Recovering debts of over EUR 10,000

Last updated more than 5 years ago

Many companies have a problem recovering debt in their daily business life.

Faced with a debtor who is reluctant to honour his debts, the creditor has at his disposal judicial and extra-judicial (amicable settlement) procedures to secure what is owed to him.

When the amicable settlement is unsuccessful, the creditor must initiate a legal proceeding which will depend on the amount of the dispute and the complexity of the case.

For claims higher than EUR 10,000 the President of the district court has jurisdiction (Diekirch or Luxembourg depending on the domicile of the debtor).

There are 2 possible types of procedure:

  • ex parte application (or request for a payment order);
  • interim payment order (procedure by summons).
Claims up to EUR 10,000 come under the jurisdiction of the magistrate's court.

Who is concerned

All creditors (natural or legal persons) with a claim on a person or company (debtor) may initiate debt recovery proceedings against said party.

For debts of over EUR 10,000, the creditor may:

  • either submit an ex parte application (or request for a payment order) if the debtor is domiciled or resides in Luxembourg.
    This procedure does not require the intervention of a lawyer;
  • or request an interim payment order (procedure by summons) if the debtor is not domiciled or does not reside in Luxembourg.
    This procedure requires the services of a Court lawyer, as the summons requires election of domicile at the lawyer's office.
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.

Prerequisites

Before he initiates a debt recovery procedure, the creditor must ensure that he is 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

Payment deadlines/Late payment interest

Transactions between professionals or with a public authority

As regards transactions between professionals or with a public authority, the creditor may, in the case of late payment, claim late payment interest and a flat fee of EUR 40 to compensate for recovery costs without a reminder or a formal demand being necessary.

He may also claim reasonable compensation for all other recovery costs exceeding this amount.

The debtor's payment is overdue:

  • as from the day following the payment due date or the end of the payment deadline agreed upon by contract;
  • or failing this, 30 days after the date of:
    • receipt of the invoice;
    • receipt of the goods or provision of the services if the date of the invoice is uncertain or if the debtor receives the invoice before the goods/services;
    • acceptance or verification of conformity of the goods/services, should such a procedure be provided for in the contract or by law and where the debtor receives the invoice on or before the date of acceptance/verification.

Transactions with a consumer

As regards transactions with a consumer, late payment interest starts to accrue as from the third month following the date of receipt of the goods, completion of the works or provision of the services. Late payment interest can only be claimed if:

  • an invoice was issued within a month of receipt of the goods by the client, of completion of the works or of provision of the services and;
  • the professional has expressly stated on the invoice that the legal rate of late payment interest will be applied where necessary.

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 his debts, the creditor may send the debtor a formal demand as a last resort before initiating any legal proceedings.

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 may initiate legal proceedings in order to recover the debt.

How to proceed

Payment order

Request for a payment order

This procedure, initiated by ex parte application, is only possible if the debtor is domiciled or resident in Luxembourg.

The creditor addresses a request for a conditional payment order (1 original + 4 copies) to the President of the district court with jurisdiction for the debtor's head office or domicile (Luxembourg or Diekirch).

The request must be accompanied by supporting documents (1 copy only) proving the existence and amount of the debt and establishing its validity (e.g. order form, invoice, reminder, financial statement, etc.).

It must be submitted in a file marked with the names of the claimants and defendants.

If the creditor is making a claim against several jointly and severally liable debtors domiciled at different addresses, he must submit a separate request (including supporting documents) for each debtor.

The President of the district court with jurisdiction in personam regarding debt claims is that of:
  • the domicile of the defendant, if the debtor is officially declared there;
  • the place of residence, if the debtor lives there without being officially declared.
The President of the district court with jurisdiction in contractual matters is that of the place where the obligation has been or must be fulfilled.

Payment order/Order of dismissal

Once the request has been submitted to the district court, the President of the court may:

  • either dismiss the request, if he does not consider it to be justified, by means of an order of dismissal, which cannot be appealed against. The creditor may, however, make a claim against the debtor via a summons;
  • or instruct the debtor to pay the amount claimed by means of a conditional payment order if he considers the request to be justified. The court clerk notifies the debtor of the conditional payment order and sends a copy to the creditor. This notification interrupts the limitation period and interest to be paid by the debtor shall start to accrue.

In the 15 days following notification of the conditional payment order, the debtor may:

  • either pay the creditor the amount claimed. In this case, neither the creditor nor the debtor need take any further action;
  • or lodge an objection if he deems that all or part of the amount is not due.

Objection

Declaration to the court clerk

The debtor may lodge an objection simply by means of a written declaration to the clerk of the district court which issued the conditional payment order, stating the reasons and enclosing all documents in support of the objection.

The court clerk then summons the parties to a summary judgment hearing in open court to deliberate on the validity of the debt.

Appearance in open court

If the debtor does not appear in court, the judgment will be handed down without him being able to put forward his arguments.

