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Debt collection procedure in Switzerland
The debt collection procedure in Switzerland is a legal process strictly regulated by the Federal Act on Debt Enforcement and Bankruptcy (DEBA). It represents the method through which a creditor can recover a debt from a debtor in case of non-payment.
The debt collection procedure starts with the sending of a payment order to the debtor, which is issued by the debt enforcement office at the request of the creditor. This document is a formal summons to pay the debt and specifies a payment deadline.
If the debtor disputes the debt within 10 days, the procedure is interrupted, and the creditor must obtain a court judgment to continue. If not contested, the procedure continues with the attachment or bankruptcy phase, depending on whether the debtor is an individual or a corporation.
In the attachment phase, the debt enforcement office proceeds to seize the debtor’s assets, which will be auctioned. The proceeds from the sale are used to satisfy the debt. If the debtor is a company, the procedure can lead to bankruptcy, where the company’s assets are liquidated and distributed among the creditors.
Debt enforcement request
The debt enforcement request is the formal application made by the creditor to the debt enforcement office to initiate the collection procedure. It is the first step in the process and must be carefully prepared to meet legal requirements.
The request must be made in writing and contain precise information such as the complete identities of the creditor and debtor, the amount of the debt, the due date, and proof of the debt if necessary. If the request is incomplete or incorrect, it can be rejected by the debt enforcement office.
Once the debt enforcement request is filed and accepted, the debt enforcement office proceeds to issue the payment order to the debtor, officially launching the procedure. It is from this moment that legal deadlines start to run, and the debtor officially finds themselves in a debt collection situation.
Payment order
The payment order is a central stage in the Swiss debt collection procedure. Issued by the debt enforcement office following the debt enforcement request, it serves as an official notification to the debtor of the due debt and is a formal summons to pay it.
The payment order contains essential information such as the names and addresses of the creditor and debtor, the amount owed, as well as any fees and interest. It also mentions the 10-day period the debtor has to dispute the debt.
If the debtor wishes to contest the debt, they must do so within this 10-day period by declaring their opposition to the debt enforcement office. Such opposition will suspend the debt collection procedure, and the creditor must then take legal action to obtain a judicial decision confirming the validity of the debt.
If the debtor does not contest the debt within this period or does not react at all to the payment order, the debt collection procedure continues to the next stages, whether it be attachment of assets or bankruptcy, depending on the situation.
Opposition to the payment order
Opposition to the payment order is an essential aspect of the Swiss debt collection procedure, allowing the debtor to formally contest the claimed debt.
When a debtor receives a payment order, they have a 10-day period to declare their opposition to the debt enforcement office. This opposition must be made in writing but does not need to state the reasons or grounds for the contestation.
The immediate effect of the opposition is to suspend the debt collection procedure. From this point, it is up to the creditor to decide how to proceed. If they wish to continue the enforcement, the creditor must obtain an enforceable title, usually by taking legal action for the courts to rule on the validity of the debt. This could involve a complete legal procedure with the presentation of evidence, arguments, and possibly a judgment.
If the creditor does not take any action to obtain an enforceable title within a given period (usually one year in Switzerland), the opposition to the payment order results in the cancellation of the enforcement.
Lifting the opposition
The procedure for lifting the opposition plays a crucial role in the Swiss debt enforcement system. It comes into play when the debtor has opposed the payment order, and the creditor wishes to continue the procedure.
Lifting the opposition involves removing the debtor’s opposition, thus allowing the continuation of the debt collection procedure. There are two main types of lifting the opposition: provisional and definitive.
Provisional lifting can be requested by the creditor when the debt is based on a provisional title, like a signed acknowledgment of debt. The creditor must present this document to the lifting judge, who then decides whether the opposition should be provisionally lifted. If the debtor wants to contest this decision, they must initiate a lawsuit within a defined period.
Definitive lifting applies when the creditor has a definitive judgment or another enforceable title against the debtor. Definitive lifting is granted automatically, and the enforcement can continue immediately.
Request to continue the enforcement
The request to continue the enforcement is a specific stage in the Swiss debt collection procedure that follows the obtaining of a lifting, either provisional or definitive, in the case where the debtor has opposed the payment order.
