1. What does a debt collection process in Austria look like?
The debt collection process can be divided into three phases.
a) Enforcement out of court
This phase can consist of:
This phase begins in most cases with a custom-made notice of default. In addition, its helpful to try to seek contact with the debtor. This happens, among other things, by summons by mail, by e-mail, text message and telephone.
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.
b) Judicial collection
– Civil Procedure:
At the time the debtor is in default, it is possible to start a civil procedure.
The Austrian order for payment (Mahnverfahren):
The “Mahnverfahren” can be applied to claims up to € 75,000. With this procedure a con ditional payment order (“bedingter Zahlungsbefehl”) can be obtained, without first having to start a substantive procedure for this. This ensures quick clarity. The order for payment is then served on your debtor who is given a 14-day period for payment of principal and interest and costs. Your debtor can also choose to make a defense (“Einspruch”). In cases where the subdistrict court is competent, zhe debtor can do this himself without the intervention of a lawyer.
Your debtor must defend within 4 weeks. Experience shows that few Austrian debtors make a defense because the debtors otherwise run the risk of being sentenced by the court to pay the costs of the proceedings. If your debtor does make a defense, the proce dure will continue under the rules of the bottom procedure (see below). But if your debtor does not respond, or reacts too late, the order will be given legal force. This means that the bailiff can collect your claim with attachment on the basis of a declaration of enforce ability that the lawyer collects from Austria.
The deadlines are therefore short: a procedure for debt collection Austria – in comparison with other countries – is very prosperous.
The bottom procedure:
This procedure is also called the regular procedure and applies to claims in excess of € 75,000. The bottom procedure can be started at two moments.
- Immediately after the extrajudicial phase;
- If the debtor defends the proceedings of the Mahnverfahren (as explained above). The procedure is then continued under the rules of the basic procedure.
European order for payment procedure:
The European order for payment procedure is a procedure for cross-border claims that are not disputed. Under the European order for payment procedure, it is possible to collect an undisputed claim quickly in all EU Member States except Denmark. The court can then send a European order for payment to the debtor. The debtor then has 30 days to respond. If he does not respond, the court can be request to finalize the payment order. This is a judgment that is accepted in every EU member state.
c) Execution phase
As soon as the court gives its verdict, there is an enforceable title, and the third phase begins. The verdict gives the debtor the opportunity to pay the amount within a few days by means of serving of the judgment. Only after this term of command has expired can the plaintiff proceed to execution and take further steps. Incidentally, it is also possible for the judge to give explicit permission to proceed immediately to execution.
Any prejudgment imposed attachment is converted into an enforcement order and, if necessary, additional executory attachment can be made on the assets of the debtor.
The debtor can stop the execution, but for very limited reasons.
Sometimes the debtor doesn’t offer any means of redress and so conducting legal proceedings may not be appropriate.
2. Are there options to “freeze” or secure debtor’s redress objects?
In most cases, the obligated party must submit a list of assets. This must be truthfully completed in the event of any other penalty.
The debtor’s revenues, including general revenues from buildings, amounts in bank accounts, mov able and immovable goods, etc. may be subject to enforcement.
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.
3. Do you need to be assisted by an attorney at law?
During this phase it is not necessary to be assisted by an attorney at law.
- Civil procedure:
Absolute legal requirement:
Proceedings before the district courts with a value in dispute of more than 5,000 euros, pro vided that the district courts do not have special jurisdiction and in case of an appeal proce dure.
Relative legal requirement (if there is a relative legal requirement, the parties do not have to be represented. But if a party can be represented, it must be represented by a lawyer. Rela tive lawyer duty exists in the following cases, provided that at least two lawyers have their seat at the place of the court):
In matrimonial matters;
In proceedings that fall under the jurisdiction of the district courts with a value in dispute of more than 5,000 euros (e.g. border or property disputes);
- European Payment Order Procedure:
For the European order for payment procedure, representation by an attorney at law is not required.
4. What are the costs of the procedure and are they eligible for reimbursement?
If you are a business entity and another business entity owes you payment for the goods or services, you are entitled to charge him an additional € 40 as a lump sum to reimburse the costs of recovery. You do not have to prove that you already have or will actually incur any recovery costs. If you later actually incur recovery costs (eg court fees or legal fees related to enforcement), you are also enti
tled to reimbursement of these costs. This right of the creditor shall lapse within three years from the date of the delay.
Court fees are based on the Court Fees Act and depend on the amount in dispute. Some examples:
Amount in dispute EUR 500,000: Court fees: EUR 9,488 in first instance;
Amount in dispute EUR 1,000,000: Court fees: EUR 15,488 in first instance; Amount in dispute EUR 5,000,000: Court fees: EUR 63,488 in first instance.
ATTORNEYS’ FEES (NET):
Assumptions based on an amount in dispute of EUR 1,000,000 (based on the Austrian Act on At torneys’ Tariffs plus hourly rates):
First instance: in total EUR 35,000 to 50,000, incl. preparation of two briefs, four hearings with a duration of 1h, 2h, 4h, and 6h, preparation of hearings/meetings with client, witnesses, corres pondence with client;
Second instance: in total EUR 8,000 to 20,000; incl. one brief, no hearing;
Third instance: in total EUR 7,000 to 18,000; incl. one brief, no hearing.
If you have won a case, you still have to get what you are entitled to according to the judge. This may also involve costs, such as the costs of seizure and bailiff’s costs.
– COURT FEES:
They depend on the amount in dispute and whether the creditor seeks execution in movable and/or immovable assets. As a rule of thumb, for disputes above EUR 70,000, the court fees vary between 0.25% and 0.60% of the amount in dispute.
– ATTORNEYS’ FEES (NET):
Simple case: up to EUR 2,000
Complex case: up to EUR 10,000
5. What is the term of the procedure?
This phase lasts as long as the creditor wishes in the period of the statute of limitations. However, he must take into account the reasonable period that he must give the debtor in his summons so that the debtor is actually in default.
It depends on whether the debtor disputes the creditor’s submissions or not (compare „Mahnver fahren“). If he does, the average duration of the proceedings in austria is 6 months.
- 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.
The duration of execution proceedings depends mainly on whether the debtor has executable as sets and whether execution measures are opposed by the debtor.