Bankruptcy: procedures explained simply
Debt collection and bankruptcy
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Recovering a debt
When a debtor refuses to pay a debt, the creditor can ask the courts to intervene.
As a first step, the debtor will usually have to apply to the relevant debt collection office for the issue and notification of a summons to pay.
Further legal proceedings
After having been notified of the payment order, the debtor has the right to oppose the payment order in accordance with articles 74 and 75 of the Debt Collection and Bankruptcy Act (LP). The debtor is not required to justify his decision. This opposition has the immediate effect of halting the progress of the proceedings initiated by the creditor. It is at this point that legal proceedings must be initiated.
To lift this opposition, the creditor must contact the competent authority before the validity of the summons to pay expires. There are three ways of doing this:
1. Action en Reconnaissance de Dette (Article 79 LP): This option is chosen when the creditor does not hold an acknowledgement of debt equivalent to a title de mainlevée, but wishes to assert other evidence in his favor. It is important to note that this approach is a little more complex, and it is generally advisable to call on the services of a lawyer to bring it to a successful conclusion.
2. Request for definitive release (Article 80 LP): If the creditor has an enforceable judgment, a decision by a Swiss administrative authority, an enforceable title in Switzerland or abroad, or even a transaction or judicial recognition, he can opt for a request for definitive release. This method is quicker and more direct.
3. Requête de Mainlevée Provisoire (Article 82 LP): When the debt collection is based on an acknowledgement of debt, i.e. when the debtor has expressed his willingness to pay a specific or easily determinable sum of money (e.g. a lease, employment contract, etc.), without reservation or condition, the creditor may opt for a requête de mainlevée provisoire. This option applies when the acknowledgement of debt is evidenced by an authentic or private deed signed by the debtor.
By understanding these different legal options, you can better decide on the best strategy to defend your rights in the event of opposition to a summons to pay. For any legal assistance you may require, please do not hesitate to contact our team of legal experts.
Defending yourself against unjustified claims
The summons to pay is a document issued by a debt-collection office as part of the debt-collection requisition. It is important to note that the debt-collection office is neither competent nor obliged to verify the validity of the claim.
As soon as the debtor is notified of the order to pay, in accordance with articles 64 to 66 of the Debt Collection and Bankruptcy Act (LP), two scenarios arise:
1. If the claim is recognized: A period of 20 days from the date of notification of the summons to pay in ordinary proceedings is allowed for payment of the full amount of the claim. If this period is exceeded, the creditor has the option of requesting seizure or bankruptcy proceedings, particularly if the debtor is entered in the Commercial Register in accordance with article 39 of the LP.
2. If the claim is contested: You have 10 days from the date of notification of the summons to pay in ordinary debt collection to lodge an objection to the debt collection. It is very important not to let this period elapse if you dispute the claim.
By understanding these key steps, you'll be better prepared to deal with an order to pay and make informed decisions. For further information or legal assistance, please do not hesitate to contact us.
Our Geneva law firm specializes in defending against wrongful prosecution and has extensive experience in resolving these types of disputes. We understand the issues at stake and are determined to defend our clients' interests with diligence and determination.
We work with clients to understand the facts of each situation, assess the options available and determine the best strategy to defend their interests. We negotiate effectively with the parties involved to find amicable solutions, but are prepared to represent our clients in court if necessary.
If you have such a dispute, please do not hesitate to contact us.
Bankruptcy is declared by the judge, usually following a hearing to which you have been summoned. The judgment formalizes the moment of bankruptcy.
When bankruptcy is declared, the bankrupt loses the right to manage his assets. This means that he or she cannot favor one creditor over another.
The debtor may contest the bankruptcy decision by lodging an appeal with the competent court (article 174 paragraph 2 of the LP). For the appeal to be admissible, the debtor must, within the appeal period, file a deed meeting the requirements of the law. You are strongly advised to seek the assistance of a lawyer in this process.
The special case of personal bankruptcy
Any debtor, whether or not he is the subject of bankruptcy proceedings, can declare his insolvency in court. This involves a declaration by the debtor himself.
The debtor is not required to prove his insolvency; his declaration to the court is sufficient to file for personal bankruptcy.
Personal bankruptcy can have a positive impact on a debtor's quality of life. It puts an end to wage garnishment, successive lawsuits and creditor proceedings.
However, personal bankruptcy does not resolve debts. Claims not covered during the procedure remain active after its closure. Creditors receive a certificate of default, enabling them to claim their dues if the debtor's financial situation improves (return to better fortunes).
Before declaring bankruptcy, the judge examines the possibility of an amicable debt settlement, which is only available to debtors not entered in the commercial register.
The application for personal bankruptcy must be addressed to the judge and must include a formal request for bankruptcy, the reasons, the current budget demonstrating the inability to manage finances without incurring new debts (including taxes), the status of debts (supporting documents, list of lawsuits, etc.).
It is important to note that, according to case law, a debtor who deliberately seeks his own bankruptcy must have certain assets that can be transferred to his creditors.
In addition, an advance on costs may be requested by the Court for the processing of the bankruptcy, including publication in the Swiss Official Gazette of Commerce and the Feuille des avis officiels cantonale.
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Questions about debt collection
This is a document issued by the Office des poursuites at the request of a creditor to claim payment of a sum of money.
The debtor has two options:
- He acknowledges the claim. He then has 20 days to pay the claim in full. Otherwise, the creditor can pursue the claim by seizure or bankruptcy.
- The debtor contests the claim, in which case he has 10 days to lodge an objection.
When an objection is made to a summons to pay, it is not always necessary to give reasons. However, if the dispute concerns only part of the debt, or if there has been no return to better fortunes following bankruptcy, it is advisable to give reasons for the opposition. In all cases, it is important to respect the 10-day time limit for lodging an objection, either through the debt-collection agent or by letter addressed to the debt-collection office that drew up the deed. It should also be pointed out that filing an unfounded objection may entail additional costs for the debtor.
This is a document given to the creditor when the debtor has not been able to pay his debt in full. Interest ceases to accrue and the debt becomes time-barred after 20 years. The debtor may redeem the deed of default by repaying all or part of the debt.