcy. If that is the case, the creditor must submit a declaration of debt to the clerk of the competent district court (depending on where the debtor's registered office is located).

Preliminary steps

Formal demand

If, in spite of several reminders from the creditor (visits, phone calls, letters or dunning letters), the debtor still refuses to settle their debts, the creditor may send the debtor a formal demand as a last resort before initiating legal proceedings.

From a legal point of view, dunning letters or a formal demand are not required by law before initiating a judicial recovery procedure. In most cases, the formal demand is not necessary to set a deadline with a view to late-payment interest unless a compensation for damages is claimed.

The creditor may:

  • either serve the formal demand by bailiff;
  • or address the formal demand by registered letter with acknowledgment of receipt directly to the debtor.

If the debt is guaranteed by a surety, the formal demand also has to be addressed to the person (natural or legal) who acts as surety.

The formal demand must make mention of:

  • a formal order to pay addressed to the debtor;
  • the legal proceedings considered by the creditor should the debt not be paid;
  • the exact extent of the debtor's obligation;
  • a final deadline for the debtor to pay (recommended clause).

If the formal demand is unsuccessful, the creditor must initiate legal proceedings in order to recover their debt.

Payment time frames  

Transactions between professionals or with a public authority

If the debtor has passed the payment deadline, late-payment interest is due from:

  • the day following the payment due date or the end of the payment deadline agreed upon by contract;
  • If no date is stipulated by contract, 30 days after the date:
    • of receipt of the invoice; or
    • of receipt of the goods or the provision of services, if:
      • the date of the invoice cannot be clearly established; or
      • the debtor receives the invoice before the goods/services; or
    • of acceptance or verification of the conformity of the goods/services when:
      • this procedure has been agreed on by contract or is provided for by law;
      • the debtor receives the invoice before or on the date of acceptance/verification.

All parties to the contract have the possibility to agree on other terms of payment.

However, abusive clauses in the contract can be invalidated by the court.

Transactions between a professional and a consumer

A consumer is deemed to be in arrears with payment from the third month after the date:

  • of receipt of the goods; or
  • of completion of work or the provision of services.  

Late payment interest

Within the framework of transactions between professionals or with a public authority, the creditor can, in the event of late payment, claim:

  • late payment interest;
  • a basic flat-rate amount of EUR 40;
  • the payment of a reasonable recovery fee, such as lawyer's fees;
  • a reasonable compensation for any other fees exceeding that amount.

Within the framework of transactions with a consumer, the late payment interest:

  • starts running from the third month after the date:
    • of receipt of the goods; or
    • of completion of work or the provision of services.
  • can only be claimed if:
    • the invoice was issued within one month of receipt:
      • of the goods by the customer; or
      • of completion of work or the provision of services;
    • the professional has expressly stated on the invoice that the legal rate of late payment interest will be applied where necessary.

The applicable legal rate of late payment interest is fixed annually by Grand Ducal Regulation.

Costs

The cost of the summons mainly consists of the court bailiff's fees, plus the lawyer's fees if one was consulted.

The court bailiff's rate, which is set by a Grand Ducal Regulation, consists of:

  • a flat fee;
  • travel expenses;
  • in the event of consultation of the court bailiff: their hourly rate;
  • a percentage of 0.5 % to 3 % of the recovered amount.

How to proceed

For debts of EUR 10,000 or less, the creditor may file:

  • a provisional payment order when:
    • the debt arises from contractual agreements;
    • the contract allows to clearly determine the amount of the debt; or
  • a summons within the framework of:
    • a complex case (eg.: the amount of the debt cannot be accurately determined); or
    • the debt is disputed.

The amount of the debt to be taken into account includes accrued interest due on the date of the request.

Should a single creditor have multiple claims on the same debtor, the claims concerning the same cause may be added together to determine the amount and, consequently, the competent court.

These procedures do not require the intervention of a lawyer.

The parties must appear in person or be represented and/or assisted by:

  • a lawyer;
  • their spouse or partner;
  • their direct relatives (parents, grandparents, great-grandparents, children, grandchildren, great-grandchildren, etc.);
  • their collateral relatives up to and including the third degree (brother, sister, uncle, aunt, nephew, niece, brother-in-law, sister-in-law, etc.);
  • persons exclusively in their personal employ or the employ of their company.

All representatives, with the exception of lawyers, must have special authorisation (written power of attorney).

Order for payment

Submission of the request for an order for payment

The creditor addresses a request for an order for payment to the magistrate's court which has jurisdiction depending on the debtor's head office or domicile (Esch-sur-Alzette, Luxembourg or Diekirch).

The provisional payment order procedure does not apply to debts stemming from a working relationship for which the employment tribunals have jurisdiction.

Supporting documents

The request must be accompanied by supporting documents (in one copy) such as to provide proof of the existence and amount of the debt and to justify the request (e.g.: order form, invoice, reminder, account statement, etc.)

Court decision

The justice of the peace can:

  • either reject the creditor's claim if they decide that the request is not justified. The magistrate then pronounces an order of dismissal which cannot be appealed. In this case, the creditor can file a claim against the debtor with a summons;
  • or instruct the debtor to pay the amount claimed by means of a provisional payment order, if they consider the claim to be justified. The court clerk notifies the debtor of the provisional payment order and sends a copy to the creditor. The notification:
    • interrupts the limitation period;
    • initiates the interest costs to be borne by the debtor.

Within 15 days following notification of the provisional payment order, the debtor can:

  • either pay the creditor the amount claimed which stops the procedure;
  • or file an objection if they deem that all or part of the amount is not due.

