Debt collection or debt recovery in Bulgaria is usually referred to the process of collection of payments due by debtors to businesses or individuals. Debt collection procedures vary in different countries and chasing a foreign debtor can be challenging due to language difficulties, communication problems and differences in legal system. Sometimes, even locating a foreign debtor can be an issue, so using a local agent, e.g. Bulgarian debt recovery lawyer is always recommended.
There are several legal options in Bulgaria to chase your debtor, regardless whether it is a company or an individual.
The first and cheapest of all options is to try to reach an out-of-court settlement. This can be done by sending a debt collection letter by a solicitor or an official notice in the form of a notary invitation with a proposal for an amicable solution and reaching an agreement with the debtor to pay his debt. In case the debtor is willing to pay but is experiencing some temporary financial difficulties, an instalment plan can be negotiated or the debtor can be brought to sign a promissory note or a pledge to guarantee the repayment of the debt in near future.
If amicable out-of-court solution is not possible, Bulgarian legislation provides for the so called: summary court proceedings (faster and cheaper than a standard court case) – they are usually completed within no more than a couple of months, there are no court hearings and the creditor is required to present only a few documents – there are no court expert witnesses, inspections of evidence, etc. There is a court fee due at the amount of 2 % of the claimed amount. Upon reviewing the claimant’s application, the court issues an enforcement order which is served to the debtor. If the debtor does not object, the court issues a writ of execution, which can be directly executed with the help of a bailiff or a private enforcement agent. All legal fees are awarded by court in this procedure.
If the debtor objects to the claim under the above described summary court procedure, the creditor can file a standard court claim within one month from debtor’s objection. But in most cases, when debtors are sure that they will lose the case, they do not object, because a standard court case is more expensive and at the end debtors pay not only the principle but also all legal expenses.
A standard court case can be also initiated directly, without the necessity of going through summary court proceedings first. The court fee for a standard debt collection court case is 4% (if the claim has been started as a summary court procedure first as explained above – only 2 % are paid additionally, on top of the 2% paid for the summary court proceedings).
Before undertaking any debt recovery proceedings in Bulgaria, it is essential for the creditor to take possible steps towards securing assets of the debtor. An experienced Bulgarian debt collection lawyer can undertake an investigation and carry out a number of researches in many different institutions and official authorities with the aim of discovering all assets of the debtor. Property interdictions and other injunctions in Bulgaria are one of the most important aspects in the debt collection proceedings. In many cases debtors make attempts, some quite successful, to sell, donate, etc. most or all of their assets thus making the monetary satisfaction of the creditor(s) practically impossible or very hard to achieve. A professional debt collection solicitor knows when and how exactly to secure assets of the debtor – which is of vital importance for the purpose of effective debt collection. For example, the lawyer can undertake specific legal actions for the return of sold or donated property back to the patrimony of the debtor and thus they can be used to cover all amounts on the creditor’s writ of execution.
Enforcement proceedings in Bulgaria (also known as executory proceedings) are conducted by public bailiffs or private enforcement agents. Most popular methods for debt collection are enforced over movable properties (chattel) or immovable properties (real estates). For these cases there are strict procedures for public auctions which are typically handled or closely monitored by Bulgarian debt recovery attorneys.
At any stage of the enforcement proceedings, before the distribution of the collected amounts is done, any other creditors of the same debtor may join the procedure. All joint creditors have the same rights in the enforcement procedure as the initial creditor. If the collected amounts are not enough to satisfy all creditors, the bailiff shall make a distribution, as first he shall separate amounts for payment of receivables that have the right of priority satisfaction. The remainder shall be distributed for the rest receivables proportionally.
Another option for the creditor is to sell the debt to a debt collection agency. These are private companies, which will buy the debt for a percentage of its value. However, usually they offer a small percentage of the real price of the debt so using their services is recommended only for smaller debts or such that have proved to be extremely difficult to collect.