Debt management, Bussiness consulting

Debt management

Sooner or later, every corporation will face the unpleasant situation, when one of it’s partners wouldn’t fulfill it’s rightful financial obligations. The negligation or ineffectiveness of claim enforcement can lead to further increase of the claim over time, which may hinder or even ruin the progression of the company. The world economic crisis has boosted the number of corporations struggling with payment problems, so nowadays effective, swift and professional claim management has become an even greater issue.

What can a manager or enterpreneur do to avoid the drastic increase of a financial claim?

It is advised to hire a skilled and experienced attorney at law without delay, who can use both judicial and out-of court methods to help fulfill your rightful claims.
Our office offers to direct the legal enforcement of claims and provide claim management on a continous basis. Our services is advantagous for corporations of every size, from multinational companies to micro-corporations and sole proprietors.

Our colleagues treat every managed claim with individual care, taking into account not only legal options, but other circumstances as well (searching for available property to put under execution, underlying personal responsibility for company claims, overseeing the compliance of financial regulations, etc.), to choose the most efficient procedure to handle the claim.

After the initiation of the process, our company provides up to date information on the progress of the case and the chances of future pay-off. This way our partners won’t have to waste their time and energy on non-paying debtors.
If needed, our office also handles consultation with debtor companies as Your representative and provides extensive legal, business and branch expertise to choose the surest way for Your company’s claim to be fulfilled.
If You are unable or unwilling to establish personal contact with your debtors, don’t hesitate to seek our colleagues support, who will be at your service.

A. Demand for payment:

A professional demand for payment letter is a sure and cost-efficient way to handle an unfulfilled claim.

If the debtor doesn’t fulfill it’s financial obligation of any legal nature, our advice is to first send a demand for payment letter.

The advantage of such a demand for payment letter is that the debtor will know, that it’s debt is handled by a professional attorney and if the debtor would like to avoid a costly judicial process, it should fulfill it’s obligation willingly.

The demand for payment letter has a beneficial effect on the debtor’s willingness to pay: in most cases, the warning of taking judicial or liquidation measures is enough to make the debtors cooperate.

It is crucial in any legal action, that the demand for payment letter fulfills the corresponding law regualtions. Our office pays utmost attention to these in each and every case.

Sending a formal demand for payment letter to the debtor is required prior to the initiation of the judicial liquidation process.

B. Payment warrant procedure:

A simple, out-of-court way of claim handling, payment warrant procedure can be a quick, cost-efficient tool, that results in an executable notary warrant, under certain circumstances.

According to Hungary’s L. Law of 2009. – from July the 1st, 2010 – notars have the jurisdiction to issue payment warrants and the petition for such a warrant can only be presented online if the petitioner has a legal attorney. Our office has the neccessary IT instruments and expertise to represent our partners in the online payment warrant procedure.

Corresponding Hungarian law provides two ways of enforcing expired financial claims under the amount of one million HUF: verbal petition in court with immediate trial or the payment warrant procedure. Further conditions for the issue of an executable payment warrant are the following:

a) the debtor has to have Hungarian residence, or (in the case of corporate debtors) Hungarian headquarters or representation

b) the source of the financial claim cannot be labour relation (including the service realtion of government employees), cooperative organisation’s labor-like relation or outside worker’s labor relation.

Law provides debtors a chance to contradict the payment warrant in front of the notar, in writing. In that case – if the contradiction was stated in time – the out-of-court procedure ceases and a judicial suit begins to judge the contradicted claim.

Our long term experience suggests, that most higher amount financial claims turn into civil law suits, as the debtors often contradict the issued payment warrant.

In the case of lower amount claims, a payment warrant is likely to have greater effect, especially if the claim is supported by legal binding document, like contracts, orders or bills.

C. European payment warrant:

With the dismantle of trade- and custom borders in the territory of the European Union, the number of disputes involving multiple member-states has increased. Most of these disputes include some unfulfilled financial claim. European payment warrant procedure offers swift and easy resolution for such disputes.

An issued European payment warrant becomes executable – according to the law of the issuer’s country – if the debtor doesn’t provides a contradiction in a deadline of 30 days.

European payment warrant is executable in every member-state of the EU, with the exception of Denmark.

Our office has ample experience in claim management and enforcement via European payment warrant procedure.

D. Civil law suit:

To put the judicial process in motion, a suit has to be presented in court, in which the petitioner provides evidence to prove the grounds of it’s claim. Courts of the first instance are local or county courts.

The outcome of a civil law suit depends mostly on the following factors:

  • the legal expertise for provoding evidence (collection of legal binding documents, proper presentation of expert opinions, questioning witnesses, etc.)
  • the attorney’s effectiveness in puting forward the clients legal point of view
  • the attorney’s skill to counter the opponent’s attempts for the trial’s malicious extention.

The above mentioned conditions are fully met by our attorney at law partners, who command great legal knowledge and trusted experience in the field of claim enforcment in court.

E. Execution:

The executive procedure is an out-of-court process used to enforce court (or other authority) decisions with the ability to enlist the force of state authorities. The court issues an execution warrant for the applicant’s petition.

The executive procedure can be initiated after receiving an enforcable paymnet warrant or enforcable court verdict, if the debtor still isn’t willing to fulfill it’s obligation.

During the execution, the executioner with territorial jurisdiction collects information on:

  1. the debtors bank accounts, to try and collect the claim via incasso,
  2. the debtor’s workplace to issue a garnishee on the wage of the debtor,
  3. the debtor’s assets (real estate, companies, vehicles, etc.), to impound and auction them.

the expenses of the execution – if the law dosen’t declare it otherwise – need to be payed in advance by the petitioner of the execution warrant, but it is beared by the debtor at the end of the procedure

Legal representation is also advised during the execution procedure, to ensure that the executioner carries out his actions according to Your – as petitioner of the execution – rightful claim and effective conclusion of the execution. Our office offers to oversee the legal deadlines, auction regulations, etc.

Our colleagues follow the execution process closely, propose the necessary actions in front of the executioner, appeal againtst the executioner’s unlawful actions and provide representation for You during the executionary auction, to enforce your claims as best as possible.

F. Personal consultation with the managers, attorneys of the debtor companies

Our office offers to consult with the representatives of the debtor company, either as the representative of your own company or as a counselor by your corporation’s side. These meetings can be particularly benefical if the debtor company truly has it’s mind on reaching a mutual agreement.

Unfortunately, consultations can be used solely for the purpose of buying time for the debtor corporation, that is why some necessary caution should be applied to predict the fruitfulness of the negotiations. During these meetings, it isn’t uncommon for specialized legal, tax, business managment, risk analisys issues to come up, which may require extensive legal knowledge to answer.
Our office has the means of providing this expertise, to achive a beneficial agreement in the end of the negotiations.

Occasionally, even when the debtor company is willing to pay, a simple agreement is not enough: to cover every aspect of the arrangement, a complex, larger scale contract is required. This is especially true in cases where options like debt transfer, claim assignment, pledge- or buyer option contracts, or their combinations are concerned.

In the case of unorthodox contracts – that may involve multiple collaterals – it is advised to pay special attention to the effects these contracts may have on eachother, especially the enforcement and tax law aspects.

Our office – with it’s partner attorneys and legal experts – handles contracts with individual agreements and collaterals with the above mentioned issues in mind, guaranteeing results to fully satisfy You and your company’s legal needs.

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