Recovering debts of EUR 15,000 or less
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When a debtor refuses to pay their debts, in order to recover what is owed to them, creditors can seek a remedy through:
- an out-of-court (amicable) settlement;
- legal proceedings.
If the amicable settlement is unsuccessful, the creditor can bring legal proceedings. The appropriate legal proceedings will vary depending on the amount of the debt and the complexity of the case.
Debts of up to EUR 15,000 fall under the jurisdiction of the Magistrate's Court of Diekirch, Esch-sur-Alzette or Luxembourg (depending on where the debtor is domiciled).
There are 2 possible types of legal proceedings:
- payment order (rapid procedure); or
- summons (procedure on the merits).
Debts exceeding EUR 15,000 come under the jurisdiction of the President of the District Court.
Who is concerned
Any creditor (be they a natural or legal person) who has a right to recover a debt of EUR 15,000 or less (e.g. an unpaid invoice) against a debtor (either a natural or legal person) can initiate debt-recovery proceedings against the latter.
For example: Mr D (debtor) has not paid a bill issued by Enterprise C (creditor). Enterprise C has a right to recover the debt against Mr D, and may initiate debt-recovery proceedings against him.
Prerequisites
Before initiating debt-recovery proceedings, the creditor must ensure that the debtor is not bankrupt. If the debtor has filed for bankruptcy, the creditor must file a declaration of claim with 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 in the form of visits, phone calls, letters or dunning letters to the attention of the debtor, the latter still refuses to pay their debts, the creditor may send the debtor a formal demand as a last resort before initiating any legal proceedings.
From a legal standpoint, it is not absolutely necessary to send a debtor a letter of reminder or formal demand before initiating legal debt-recovery proceedings. In most cases, the creditor does not have to issue a formal demand in order to be entitled to interest for late payment, unless damages and interest are sought.
The creditor may:
- either have the formal demand served by a bailiff; or
- send the debtor the formal demand directly by registered letter with acknowledgement of receipt.
If the debt is guaranteed by a surety, the formal demand must also be sent 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 which the creditor is considering should the debt not be paid;
- the exact extent of the debtor's obligation;
- and, where applicable, an ultimatum demanding payment by a particular deadline.
If the formal demand is unsuccessful, the creditor may initiate legal proceedings to recover the debt.
Costs
The cost of a summons consists mainly of the bailiff's fees, plus the lawyer's fees if one was consulted.
The bailiff's fees, which are set by Grand Ducal Regulation, consists of:
- a flat fee;
- travel expenses;
- if the bailiff is engaged for further consultations: an hourly rate;
- a percentage of between 0.5 % and 3 % of the recovered amount.
How to proceed
Filing the request for an order for payment
The creditor must address a request for an order for payment to the competent Magistrate depending on the location of the debtor's registered office or domicile (Esch-sur-Alzette, Luxembourg or Diekirch).
The creditor can file for an order for payment when:
- the debt arises from a contractual agreement;
- the contract clearly defines the amount of the debt, or how that amount can be precisely determined.
The payment order procedure does not apply to debts arising from an employment relationship, for which the labour tribunals have jurisdiction.
Supporting documents
The application must be accompanied by supporting documents (a single copy of each will suffice), which:
- prove the existence and amount of the debt; and
- establish its validity.
Examples include purchase orders, invoices, dunning letters, itemised breakdowns of costs, etc.
Court decision
The magistrate may:
- deny the request, if they believe the claim to be unfounded. In that case, the magistrate will issue an order of dismissal, which cannot be appealed, and the creditor will then be free to seek a summons against the debtor; or
- order the debtor to pay the amount claimed by means of a conditional payment order, if they consider the request to be justified. In that case, the court clerk will notify the debtor of the conditional payment order and send a copy to the creditor. The notification:
- stops the clock on the limitation period;
- marks the start of the accrual of interest against the debtor.
Within 30 days of notification of the conditional payment order, the debtor may:
- pay the creditor the claimed amount, and in so doing, settle the dispute; or
- file an objection (see below), if they believe that all or part of the amount claimed is undue.
Objection by the debtor: objection
Declaration to the court clerk
The debtor may, within 30 days of notification of the conditional order for payment, file an objection by way of a simple written or verbal declaration to the clerk of the Magistrate's Court which issued the conditional order for payment. They must state their arguments supporting their objection to the amount due.
In this case, the creditor and debtor may request that the parties be summoned to a hearing in open court to deliberate on the validity of the debt.
If neither party requests an open-court hearing within 6 months of the objection, then the order will be considered null and void.
Appearance of the parties in court
The clerk will summon the parties to a hearing if one of the parties requests it.
The procedure before the magistrate is solely a verbal procedure. Therefore, the parties must appear in person or send representation in order to have their arguments taken into consideration. Written observations addressed directly to the court will not be taken into consideration.
Should the debtor fail to appear, the creditor may ask for a judgment.
Should the creditor fail to appear, the debtor may ask for a judgment as to the validity of the debt, unless the magistrate postpones the case for a later hearing.
If neither party appears in court, the magistrate may automatically cancel the case by way of a decision that cannot be appealed. Prior to doing so, the judge must send the parties (or their representatives) a final notice to attend a hearing.
The parties may appear in person, or be represented and/or assisted by:
- a lawyer; or
- their spouse or partner, as provided for in the modified law of 9 July 2004 on the legal effects of certain partnerships; or
- their direct relatives (parents, grandparents, great-grandparents, children, grandchildren, great-grandchildren, etc.); or
- their collateral relatives up to and including the third degree (brother, sister, uncle, aunt, nephew, niece, brother-in-law, sister-in-law, etc.); or
- persons exclusively in their personal employ or the employ of their company.
