1. What does a debt collection process in Lithuania look like?
In summary, the debt recovery process consists of the following steps:
- In particular, the condition of the debtor, the basis and circumstances of the debt are assessed;
- Communication with the debtor begins: if the debtor communicates, the conditions for repaying the debt are negotiated in good faith. The pre-trial process consists of the following actions: calls, summons, negotiations on additional agreements, signing of schedules or bills, gathering information for the trial;
- If an out of court agreement cannot be reached with the debtor, documents on the compulsory award of the debt are prepared.
Out of court debt recovery saves the creditor time and reduces the cost of preparing for litigation. This method of recovery gives you the flexibility to decide on the terms of debt repayment and to choose only the methods and conditions of debt repayment that depend on the agreement between the creditor and the debtor. It is at this stage that much of the success depends on the skills and experience of the professionals, as each case requires individual, sometimes lightning-fast solutions. One unpaid invoice rarely affects a company’s financial stability, but not controlling customers’ settlements has serious consequences in the long run: cash flows are disrupted, payments to suppliers and employees are delayed, and finally, unpaid bills reach critical mass. All of this can be avoided by seeking professional help from debt collection experts in a timely manner. Depending on the client’s needs, it is possible to solve short-term problems as well as take over all the functions delegated by the client related to debt collection and solvency, from assessing the potential reliability of the client to representation during pre-trial or judicial recovery. After granting deferral limits to the creditor’s customers, debt collection experts constantly monitor the quality of settlements, react immediately to any unjustified delays, prevent the obsolescence of debts, and initiate the necessary legal actions if necessary. Whenever possible, it is always more efficient to resolve disputes amicably. Debtors tend to settle and not resort to litigation, and the creditor benefits even if the debtor is found to be insolvent, avoiding lengthy litigation and unnecessary litigation costs.
Judicial debt recovery is sometimes the only solution in cases where debtors refuse to settle and do not wish to agree with the creditor in a good manner. The need for litigation also arises in cases where the parties to the dispute treat the provisions of the contract differently, or during an out of court recovery it is not possible to gather sufficient evidence to substantiate the fact or amount of the debt and court intervention is necessary. Preparation for a litigation usually consists of several stages: the formulation of the main claim, the calculation of all possible penalties, the calculation of the mandatory court-related contributions, the preparation and submission of procedural documents to the court. In all cases, debt collection experts shall estimate the potential costs as accurately as possible before the start of the proceedings, so that the client can assess the cost-benefit ratio and the decision to initiate legal proceedings is based on the most accurate calculations possible. At this stage of recovery, it is important not only to choose the appropriate court procedure, but also to secure a future claim. Debt collection experts not only prepare the necessary documents for the award of a debt, but also assess the debtor’s financial situation before the case is initiated, identify the available and potential sources of his income to ensure the fulfillment of the creditor’s claim after the court proceedings. It is always suggested to initiate legal proceedings only after making sure that there is a real possibility of effective recovery after the debt has been awarded.
2. Are there options to “freeze” or secure debtor’s redress objects?
Yes, it is possible to approach the court for interim measures (seizure of the debtor’s movable and immovable property, property rights and, in the absence or insufficiency of the said property, cash in the amount of the monetary claim with the creditor) during the judicial debt recovery process if failure to do so could make enforcement more difficult or impossible. The granting of interim measures is a preliminary measure aimed at preventing, as soon as possible, circumstances which could complicate or render impossible the enforcement of a future judgment.
3. Do you need to be assisted by an attorney at law?
In Lithuania, according to the law, the assistance of a lawyer is not required, it is a free choice of a person – to have a legal representative or not.
4. What are the costs of the procedure and are they eligible for reimbursement?
A court fee is payable when approaching the court with the debt recovery claim.
Court fees depend on the extent of the claim:
For the claims up to 30.000 euros – 3 percent, but not less than 20 euros;
For the claims between 30.000 and 100.000 euros – 900 euros plus 2 percent of the amount of the claim exceeding 30.000 euros;
For the claim exceeding 100.000 euros – 2.300 euros plus 1 percent of the amount of the claim exceeding 100.000 euros.
The total amount of court fees may not exceed 15.000 euros.
In the case of documentary proceedings – half of the amount payable for a regular claim, but not less than 10 euros. In court orders – a quarter of the amount payable for the regular claim, but not less than ten euros.
Court decision’s execution (bailiff’s) costs include:
1) administrative costs;
2) costs to third parties for the services provided by these persons in a specific enforcement case;
3) remuneration to the bailiff for the execution of enforcement documents established by law, establishment of factual circumstances by a court order, transmission and service of documents by a court order.
Enforcement costs are based on economic calculations, taking into account the nature of the bailiff’s activities. The costs of administering the enforcement case must be commensurate with the costs (material and time) incurred by the bailiff and his staff in carrying out the enforcement action. The bailiff’s remuneration is determined by assessing the need to create appropriate customer service conditions and to recruit the necessary qualified staff, taking into account the redistribution of enforcement costs (cross-subsidization) between the different participants in the enforcement process. In enforcement proceedings for the recovery of sums of money, the amounts of the costs of administering the enforcement proceedings and the remuneration of the bailiff shall be determined by reference to the amount to be recovered:
|Amount to be recovered||Administrative expenditure||Remuneration to the bailiff|
|Up to 3 euros||12 euros||8 euros.|
|From 3 to 15 euros||16 euros||20 euros.|
|From 15 to 50 euros||20 euros||40 euros.|
|From 50 to 300 euros||24 euros||80 euros.|
|From 300 to 600 euros||28 euros||19 percent of the amount recovered, but not less than 80 euros.|
|From 600 to 850 euros||32 euros||18 percent of the amount recovered, but not less than 114 euros.|
|From 850 to 1,150 euros||36 euros||17 percent of the amount recovered, but not less than 153 euros.|
|From € 1,150 to € 1,500||40 euros||16 percent of the amount recovered, but not less than 196 euros.|
|From 1,500 to 2,000 euros||48 euros||15 percent of the amount recovered, but not less than 240 euros.|
|From € 2,000 to € 2,600||56 euros||14 percent of the amount recovered, but not less than 300 euros.|
|From € 2,600 to € 3,200||64 euros||13 percent of the amount recovered, but not less than 364 euros.|
|From € 3,200 to € 4,400||80 euros||12 percent of the amount recovered, but not less than 416 euros.|
|From € 4,400 to € 8,700||100 euros||10 percent of the amount recovered, but not less than 528 euros.|
|From € 8,700 to € 14,500||140 euros||8 percent of the amount recovered, but not less than 870 euros.|
|From € 14,500 to € 29,000||180 euros||6 percent of the amount recovered, but not less than € 1,160.|
|From 29,000 euros||220 euros||4 percent of the amount recovered, but not less than € 1,740.|
In addition, the debtor must cover claimant’s (creditor’s) legal costs. However, the lawyer’s fees may be reimbursed at a reduced amount if the court finds that the fee actually paid by the claimant is excessive (too high). The amount of the costs to be reimbursed and which party pays which costs will be indicated by the court in the judgment and included in the enforcement order.
5. What is the term of the procedure?
Depending on the method chosen to award the debt in court (dispute or documentary proceedings) and the time taken to serve the procedural and court documents on the debtor, the court proceedings can usually take between one month and three years.
The length of the enforcement proceedings depends on the debtor’s financial situation and whether the debtor is appealing against the bailiff’s actions. If the debtor has money in the bank account, recovery takes less than a month, and in case of necessity to sell debtor’s real estate – several months.