What does a debt collection process in Romania look like?
The debt collection process can be divided into three phases.
Collection out of court
The first phase is called the amicable or extrajudicial phase. This phase can consist of:
– Making a payment arrangement. In addition to sending a summons letter, it is wise to try to make a payment arrangement. The advantage is that by accepting a payment scheme, the amount of the claim is fixed. If the payment arrangement is subsequently not complied with, it is in any case established that the claim is not disputed and the size of the claim is established. If you set-up this solution in a notarized payment agreement you have a direct enforceable title against the debtor. This means you can directly execute the debtor without going to court.
– Sending a formal notice. Any creditor can have the debtor put on notice. This can be done either by sending a letter of summons, or using a notification letting the debtor know about the fact that he must pay the debt. This notification shall be communicated by the bailiff. The letter of summation, is a prerequisite to start legal proceedings. By sending a letter of summons the debtor is in default. Any letter of summation sent without putting the debtor on notice gives them the possibility to execute their debt within a reasonable time period.
It is possible to include in the contract some clauses that the debtor is immediately in default. Sending a summons letter is then not necessary.
Judicial collection
There are some legal procedures that can be initiated.
– Insolvency procedure.
The proceedings start with a petition made by the creditor(s), the debtor as well as any per-
son or institutions provided by the national laws. If the petition was made by the debtor, the
deadline is 10 days after its registration with the Court.
Once with the opening of the procedure, the company will no longer be managed by its former administrators or by its managers. The Court appoints an Official Receiver who will run the activity (or who will approve any administration acts – provided that the debtor was allowed by the Court to keep its administration right).
The minimum amount for a Company to be declared insolvent is 40.000 RON. The petition can be submitted by any of the creditors. Any costs regarding this procedure will be supported by the debtor. The procedure is applied by the following entities: the court, the syndic judge, the Official Receiver, the liquidator, the meeting of creditors and the committee of creditors.
Any arrangements with the creditors after the opening of this procedure shall be included in the reorganisation plan. Those arrangements, as well as the reorganisation plan shall be voted by the creditors.
The reorganisation plan can be submitted by any of the following: the debtor, the Official Receiver, one or more creditors holding at least 20% of the total amount of the debts noted in the table of claims.
– Civil Procedure
It is possible to start a civil procedure. This procedure is governed by the Civil Procedural Code and it represents the common low applicable to any dispute for which there is no special procedure foreseen. This procedure starts with serving the summons, which include must include:
- Name and other specific data regarding the parties;
- Name and other specific data regarding the Trustee or attorney at law representing the complainant during the lawsuit;
- What is required (payment of the claim);
- Legal and factual grounds;
- Evidence;
- Complainant’s signature.
After the bailiff shall notify the defendant, the debtor can submit a defence/answer to the petition, which must contain:
- Name and/or other specific data regarding the defendant;
- Defences used in litigation;
- Answer to every claim as well as legal and factual grounds;
- Evidence;
- Defendant’s signature.
The court shall then set the hearing. An oral hearing will take place at an appointed date before the court. During the hearing, the judge can ask questions, can let the parties say their conclusions on the merits of the case. During the civil lawsuit, the judge will always try to tell the parties that they can still reach a settlement.
The Payment Ordinance:
- Is a procedure that only applies for receivables that are certain, liquid, and as well chargeable, which represent payment obligations arising out of civil agreements, including those concluded between a professional and a contracting authority.
- The creditor must send the debtor a subpoena, otherwise the claim shall not be admissible. It is mandatory that subpoena is sent through a bailiff or registered letter.
- This claim must include:
- Name and specific data regarding the parties;
- What is required;
- Legal and factual grounds and any other evidence regarding the claim;
- Interest;
- Creditor’s signature.
- The claim is subject to a stamp duty of 200 RON.
- Regarding the remedies, against a Payment Ordinance, the parties can file a contestation within 10 days after the court decision was communicated.
- Small Claims Procedure:
- Is a procedure that can be applied alternatively to the Common Law procedure, whenever the value of the claims does not exceed 10.000 RON, without considering any interests, accessories nor legal fees.
- The judge can send the parties to the court if considered necessary.
- The claim is subject to a stamp duty between 50 RON and 200 RON.
