Debt Collection in Serbia
Out-of-Court Debt Collection
Out-of-court collection represents the first, but not less important, step in the entire debt collection process. This step aims to find a solution without initiating court proceedings, thereby saving time and resources for both parties. In practice, many situations are successfully resolved at this level.
Pre-action Letter of Demand: If an agreement with the debtor cannot be reached, the pre- action letter of demand represents the last opportunity to avoid what is often a lengthy and expensive court procedure. According to practice data, a large percentage of debtors are willing to settle their debt within the subsequently granted deadline after receiving the pre-action letter of demand. The pre-action letter of demand should contain information about the creditor and debtor, the basis of the claim (whether it is a contract, invoice, or another document confirming the obligation), the amount of debt with a specification of all components of the debt (principal, interest, possible costs), the payment deadline, i.e., the date by which the debtor should settle their obligation to avoid the initiation of court collection, and finally a warning to the debtor about the possible initiation of court proceedings and any additional costs that may arise from it. Also, it is important to note that if the debtor does not comply with
the pre-action letter of demand and does not settle the debt, the written pre-action letter of demand serves as evidence that the debtor was informed of their debt, which, according to the Enforcement and Security Law, constitutes a condition for subsequent forced collection.
Mediation and Negotiation: If the letter of demand does not result in debt settlement, it is advisable to consider the possibility of mediation or negotiation. Mediation, as a neutral and confidential procedure, can help the parties find a joint solution that is acceptable to both sides. From our practice, it has been established that most disputes are successfully resolved through this procedure.
Amicable Settlement: In situations where both parties are ready to compromise, it is possible to reach an amicable settlement. Such a solution may include debt restructuring, partial settlement, or some other agreement that is in accordance with the laws of the Republic of Serbia.
While many consider out-of-court collection only a preliminary phase, practice shows that with a strategic and professional approach, significant efficiency can be achieved at this level. Engaging an attorney with experience in this field allows parties to maximize their chances for a
successful resolution while simultaneously minimizing the costs and complications brought by court proceedings.
This procedure may be initiated after all other methods for out-of-court collection have been exhausted.
Steps in Court Collection
Litigation Proceedings are initiated by filing a motion for a payment order with the competent court. Along with the motion, the creditor submits all relevant evidence of the existence of the debt, such as contracts, invoices, delivery notes, and other relevant documents.
If the court assesses that the evidence submitted by the creditor is valid, it may issue a payment order. If the debtor does not file an objection or does not pay the debt within the specified period, the payment order becomes final.
Enforcement Proceedings are initiated by submitting a motion for enforcement. Based on this motion, if the court finds the motion well-founded, it issues an enforcement decision. The enforcement debtor has the right to file an objection within eight days, and if the court accepts the objection as well-founded, the proceedings continue as litigation proceedings.
Upon completion of the litigation proceedings, if the court determines after the evidentiary procedure that the claim is well-founded, it will render a judgment confirming the initial enforcement decision, which remains in force.
The enforcement procedure is carried out by the competent public enforcement officer. In accordance with the enforcement decision, the public enforcement officer takes actions to satisfy the creditor’s claim. This may include seizing and selling the debtor’s assets, blocking
bank accounts, and other measures prescribed by the Enforcement and Security Law.
We approach the law in a different way.