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Debt Collection in Hungary

Debt Collection in Hungary

Updated on Wednesday 24th June 2015

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When an entity refuses to pay its claims it endangers the status of its creditors which can face the impossibility to pay their suppliers also. That’s why many creditors are trying to avoid this type of situations, by granting longer terms of payment or use the prepayment method (when possible). If there are any uncovered debts, most of the creditors use the help of the debt collection agencies or law firms which can give legal advice on the matter.

The process of debt collection usually starts by checking the nature of the claim and the situation of the indebted. For an entity without possibility to pay the outstanding amounts different methods must be applied than for the indebted with possibilities to pay. If the claim is real and can be proved with specific documents, such as invoice, proofs that the invoices were delivered or documents signed by the indebted which states that the debt was acknowledged than the process of debt collection may begin.
 

The whole process starts in an amicable way: the debtor receives a notification regarding the outstanding debt, the procedure of payment, the contact details of the agency, and details regarding the last day when the payment can be made.
Usually, at this point the debtors pay their debts, mostly because after this procedure, the legal procedure can be instituted.
 
If the amicable procedure doesn’t have the desired result, the legal procedure can be initiated. For this, the following documents are necessary: invoices and statements indicating payments and credit notes used to cover the outstanding monies. Also the copies of the contract are necessary. In fact, every document proving the connection between the parties is necessary and in certain cases, even witnesses who participated at the negotiations between the creditors and debtors. If the debtor is not disputing the decision of payment in maximum 15 days after receiving it, the payment becomes enforceable. 
 
If he doesn’t agree with it, the lawsuit may begin. This usually starts with a written pre-procedure when the plaintiff and the defendant exchange opinions and proofs by letter until the judge believes they have all relevant information needed to make a judgment. A hearing is scheduled and both parties must be present. After that, the judge will publish a final judgment, and the parties are informed about it in writing by the court.
 
If the parties don’t agree on the decision, they can make an appeal and the case is heard by a second instance. The usual duration of a legal process is between 30 and 120 days if there is no appeal from debtor while the court procedure takes around 1-3 months or depending on the complexity of the case.
 
The costs of the litigation are usually 3% of the debt and 6% of the lawsuit debt while the judgments issued by the courts of appeal are generally 8% of the debt. The losing party has to carry the costs of the legal procedure.

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