- Regarding the remedies against this procedure, the parties can file an appeal within 30 days after the court decision was communicated.
– European Payment Order Procedure.
Since 2008, it has been possible within the European Union to have an undisputed monetary claim on a foreign debtor established by a judge in the form of a European Payment Order. The procedure is as follows:
- The standard form must be submitted to the competent court;
- The judge decides without summoning the debtor;
- If the European Payment Order is issued, it will be served on the debtor;
- The European Payment Order states that the debtor must make payment within 30 days or can file a defence;
- If he wishes to defend himself, this European Payment Order procedure will shift to a “normal” civil procedure;
- If there is no payment, but it is not indicated in time that a defence will be presented, the European Payment Order will be declared enforceable.
- This declaration of enforceability should be sent to the debtor together with the European order for payment. Together they are the necessary enforceable title to proceed to execution.
Therefore, the procedure is not appropriate when it concerns a disputed claim.
Execute
Court judgments and the other enforceable documents are executed by a judicial enforcement officer whose office is located in the jurisdiction of the court of appeal where the immovable property is located in the case of enforcement in respect of immovable goods/unharvested fruit and in the case of direct enforcement in respect of immovable property.
The Court’s verdict is an enforceable title, and the next step is to execute the claim. The bailiff must give the debtor the opportunity to pay the plaintiff’s claims within a reasonable period of time. The execution is always conducted by a bailiff and only starts after the petition is made. It is mandatory that the debt is certain, liquid and outstanding.
The claim must include :
- Name and other specific data regarding the parties;
- What is required;
- Proof of paying the stamp duty.
The defendant will receive a summons to fulfil his obligation within a reasonable period of time. He will receive the summation and the enforceable title.
The applicant right to obtain the claim shall lapse within 3 or 10 years, depending on the nature of the enforcement titles.
The debtor’s revenues, including general revenues from buildings, amounts in bank accounts, movable and immovable goods, etc. may be subject to enforcement.
The execution stops immediately if :
- The payment obligation is completed;
- The enforcement cannot be completed due to the absence of executable goods or the impossibility to execute them;
- The complainant has dropped the case;
- The enforcement title has been terminated;
- The execution has been repealed.
Are there options to “freeze” or secure debtor’s redress objects?
Sometimes, the debtor does not offer any means of redress and so, conducting legal proceedings may not be appropriate. Therefore, it is always wise to determine whether the debtor offers a remedy.
The debtor’s revenues, including general revenues from buildings, amounts in bank accounts, movable and immovable goods, etc. may be subject to enforcement.
A good remedy against a bad faith debtor is freezing the goods in the hands of a third party.
However, the creditors have several options for strengthening their position against the debtors. For example, right of pledge, retention of title, surety, freezing/garnishment, execute in kind, mortgage, seizure of goods, privileges.
Do you need to be assisted by an attorney at law?
Extrajudicial phase
During this phase it is not necessary to be assisted by an attorney at law.
Judicial phase
- Bankruptcy procedure
During this phase it is not necessary to be assisted by an attorney at law.
- Civil procedure
In the Romanian Civil procedures, it is not necessary to be assisted by an attorney at law, regardless of the procedure (Common Law Procedures, Small Claims Procedures, Payment Order Procedures).
- European Payment Order Procedure
For the European order for payment procedure, representation by an attorney at law is not required and the parties do not have to appear in court.
Execution phase
During this phase, parties are always assisted by a bailiff, often in combination with an attorney at law. It is not necessary to be assisted by an attorney at law.
What are the costs of the procedure and are they eligible for reimbursement?
Extrajudicial phase
During the extrajudicial phase, the costs are up to 400 RON when the notifications are sent through a bailiff.
Sending them via registered letter, there are no costs besides the postal services.
Judicial phase
During the judicial phase, you should consider the following costs / fees:
- Bailiffs fees.
The level of the fee depends on the activity involved in carrying out an enforcement operation pursuant to a court judgment or enforcement order in accordance with the law. The list of fees has been established by the Ministry of Justice, in cooperation with the National Union of Judicial Executors. The judicial executor is paid by the party which has requested the execution of a certain procedure. In general, judicial executors are paid for each individual enforcement act.
