In the Republic of Croatia, forced collection of receivables is realized in enforcement proceedings. Enforcement proceedings are proceedings conducted by courts and notaries public for the purpose of forcible settlement of the enforcement creditor’s claims on the enforcement debtor’s property in accordance with the provisions of the Enforcement Act. Therefore, the purpose of the enforcement proceedings is to settle the enforcement creditor’s claim that he as the creditor has against the enforcement debtor as his debtor. If you want to find more about debt collection in Croatia then continue reading this article.
Initiation of enforcement proceedings
The enforcement procedure is initiated by the bailiff by submitting an enforcement proposal to the court or notary public, depending on the documentation or document on which the bailiff bases his claim. The initiation of enforcement proceedings is usually preceded by sending a written notice by registered mail to inform the other party about the maturity of the claim and the possibility of forced collection in case of non-payment within the period in which the person is called to settle the claim. Also, after 1 July 2013, when the Republic of Croatia became a member of the European Union, it is possible without special procedures, on the basis of a domestic enforcement document to initiate and conduct enforcement proceedings in one of the EU member states, as well as initiate and conduct such proceedings in front of the domestic courts on the basis of an enforcement document issued in one of the Member States of the European Union.
Sending reminder to the debtor before initiating proceedings
The reminder should contain elements of who is claiming, from whom is being claimed, what amount, for which service, until when the payment date was agreed, what needs to be done if you want to pay and what happens if the debt is not settled. It needs to be signed and sealed to gain credibility. It is advisable to send a reminder by e-mail containing the above elements, because the debtor can react quickly since the receipt of the message is immediate. The most direct way for the creditor to warn the debtor is orally, face to face or by telephone. He can then set a deadline within which he requests the collection of the claim, with a warning that otherwise he will initiate the procedure of forced collection of the claim. Most often, the announcement of a court or notary procedure encourages the debtor to settle the claim because the enforcement procedure is long and expensive and the debtors try to avoid it at all costs. However, if the debtor, even after written or oral warnings and within an additional period, does not voluntarily wish to fulfill his obligation, the creditor has the right and possibility to settle his claim by force. When conducting enforcement proceedings, care must be taken to ensure the dignity of the debtor and to ensure that enforcement is as unfavorable as possible for him. Enforcement proceedings are urgent proceedings.
Debt collection in Croatia – Initiating proceedings in front of a notary public
When enforcement proceedings are initiated in front of a notary public, they are initiated by the bailiff by submitting an enforcement proposal based on an authentic document, namely invoices, bill of exchange and protest, public document, excerpt from business books, legally certified private document, special public documents, and the calculation is considered the calculation of interest. The bailiff submits the proposal for enforcement on the basis of an authentic document to the notary public according to the residence of the debtor and requests him to issue a decision on enforcement. If the proposal is suitable for decision-making, the notary public will issue a decision on enforcement and deliver it to the bailiff and the enforcement debtor. The debtor may file an objection against the decision on enforcement within 8 days (if the enforcement was determined on the basis of a bill of exchange or a check, within 3 days) and then the case passes into court jurisdiction, if the objection is filed by an authorized person and within the time limit, and if not, the court will reject the objection and the enforcement proceedings will continue for the purpose of settlement. Enforcement according to the decision on enforcement issued by a notary public is conducted only when the decision on enforcement becomes final, which is determined by the notary public at the request of the bailiff. After the enfor
cement decision becomes final, the bailiff continues with the enforcement procedure on the subject or property of the debtor and in the manner as proposed in his proposal. If the enforcement order is determined on the debtor’s monetary claim (funds in the bank account or salary), the bailiff submits it to the Financial Agency or his employer, for seizure and transfer to his account, but if the enforcement is determined on another property of the debtor, the bailiff will initiate proceedings in front of the court in order to carry out the proceedings on that property, for example on movables, motor vehicle, real estate, shares, etc.
Initiating proceedings in front of the court
When enforcement proceedings are initiated in front of the court, the bailiff initiates them by submitting an enforcement proposal based on the enforcement document, which are: enforcement court decision (judgment and decision) and enforcement court settlement, enforcement decision of the arbitral tribunal, enforcement decision or settlement made in administrative dispute if they are for the fulfillment of a pecuniary obligation, an enforceable notarial decision and document (debenture and blank debenture), a settlement concluded in proceedings in front of the courts of honor in the Republic of Croatia, and another document specified by law as an enforceable document. The bailiff submits the enforcement proposal to the competent court, municipal or commercial, which issues a decision on enforcement if the proposal is suitable for decision-making, and if it is not, the court will reject it. The debtor may file an appeal against the enforcement decision issued by the court, but in that case the appeal does not prevent the enforcement because it could be conducted before the enforcement decision becomes final. The debtor may file a motion to postpone the execution, on which motion the court decides by a special decision.
Debt collection in Croatia – Parties in the enforcement proceedings
Any physical or legal entity can be a party in enforcement and other proceedings, and its personal information must be properly indicated in the enforcement proposal. If the party is a physical entity, the name and surname, place of residence or stay and personal identification number should be indicated on the proposal. If the party is a craftsman, the proposal should indicate the name and surname, personal identification number, and he should be indicated as the owner of the craft to which craft the full name and seat should be stated. If the party is a company, the full name of the company with the organizational form (d.d., d.o.o., etc.), address of the registered office and personal identification number should be indicated in the enforcement proposal.
Subject of the enforcement proceedings
The term subject of enforcement includes the debtor’s property and rights on which enforcement can be conducted, such as salary, money in accounts, real estate, movables, shares, shares in companies, etc., but the law determines which items are exempt from enforcement, and they cannot be the subject of enforcement, and things on which enforcement is limited. Thus, for example, enforcement cannot be conducted on clothing, footwear, furniture, etc., on the debtor’s statutory movables if he is a physical entity, and for example on tools and machines that are necessary for the craftsman to perform the registered activity. The bailiff may propose a new asset or subject of enforcement in order to settle the same claim, if a final decision on enforcement on a certain asset or on a certain subject cannot be conducted. In that case, the court will issue a new enforcement decision and continue the enforcement based on that decision. However, if the bailiff does not file a motion to continue the proceedings within two months after receiving notice from the court of the impossibility of conducting the enforcement, the court shall suspend the proceedings. Also, the bailiff may, during the proceedings, without the consent of the bailiff, withdraw in whole or in part the proposal for enforcement and in that case the court will suspend the enforcement. After the withdrawal of the enforcement proposal, the bailiff can resubmit the proposal for enforcement.
Debt collection in Croatia – Costs of enforcement proceedings
The costs of the debt collection in Croatia depend on whether the proceedings are initiated and conducted in front of the court or in front of a notary public, and they include court or notary fees regulated by special provisions, and the costs also depends on whether a lawyer was engaged in proceedings because he is entitled to a reward for representation his parties according to the Tariff of the Croatian Bar Association. The costs of the proceedings may also include other costs, such as the payment of an advance on work for the purpose of undertaking certain enforcement actions by the participants in the enforcement proceedings, for example an expert witness of a certain profession. The bailiff is obliged to advance the costs of the procedure within the deadline set by the court, and if he does not act on the court’s order within the given deadline, the court will suspend the procedure. The debtor is obliged to reimburse the bailiff for the costs that were necessary for the enforcement.
Completion of enforcement proceedings
The enforcement procedure is considered to be completed by the finality of the decision on rejection or by rejection of the enforcement proposal, the implementation of the enforcement action by which the enforcement is completed or the suspension of the enforcement. The court will determine the completion of the enforcement after the last enforcement action by a court’s decision.
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