This request must be filed by the creditor with the debt enforcement office, usually within 30 days after obtaining the lifting. The deadline can vary depending on the situation, and precise understanding of the applicable legislation is therefore necessary.
The request to continue the enforcement is a formal declaration of the creditor’s intention to continue the collection process, despite the debtor’s initial opposition. It signals to the debt enforcement office that the creditor has either succeeded in lifting the opposition through a lifting procedure or obtained a favorable court judgment, and now wishes to move to the execution phase of the enforcement, whether by attachment of the debtor’s assets or by bankruptcy proceedings.
If the creditor does not file this request within the required deadlines, the enforcement is considered closed, and the creditor loses their right to collect within the framework of this specific enforcement.
Execution of attachment
The execution of attachment represents the concrete recovery phase in the Swiss debt collection procedure, where the debtor’s assets can be seized to satisfy the creditor’s claim.
Once the creditor has filed the request to continue the enforcement and all preliminary steps have been passed without opposition or the opposition has been lifted, the debt enforcement office can proceed to seize the debtor’s assets.
The execution of attachment is a delicate and strictly regulated procedure. It usually begins by establishing an inventory of the debtor’s attachable assets. These assets can include bank accounts, wages (within legal limits), real estate, and valuables. Certain essential possessions for daily life are generally exempt from attachment to protect the debtor’s fundamental rights.
The sale of the seized assets then takes place, often through public auctions. The proceeds from the sale are used to cover the costs of the enforcement and then to repay the creditor. If the sale does not cover the entire debt, the creditor can continue the enforcement on other assets or incomes of the debtor.
It is important to note that the execution of attachment must be carried out with utmost care and in accordance with the prevailing legislation. Failure to comply with the rules can result in the cancellation of the attachment and legal recourse by the debtor.
Realization
Realization constitutes the final stage of the attachment procedure in Swiss enforcement law. It concerns the sale of seized assets and the distribution of the proceeds from this sale to satisfy the creditor’s claim.
After the debtor’s assets have been properly inventoried and appraised during the attachment execution phase, the realization is organized. This stage involves converting the seized assets into cash, usually through a public auction. There are strict rules regarding how the sale should be conducted, including appropriate notifications, transparency, and fairness in the sales process.
The proceeds from the sale are then used to cover the costs of the enforcement, including the fees of the debt enforcement office. What remains is destined for the creditor to satisfy their claim.
If the proceeds from the realization are insufficient to cover the entire claim, the creditor can continue the enforcement by seizing other assets or initiating a new enforcement. Conversely, if the proceeds from the realization exceed the claim and costs, the surplus is returned to the debtor.
Bankruptcy proceedings
Bankruptcy proceedings are a mechanism used in Switzerland to recover debts from insolvent debtors, whether individuals or legal entities. The process is divided into several key stages, as developed below.
Once the creditor has issued a payment order and the period for opposition has expired (or the opposition has been lifted), they can request the debt enforcement office to continue the enforcement. In the case of bankruptcy proceedings, this leads to the issuance of a payment summons.
If the debtor is a company, the debt enforcement office issues a payment summons, demanding that the debt be paid within a period of 20 days. If the debt is not paid within this period, bankruptcy can be declared.
If the debtor does not pay within the given deadlines, the creditor can ask the court to declare the debtor’s bankruptcy. The declaration of bankruptcy opens the bankruptcy proceedings, and a bankruptcy administrator is appointed to oversee the process.
The bankruptcy administrator is responsible for inventorying the debtor’s assets and selling them. The funds generated from the sale are used to pay the creditors according to a priority order defined by law.
After paying the bankruptcy costs and secured claims, the remaining funds are distributed to unsecured creditors. The distribution is done based on the order of priority and the amount of the claims.
The bankruptcy procedure is closed when all assets have been realized and the funds have been distributed to creditors. If funds remain after paying all claims, they are returned to the debtor.
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PBM Avocats in Geneva
Boulevard Georges-Favon 26
1204 Genève
T. : +41 22 348 32 35
PBM Avocats in Geneva
Boulevard Georges-Favon 26
1204 Genève
T. : +41 22 348 32 35
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