If the creditor does not appear in court (without a legitimate reason), the debtor may request that a judgment be handed down on the validity of the debt, unless the judge 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, he must send the parties (or their representatives) a final notice of hearing.

The parties may appear in person or be assisted or represented 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.);
  • people in their personal employ or the employ of their company.
All representatives (apart from the lawyer) must have special authorisation (written power of attorney).
Hearing

At the hearing, the President first reads out the list of cases. The parties may request that the case be:

  • admitted and heard at the hearing, or;
  • postponed and heard at a later date, or;
  • removed from the list if the case is no longer valid due to the fact that the parties have come to an agreement themselves.

If the claimant and the defendant appear at the first call, the case will be postponed to allow them to exchange their evidence, i.e. the documents in support of their arguments, and examine the evidence of the other party.

During the hearing of the case, the President will invite the parties to present their case. Although it is a verbal procedure, it is recommended that the parties present their financial statements (e.g. statement of interim payments, etc.) in writing. The parties may also present notes on submissions, stating their case in writing.

The debtor is authorised, if he so wishes, to make a counterclaim against the claimant (e.g. request for procedural compensation).

To close the deliberations, the President declares that the matter is taken under advisement and sets the date on which the order will be issued.

Judgment

On the day of the judgment, the President issues a reasoned order.

If the objection is valid, the conditional payment order shall be considered null and void.

If the objection is partially valid, the President shall order the debtor to pay the part of the debt recognised as valid.

If the objection is rejected, the President shall order the debtor to pay.
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 lodge an objection within 15 days, the creditor may request that the order be made enforceable.

The request is submitted to the court clerk by the creditor or his representative (on the copy of the order notified to the creditor).

The enforcement order issued by the President has the same effect as an interim order: it is provisionally enforceable, i.e. the decision on the principal matter is not a legally binding court ruling. It is enforced by the creditor at his own risk. It may be amended or be the subject of a new summary judgment should new circumstances arise.

Interim payment order

Summons

The creditor submits his request to a court bailiff, stating:

  • the date;
  • names, first names, profession and domicile of the applicant;
  • if the applicant is a legal person, type of company, company name, registered office and registration number with the Trade and Companies Register;
  • names, first names, profession and domicile of the recipient;
  • names, first names and residence of the court bailiff;
  • object and a summary of the arguments;
  • formalities of the notification of the legal document;
  • indication of the competent jurisdiction and the deadline for appearance in court;
  • indication of the documents on which the claim is founded (the documents must be appended).

The court bailiff shall notify the debtor of the summons at his address.

The matter is then referred to the district court as a summary judgment hearing.

This procedure takes longer than the payment order because the judges will examine the case on the merits. The case will be decided by a legally binding court ruling (res judicata).

This procedure requires the services of a court lawyer, as the summons requires election of domicile at the lawyer's office.

If the debtor does not appear in court and has not received the summons (for example, as he has moved abroad without leaving a forwarding address), the President shall rule via an order issued by default.

If the debtor does not appear in court but has received the summons, the President shall rule as in an inter partes procedure.

If the debtor appears in court, either in person or via the representation of a lawyer or a representative with special authorisation, the President shall rule via an order issued after due hearing of all the parties.

Hearing

At the hearing, the President first reads out the list of cases. The parties may request that the case be:

  • admitted and heard at the hearing, or;
  • postponed and heard at a later date, or;
  • removed from the list if the case is no longer valid due to the fact that the parties have come to an agreement themselves.

If the claimant and the defendant appear at the first call, the case will be postponed to allow them to exchange their evidence, i.e. the documents in support of their arguments, and examine the evidence of the other party.

During the hearing of the case, the President will invite the parties to present their case. Although it is a verbal procedure, it is recommended that the parties present their financial statements (e.g. statement of interim payments, etc.) in writing. The parties may also present notes on submissions, stating their case in writing.

The debtor is authorised, if he so wishes, to make a counterclaim against the claimant (e.g. request for procedural compensation).

To close the deliberations, the President declares that the matter is taken under advisement and sets the date on which the decision will be pronounced.

Decision

If the creditor's claim can seriously be disputed, (i.e. the creditor has not provided proof of an unquestionable, liquidated and payable debt), the President of the court shall declare the request for payment inadmissible.

If the claim is partially valid, the President of the court will order payment of the part of the debt which cannot seriously be disputed.

If the claim cannot seriously be disputed, the President of the court will order the debtor to pay.

The interim order is provisionally enforceable, i.e. the decision on the principal matter is not a legally binding court ruling. It is enforced by the creditor at his own risk. It may be amended or be the subject of a new summary judgment should new circumstances arise.

The interim order may be:

  • appealed against within 15 days of the notification, if it was issued after due hearing of all the parties or as in an inter partes procedure with regard to the defaulting debtor;
  • the subject of an objection within 8 days of the notification, if it was issued by default.

Said appeal or objection must be lodged by a lawyer.

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 (créance supérieure à 10.000 euros)

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.

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