Objection of the debitor: the objection

Declaration to the court clerk

The debtor may make an objection simply by submitting a written or verbal declaration to the clerk of the magistrate's court that issued the provisional payment order, stating their reasons for objecting to the amount due. They must state their arguments to object to the amount due.

In this case, the creditor and the debtor may request that the parties be summoned to a hearing in open court to deliberate on the validity of the debt.

Appearance of the parties in court

The court clerk summons the parties to the hearing at the request of one of the parties.

The procedure before the justice of the peace is solely a verbal procedure. The parties must appear in person or be represented in order to state their case. Written observations directly addressed to the court will not be taken into consideration.

In the event where the debtor should fail to appear in court, the creditor can request a judgement.

In the event where the creditor should fail to appear in court, the debtor may request that a judgment be handed down on the validity of the debt, unless the magistrate decides to postpone the case for a subsequent hearing.

If none of the parties appear in court, the judge may automatically cancel the case by means of a decision which cannot be appealed against. Prior to this, the judge must send the parties (or their representatives) a final notice of hearing.

Delivery of the judgment

On the day of the judgment, the justice of the peace hands down a reasoned judgment. If the objection is:

  • well-founded: the provisional payment order is cancelled;
  • partially founded: the justice of the peace shall sentence the debtor to pay the part of the debt recognised as founded;
  • rejected: the justice of the peace convicts the debtor.

Should the debtor be ordered to pay, the judgment handed down shall serve as an order for execution of payment on the part of the debtor.

Enforcement order

If the debtor does not pay and does not make an objection, the creditor has 6 months from the notification of the provisional payment order to the debtor, to request that the conditional payment order be rendered enforceable.

This is done by simply making a written or verbal declaration to the clerk of the magistrate's court that issued the provisional payment order.

Once the 6-month period has elapsed, the provisional payment order shall be considered null and void, meaning that the creditor will have to initiate a new procedure if he wishes to bring a new claim against the debtor.

The enforcement order issued by the justice of the peace has the same effect as a judgment by default and enables a judicial mortgage to be recorded.

Summons

Summons to appear in court

In matters of debt collection, this is the adequate procedure to follow in more complex situations, e.g. an objection to the provision of services on which the court is to rule.

The creditor submits their request to a court bailiff who notifies the debtor of the summons to appear in court. The deadline for appearance at the magistrate's court is 8 days.

On the day of the hearing, the justice of the peace first hears the case from both parties before they:

  • either order the debtor to pay the debt;
  • or reject the creditor's claim if they decide that the claim is not justified.

If one party disagrees with the decision, they can appeal against it within a period of 40 days from the day the judgment is handed down.

Forms / Online services

Modèle de mise en demeure

Modèle de mise en demeure - recouvrement de créance

Les informations qui vous concernent recueillies sur ce formulaire font l’objet d’un traitement par l’administration concernée afin de mener à bien votre demande.

Ces informations sont conservées pour la durée nécessaire par l’administration à la réalisation de la finalité du traitement

Les destinataires de vos données sont les administrations compétentes dans le cadre du traitement de votre demande. Veuillez-vous adresser à l’administration concernée par votre demande pour connaître les destinataires des données figurant sur ce formulaire. Conformément au règlement (UE) 2016/679 relatif à la protection des personnes physiques à l'égard du traitement des données à caractère personnel et à la libre circulation de ces données, vous bénéficiez d’un droit d’accès, de rectification et le cas échéant d’effacement des informations vous concernant. Vous disposez également du droit de retirer votre consentement à tout moment.

En outre et excepté le cas où le traitement de vos données présente un caractère obligatoire, vous pouvez, pour des motifs légitimes, vous y opposer.

Si vous souhaitez exercer ces droits et/ou obtenir communication de vos informations, veuillez-vous adresser à l’administration concernée suivant les coordonnées indiquées dans le formulaire. Vous avez également la possibilité d’introduire une réclamation auprès de la Commission nationale pour la protection des données ayant son siège à 1 Avenue du Rock'n'Roll, L-4361 Esch-sur-Alzette.

En poursuivant votre démarche, vous acceptez que vos données personnelles soient traitées dans le cadre de votre demande.

Requête en matière d'ordonnance de paiement

Les informations qui vous concernent recueillies sur ce formulaire font l’objet d’un traitement par l’administration concernée afin de mener à bien votre demande.

Ces informations sont conservées pour la durée nécessaire par l’administration à la réalisation de la finalité du traitement

Les destinataires de vos données sont les administrations compétentes dans le cadre du traitement de votre demande. Veuillez-vous adresser à l’administration concernée par votre demande pour connaître les destinataires des données figurant sur ce formulaire. Conformément au règlement (UE) 2016/679 relatif à la protection des personnes physiques à l'égard du traitement des données à caractère personnel et à la libre circulation de ces données, vous bénéficiez d’un droit d’accès, de rectification et le cas échéant d’effacement des informations vous concernant. Vous disposez également du droit de retirer votre consentement à tout moment.

En outre et excepté le cas où le traitement de vos données présente un caractère obligatoire, vous pouvez, pour des motifs légitimes, vous y opposer.

Si vous souhaitez exercer ces droits et/ou obtenir communication de vos informations, veuillez-vous adresser à l’administration concernée suivant les coordonnées indiquées dans le formulaire. Vous avez également la possibilité d’introduire une réclamation auprès de la Commission nationale pour la protection des données ayant son siège à 1 Avenue du Rock'n'Roll, L-4361 Esch-sur-Alzette.

En poursuivant votre démarche, vous acceptez que vos données personnelles soient traitées dans le cadre de votre demande.

Who to contact

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