In the case of execution of claims referring to monetary amounts, the maximum fees are as follows:
| For claims of up to RON 50 000 inclusive | The maximum fee is 10% of the value of the claim (for example, if the value of the claim is RON 40 000, the fee can be no more than RON 400, or EUR 100). |
| For claims of between RON 50 000 and RON 80 000 inclusive | The maximum fee is a fixed amount of RON 5 000 plus 3% of the amount by which the sum exceeds RON 50 000. |
| For claims of between RON 80 000 and RON 100 000 inclusive | The maximum fee is the amount of RON 5 900 plus 2% of the amount by which the sum exceeds RON 80 000. |
| For claims exceeding RON 100 000 | The maximum fee is a fixed amount of RON 6 300 plus 1% of the amount by which the sum exceeds RON 100 000. |
Fees charged prior to judgment (before filing the claim)
| Notification and communication of procedural documents | Between RON 20 (EUR 5) and RON 400 (EUR 100). |
| Insuring sequester | Between RON 100 (EUR 25), and RON 1,200 (EUR 300) for a natural person debtor or RON 2,200 (EUR 550) for a legal person debtor. |
| Legal consultation related to the constitution of execution documents | Between RON 20 (EUR 5) and 200 (EUR 50). |
| Ascertaining a factual situation and making an inventory of goods (Article 239 of the Civil Procedure Code) | Between RON 100 (EUR 25), and RON 2,200 (EUR 550) for a natural person debtor or RON 5,200 (EUR 1300) for a legal person debtor. |
| Real offer minute | Between RON 50 (EUR 12.5) and RON 350 (EUR 87.5). |
| Confiscations | 10% of the value in all cases. |
Fees charged during proceedings
| Notification and communication of procedural documents | Between RON 20 (EUR 5) and RON 400 (EUR 100). |
| Ascertaining a factual situation and making an inventory of goods (Article 239 of the Civil Procedure Code) | Between RON 100 (EUR 25), and RON 2,200 (EUR 550) for a natural person debtor or RON 5,200 (EUR 1300) for a legal person debtor. |
| Real offer minute | Between RON 50 (EUR 12.5) and RON 350 (EUR 87.5). |
| Confiscations | 10% of the value in all cases. |
| Insuring sequester | Between RON 100 (EUR 25), and RON 1,200 (EUR 300) for a natural person debtor or RON 2,200 (EUR 550) for a legal person debtor. |
| Legal consultation related to the constitution of execution documents | Between RON 20 (EUR 5) and 200 (EUR 50). |
Fees charged during proceedings
| Garnishment | RON 60 (EUR 15) is the minimum fee for a claim of up to RON 1 000 (EUR 250) | For sums of up to RON 50,000 (EUR 12,500) the fee may be up to 10% of the value of the claim; |
| RON 60 plus 2% of the amount by which the sum exceeds RON 1 000, in the case of claims exceeding RON 1 000 | For sums between RON 50,001 and RON 80,000 (EUR 20,000) the fee is 3% of the value of the claim; | |
| For sums between RON 80,001 and RON 100,000 (EUR 25,000) the fee is 2% of the value of the claim; | ||
| For sums exceeding RON 100,000 the fee is 1% of the value of the claim. | ||
| Protest for non‑payment of drafts, promissory notes or cheques | A minimum fee of RON 150 (EUR 37.5) | A maximum of RON 400 (EUR 100). |
| Judicial sequester | A minimum fee of RON 100 (EUR 25) | A maximum of RON 1,200 (EUR 300) for a natural person debtor or RON 2,200 (EUR 550) for a legal person debtor. |
- Legal aid + legal costs.
Lawyers’ fees are variable and determined according to the case’s level of difficulty, size, and duration. The level of fees may be agreed upon freely between the lawyer and his client, yet within the limits of the law and the Statute of the profession.
The level of fees payable can be based on:
- An hourly rate charged in relation to hours worked;
- A fixed sum;
- An amount dependent on a successful outcome: in addition to a fixed sum, the lawyer may request an additional, fixed, or variable sum paid upon success (It is strictly forbidden however to base the lawyer’s fee exclusively on the judicial outcome);
- Both hourly and fixed fees, regardless of the result obtained.
It is almost impossible to provide an estimate of the fees because this information can only be obtained after presenting the case to a lawyer, who will then assess the fees to be paid taking into account all the case necessary related aspects, and mainly the workload, the value of the litigation and also the nature of the litigant.