All representatives, apart from the lawyer, must have special authorisation (written power of attorney).
The parties may request that the case be:
- admitted and heard at the hearing; or
- postponed and heard at a later date; or
- struck off the roll, if there are no longer any grounds for the case due to the fact that the parties have reached a settlement.
If both the plaintiff and the defendant appear at the first hearing, a date is set to hear pleas, so that the parties have time to:
- exchange their exhibits – i.e. the documents supporting their own positions; and
- study those submitted by their opponent.
If the defendant, having been validly informed that the hearing is being held, does not appear at the initial hearing, the case may be admitted in their absence.
Delivery of the judgment
On the day of the judgment, the magistrate will hand down a reasoned judgment. If the objection is:
- valid: the conditional order for payment will be nullified; or
- partially valid: the magistrate will hand down a judgment against the debtor for that part of the debt which is recognised to be valid; or
- invalid: the magistrate will find against the debtor.
No opposition on the part of the debtor: enforcement order.
If the debtor does not pay and does not lodge an objection, the creditor has 6 months, as from the notification of the conditional payment order to the debtor, to request that the conditional payment order be made enforceable.
This procedure may be initiated no earlier than 30 days after the debtor has been notified of the order, and by way of a simple written or verbal declaration to the court clerk for the magistrate's court which issued the conditional payment order.
Once the 6-month time limit has elapsed, the conditional payment order shall be considered null and void, meaning that the creditor will have to initiate a new procedure if they wish to bring proceedings against the debtor again.
The enforcement order issued by the magistrate has the same effect as a judgment by default and enables a judicial mortgage to be recorded.
Summons
The creditor may seek a summons if:
- the case is more complex (for example: when the amount of the debt cannot be calculated precisely); or
- the debt is disputed.
The creditor must submit their request to a bailiff, who will notify the debtor of the summons. The time limit for appearing in the magistrate's court is 8 days.
On the day of the hearing, the magistrate will hear both parties before:
- ordering the debtor to pay the debt; or
- rejecting the creditor's claim, if they decide that the claim is unfounded.
If either party disagrees with the decision, they can appeal the decision, provided they do so within 40 days of the day the judgment is handed down.
Representation at the hearing
The parties are required to either appear in person, or be represented and/or assisted by:
- a lawyer; or
- their spouse or partner, as provided for under the modified law of 9 July 2004 on the legal effects of certain partnerships; or
- their direct relatives (parents, grandparents, great-grandparents, children, grandchildren, great-grandchildren, etc.); or
- their collateral relatives up to and including the third degree (brother, sister, uncle, aunt, nephew, niece, brother-in-law, sister-in-law, etc.); or
- 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).
Good to know
Interest is not to be taken into consideration when determining the amount of the debt.
Should a single creditor have multiple claims against the same debtor, the claims arising from the same cause may be aggregated to determine the amount and, consequently, the competent court.
These procedures do not require the involvement of a lawyer.
B2B transactions
Late payment interest
In the context of B2B transactions, in the event of late payment, the creditor may claim:
- late payment interest;
- a flat fee of EUR 40 for recovery costs;
- reasonable compensation for recovery costs exceeding the EUR 40 flat fee, such as lawyer's fees.
If the debtor misses the payment deadline, late-payment interest is due:
- as of the day following the payment due date, or the expiry of the payment deadline contractually agreed upon;
- 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 is uncertain; or
- the debtor receives the invoice before receiving 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.
The parties to the contract are free to agree on other terms of payment.
Any unfair clauses in the contract may be rendered null and void by the court.
Transactions between a professional and a consumer
Payment time limits
In the context of transactions with a consumer, late payment interest:
- is automatically incurred (without the need for formal notification) as from the 3rd month following the date:
- of receipt of the goods; or
- of completion of work or the provision of services;
- can be claimed if and only if:
- an invoice was issued within one month of:
- receipt of the goods by the customer; or
- 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 claimed.
- an invoice was issued within one month of:
The applicable legal rate of late payment interest is set annually by Grand Ducal Regulation.
Online services and forms
Who to contact
Magistrate's Court of Diekirch
-
Magistrate's Court Magistrate's Court of Diekirch
- Address:
- 8-10, Place Joseph Bech L-9211 Diekirch Luxembourg
- Phone:
- (+352) 80 88 53-1
- Fax:
- (+352) 80 41 90
Magistrate's Court of Esch-sur-Alzette
-
Magistrate's Court Magistrate's Court of Esch-sur-Alzette
- Address:
-
Place Norbert Metz
L-4239
Esch-sur-Alzette
Luxembourg
L-4006
- Phone:
- (+352) 530 529 200
- Fax:
- (+352) 530 529 304
Magistrate's Court of Luxembourg
-
Magistrate's Court Magistrate's Court of Luxembourg
- Address:
- Cité judiciaire - Plateau du Saint-Esprit - Building JP L-2080 Luxembourg Luxembourg
- Phone:
- (+352) 47 59 81-1
- Fax:
- (+352) 46 54 34
Related procedures and links
Procedures
Links
Further information
-
Créance inférieure à 15.000 euros
sur le Portail Justice
-
Annuaire des avocats
sur le site du Barreau de Luxembourg
-
Which country's court is responsible?
on the European e-Justice Portal
-
Which court to turn to?
on the European e-Justice Portal
Legal references
- Code civil
- Code de Commerce, Livre IV, Titre II
-
Loi modifiée du 18 avril 2004
relative aux délais de paiement et aux intérêts de retard
