Debt collection in Bosnia and Herzegovina

The debt collection procedure in Bosnia and Herzegovina begins with an analysis of the debtor’s financial performance, its field of activity, the history of the company, the availability of documentary evidence of the debt, current court cases and enforcement procedures, as well as the possibility of challenging the debt. This analysis forms the strategy that will be used to repay the debt.

If the debtor does not have current court cases or outstanding court decisions on debt collection, and he is actively engaged in his activities, then it is advisable to proceed to the stage of informal amicable debt collection.

This stage involves active negotiations with the debtor to reach an agreement to pay the creditor’s claims or other possible settlement options (for example, return of goods, transfer of debt to a third party, exchange of services or goods).

Interaction with the debtor begins immediately after sending the notification by mail, email, telephone or instant messengers. This process involves intensive communication with the debtor in order to apply constant pressure. The main task is to establish contact with key decision makers to achieve speedy debt repayment.

The average time for unofficial out-of-court collection is up to 60 days (except in cases where an installment plan for debt repayment has been agreed upon). If this stage does not bring the expected results or after an initial analysis it becomes clear that it is not applicable, you should proceed to recovery through the court.

Before initiating legal action, you should pay attention to the statute of limitations. The general limitation period is 5 years. Mutual claims of legal entities under contracts for the sale and purchase of goods and services, as well as claims for reimbursement of expenses incurred in connection with these contracts, expire after three years. The limitation period runs separately for each delivery of goods, work or service performed. The legislation prohibits changing the specified period by agreement between the parties. The running of the limitation period can be interrupted if the debtor acknowledges the debt through a direct statement to the creditor or indirectly, for example, partial payment of the debt, payment of interest, provision of security. The court applies the consequences of missing the limitation period only if the debtor declares this.

The legislation of the Federation of Bosnia and Herzegovina provides for two options for debt collection through the court: in general claims proceedings and in small claims proceedings.

The general procedure for judicial proceedings is carried out by filing a statement of claim, after receiving which, the court begins preparations for the main hearing. This preparation includes the preliminary examination of the claim, the submission of the claim to the defendant for a mandatory response, the holding of a preliminary hearing, and the scheduling of a substantive hearing. Within 30 days after receiving the claim, the court sends the claim with all attachments to the defendant and gives him 30 days to provide a response. After receiving a response to the claim, the court schedules a preliminary hearing. If the defendant has not submitted a response to the claim and there are no conditions for making a decision in connection with the failure to submit, the court will schedule a preliminary hearing after the deadline for filing a response to the claim has expired. A preliminary court hearing is usually held no later than 30 days from the date the defendant submits a written response to the claim.

Before the preliminary hearing, if the court deems it appropriate given the nature of the dispute and other circumstances, can invite the parties to resolve the dispute through mediation. In order to facilitate the settlement of a dispute, the court may, if it considers it justified, offer the parties ways of settlement, taking into account the wishes of the parties, the nature of the dispute, the relationship between the parties and other circumstances. A proposal for mediation may also be made by the parties before the completion of the main hearing in the case. The settlement agreement is formalized in a protocol signed by all parties. The signed protocol has the force of a final decision. A settlement agreement can be challenged if it was concluded erroneously, under the influence of coercion or deception.

At the preliminary hearing, the court decides by decision: the day and time of the main meeting, the issues that will be discussed, the evidence that will be presented, and the persons who will be invited to the main meeting. Generally, the main hearing will take place no later than 30 days from the date of the preliminary hearing. The court may order a substantive hearing to be held immediately after the preliminary hearing.

After completion of all stages of the main hearing, the court declares the main hearing closed and makes a decision (sentence) within 30 days. The decision comes into force after thirty days (for bill and check disputes after the expiration of fifteen days) from the moment it is made or the transcript of the verdict is served, provided that it is not appealed. A party may waive the right to appeal upon receipt of the decision.

The appeal is filed through the court of first instance, after which the court of first instance, within eight days, transfers it to the opposing party, who can, within eight days of receipt, submit a response to the appeal to this court. A copy of the response to the appeal is transferred by the court of first instance to the applicant.

After receiving a response to an appeal or after the expiration of the period for a response to an appeal, the court of first instance, within eight days, transfers the appeal and the response to the appeal, if filed, with all documents to the court of second instance. The court of second instance makes a decision on the appeal in a collegial session within 45 calendar days from the date of receipt of the appeal materials from the court of first instance. The failure of the parties to appear at the court hearing does not prevent the consideration of the complaint. The court of second instance makes a decision within 30 days from the date of the board meeting at which the decision on the appeal was made, and in the case of a hearing – within 30 days from the date of its completion.

The decision of the appellate court is final, but may be appealed to the Supreme Court within 30 days from the date of service of the transcript of the decision. No appeal is allowed if the value of the disputed part of the final decision does not exceed 10,000 convertible marks, unless the Supreme Court of the Federation considers that the decision on review will have implications for the application of the law in other cases. As a result of the consideration of the case, the Supreme Court of the Federation makes a decision that is final and not subject to subsequent appeal.

The small claims procedure applies to monetary claims not exceeding 3,000 convertible marks. The consideration of the case is carried out similarly to the general procedure, only in a more simplified manner. The decision in the case of minor disputes is announced immediately after the end of the main hearing. Appeals are allowed only against decisions to terminate a dispute in the manner of disputes of small value and can be appealed only in connection with a significant violation of the provisions of the civil procedure, as well as due to incorrect application of substantive law.

The parties may file an appeal against the verdict of the first instance within fifteen days. The period for appeal is calculated from the date of publication of the decision, and if the decision was delivered to the party, the period is calculated from the date of delivery.

If, after the court decision has entered into force, the debtor voluntarily does not comply with the court decision, it should be presented to the bailiff to open the enforcement procedure. A court decision may be transferred for enforcement within 10 years from the date it acquires the force of a final decision.

The creditor’s demands at the stage of forced collection can be satisfied by seizing the debtor’s accounts and writing off money from them; seizure of movable and immovable property of the debtor with their subsequent sale, sale of securities and shares of the debtor in legal entities.

If the debtor has signs of a threat of insolvency (if the debtor will not be able to pay off the accepted payment obligations when they fall due in the next 12 months and if the debtor is overdue in fulfilling accepted monetary obligations for up to 60 days or the bankrupt debtor’s account is blocked for 60 days in a row), it is worth considering an alternative option for debt collection by initiating bankruptcy proceedings for the debtor.

Within the framework of this procedure, provided that the debtor’s assets are absent or insufficient, it is possible to cancel transactions or actions of the debtor that caused direct damage to the creditor, for example, transactions made five years before the opening of bankruptcy proceedings with the debtor’s counterparty, who knew that the debtor had signs of insolvency and such a transaction is concluded to the detriment of the creditor; or transactions under which the debtor provides services or performs work without remuneration or for a small remuneration; transactions made with related parties. As a result of the cancellation of such transactions, it is possible to return back to the debtor what he lost from such transactions and thereby increase the liquidation estate to satisfy the claims of creditors and cover the costs of implementing the bankruptcy procedure.

If you have any questions or need support with international debt collection in Bosnia and Herzegovina, our company is ready to provide our expert assistance to effectively resolve your financial issue. Please contact us to receive additional information and professional support from specialists of the leading debt collection agency.

# DEBT COLLECTION AGENCY BOSNIA AND HERZEGOVINA

12.04.2024

913