- Court fees.
Court fees can vary between around EUR 0.5 to over EUR 1,500.
For financially quantifiable claims (e.g. applicable in alimony cases, commercial cases) the court fees vary according to the value of the claim:
| Value of the claim | Amount of the court fee |
| Up to RON 39 | RON 2 |
| RON 39.01 – RON 388 | RON 2 plus 10% of the amount by which the value of the claim exceeds RON 39 |
| RON 388.01 – RON 3,879 | RON 37 plus 8% of the amount by which the value of the claim exceeds RON 388 |
| RON 3,879.01 – RON 19,395.00 | RON 316 plus 6% of the amount by which the value of the claim exceeds RON 3,879 |
| RON 19,395.01 – RON 38,790.00 | RON 1,247 plus 4% of the amount by which the value of the claim exceeds RON 19,395 |
| RON 38,790,01 – RON 193,948.00 | RON 2,023 plus 2% of the amount by which the value of the claim exceeds RON 38,790 |
| Superior to RON 193,948.00 | RON 5,126 plus 1% of the amount by which the value of the claim exceeds RON 193,948 |
Stamp duty (approx. EUR 1) – varies between RON 1.5 and RON 5;
Court decisions – Cost of decision (approx. EUR 1);
Judicial decisions, subpoenas, and notifications are communicated to parties, witnesses, experts or any other persons or institutions involved in the litigation for free.
The consultation or copying of documents from the court file and of certificates from the court clerk ‘s office is subject to payment (maximum RON 4).
Cost of obtaining an authenticated decision (less than EUR 1).
| Requests to the courts to deliver copies of judicial decisions stated as final and irrevocable | Stamped with a court fee in the amount of RON 2 |
Often documents are equired for a procedure. Just think of extracts, documents from the Land Registry or Chamber of Commerce but also medical documents in personal injury cases.
Most agencies do not provide these documents free of charge. The costs for requesting the necessary documents are often advanced by an attorney at law and passed on to you.
Execution phase
- Collection costs
The costs are often supported by the losing side. However, if the petition was only partially admitted, the judge can decide which one of the parties should support the cost of the non-resolved part. This can be settled by the judge to be supported by both parties.
The defendant can also be exonerated from supporting the costs of the lawsuit.
What is the term of the procedure?
Extrajudicial phase
This phase lasts for as long as the creditor wishes. However, he must consider the limitation period affecting the claim.
Judicial phase
– Insolvency/bankruptcy procedure
This procedure in Court takes between 6 and 12 months and sometimes it can extend to over 18 months. If the debtor is presumed bankrupt (the last payment is due to pay for more than 30 days), we could start the insolvency procedure. Bankruptcy involves basically the same procedure as for summons for payment, but it can take longer, because the court must appoint a Liquidator. The Liquidator is the person appointed to prepare documents for liquidation of the company. According to debt collection Romania procedures, the documentation includes inventory and balance sheet liquidation, stating the exact status of assets and liabilities of the Company.
Insolvency proceedings differ according to their objectives:
Companies
If the company can be saved or the business is viable – its debts may be restructured (usually in agreement with creditors). This is to safeguard the firm and preserve jobs. If the business cannot be saved, the company must be wound up (it ‘goes bankrupt’).
Entrepreneurs
Can usually apply for a procedure involving an ordered repayment plan for their debts and a debt-discharge following a reasonable period (3 years, usually). This ensures they are not personally bankrupted and can launch further ventures in future. In all cases, as soon as the proceedings are formally opened, creditors can no longer take individual action to reclaim their debts. This is to ensure all creditors are on an equal footing and protect the debtor’s assets. In order to be paid, creditors must prove their claims, either to the court or to the body (generally an administrator or liquidator) responsible for reorganising or liquidating the debtor’s assets. In specific circumstances, this can be done by the debtor themself.
– Civil procedure
At the first hearing, the judge will make a statement approximating the duration of the lawsuit, so the parties could enjoy a fair trial (art. 7, ECHR).
– European Payment Order Procedure
If the debtor does not indicate that he disputes the claim, this procedure will not take much longer than the 30 days in which the debtor can respond.
Execution phase
The petition must be resolved in 7 days after the registration. The procedure of force execution can take up to six months.