Debt Collection in Iraq

The debt collection procedure in Iraq begins with an assessment of the debtor’s solvency, scope of activity, business history, availability of documentary evidence of the debt, current court cases and enforcement proceedings, and the possibility of disputing the debt. This assessment determines the strategy to be used on behalf of the client in the collection process.

If the debtor has no ongoing court cases or outstanding judgments on debt collection, and is actively engaged in commercial activities, then it is advisable to use the out-of-court debt collection stage.

This stage involves active negotiations with the debtor in order to reach an agreement on payment of the creditor’s claims or other possible settlement options (e.g. return of goods, transfer of the debt to a third party, exchange of services or goods).

Interaction with the debtor begins immediately after sending a notice by mail, email, phone or instant messengers. This process involves intensive communication with the debtor in order to exert constant pressure. The main objective is to establish contact with key decision makers in order to achieve the fastest possible recovery of the debt.

The average time for informal extra-judicial collection is up to 60 days (except in cases where a payment plan 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, it is necessary to proceed to collection through the courts.

Before initiating judicial collection, it is worth paying attention to the limitation period. The general limitation period is 15 years. A limitation period of 5 years is set for claims for recurring periodic rights, such as rent, interest and income due. The consequences of the expiration of the limitation period are applied in court only at the request of the debtor. The limitation period is interrupted if the debtor has directly or indirectly acknowledged the debt. After the interruption, the limitation period begins to count anew.

Iraqi law provides for judicial collection of debts through the ordinary court procedure.

The ordinary court procedure begins with the filing of a statement of claim with the court. The court then checks the statement of claim for compliance with the requirements of the law. If the claim meets the criteria for acceptance, the court registers it and issues the plaintiff a receipt indicating the parties to the case, the date of filing the claim, and the case registration number.

After the claim is registered, the court sets a date for the hearing and sends the defendant a copy of the statement of claim with its attachments and a notice of summons. The defendant has the right to file a written response during the period from the date of receipt of the notice until the date of the first court hearing.

If the defendant fails to appear on the day of the hearing, despite having been duly notified, the trial is held in his absence and the court makes a decision on the case if all the material circumstances of the case are clear to the court. If the case was not ready for a decision, it is postponed until the claims in the statement of claim have been properly and fully proven.

If the defendant appears, the court shall hear the parties’ positions. The court may also request clarification from the parties on matters that the court may consider ambiguous or if it considers that the clarification requested would contribute to the decision of the case.

The court may not adjourn the hearing except for good cause and not more than once for each cause, unless the court considers otherwise conducive to the proper administration of justice. An adjournment shall be allowed for a period not exceeding 20 days, except where, for example, a longer period is necessary to obtain documents or records from official agencies.

The court, on its own initiative or at the request of any of the parties, may decide to carry out any investigative measures that it considers necessary for the proper examination of the evidence presented by the parties. The facts to be established must be relevant, productive and admissible. After establishing the essential facts and circumstances of the case, the court shall conclude the trial and issue a decision on the same day or shall set a date for issuing the decision not exceeding 15 days from the date of the determination to conclude the case.

The decision of the court of first instance may be appealed to the appellate court, provided that the amount of the claim exceeds 1,000.00 dinars. The period for filing an appeal is 15 days from the date of the decision. The decision of the appellate court may be appealed to the Supreme Court of Iraq within 30 days from the date of the contested decision. The decision of the Supreme Court is final and cannot be further appealed.

Once a court decision has entered into legal force, the creditor must initiate enforcement proceedings. As part of the enforcement of a court decision, the creditor’s claims may be satisfied by seizing and writing off funds from the debtor’s accounts; seizing the movable and immovable property of the debtor with their subsequent sale; seizing and confiscating securities; seizing and confiscating company shares.

An alternative option for collecting a debt from a company and an individual – a merchant is the bankruptcy procedure of the debtor. According to the Iraqi law on trade, the bankruptcy of the debtor occurs if the debtor stops paying its commercial debts as a result of a failure in its financial activities. In the event of a company being declared bankrupt, all participants in such a company are also recognized as bankrupt by default, including participants who left the company within a year before the company stopped paying its debts. At the discretion of the judge, such participants may be held jointly and severally liable for the company’s debts. In addition, if it becomes clear that the debtor’s assets are insufficient to pay at least 20 percent of the company’s debts, the judge may order the board of directors or managers, all or some of them, jointly or severally, to pay all or part of the company’s debts, unless such persons prove that they have exercised due diligence in the conduct of the company’s affairs. By using the above provisions, it is possible to increase the chances of collecting the debt in full.

If you have any questions or need support on international debt collection in Iraq, our company is ready to provide its expert assistance to effectively resolve your financial issue. Contact us for more information and professional support from specialists of the leading debt collection agency.

# DEBT COLLECTION AGENCY IRAQ

24.10.2024

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