Debt Collection in Lebanon

The debt collection process in Lebanon begins with an assessment of the debtor’s solvency, their line of business, the history of the business, the availability of documentary evidence of the debt, ongoing court cases and enforcement proceedings, and the possibility of disputing the debt. This assessment determines the strategy that will be used on behalf of the client in the collection process.

If the debtor has no ongoing court cases or outstanding judgments for 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 the 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 to achieve the fastest possible debt recovery.

The average time for informal extra-judicial collection is up to 60 days (except in cases where a debt repayment installment plan is 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 court.

Before initiating judicial collection, it is worth paying attention to the limitation period. The general limitation period is 10 years. A limitation period of 5 years is provided for the collection of debts, interest, dividends, rent, as well as for all claims payable annually or within a shorter period. The consequences of missing the limitation period are applied by the court of first instance and the appellate court only at the request of the defendant. The limitation period is interrupted if the debtor recognizes the creditor’s right. After the interruption, the limitation period begins to count anew.

Lebanese law provides for judicial collection of debts in the ordinary court procedure.

The ordinary court procedure is carried out by filing a statement of claim with the court with copies of the appendices. After paying the court fee, the court registers the claim on the same day in a special register with the assignment of a unique number in the order of receipt, affixes the court stamp and indicates the registration number and date on all copies.

If the value of the claim is more than one million Lebanese pounds, the parties are required to hire lawyers. Filing a claim in court without the participation of a lawyer in this case is not allowed.

After the registration of the claim, it is handed over to the defendant with all appendices. The defendant is obliged to file a response within fifteen days from the date of receipt of the claim, to which he must attach all documents substantiating the defendant’s position. The plaintiff may respond to the defendant’s objection within ten days from the date of its receipt, sending a copy to the defendant, who may also respond within the same period. After the expiration of the deadline, neither party may submit new applications unless they have a valid reason.

On the day following the expiration of the deadline for filing applications, the head of the registry or the secretary must refer the file to the president of the court, who will appoint one of the judges to prepare the case for hearing. In preparing the case for hearing, the judge may order the parties to submit factual or legal explanations of their claims or objections, as well as to submit documents to which they refer, subject to the parties’ right to discuss any new documents or materials submitted to the court. The judge may also hear the parties, seeking reconciliation and settlement between them. Upon completion of this procedure, the judge returns the file to the registry. If the parties fail to reach a settlement, the president will set a date for the hearing of the case.

In cases where the amount does not exceed 800,000 Lebanese pounds and in urgent cases, the judge may immediately set a date for the hearing after the claim is registered and hear the parties at the first hearing without the need to exchange applications.

The parties may file a joint written statement indicating that they confine themselves to the written explanations set out in their statements. If the court finds that no oral argument or further investigation is necessary and that the case is ready for decision, it may render a decision without setting a hearing date. In such a case, the court must make its decision within 30 days of receiving the joint statement.

If the defendant fails to appear at the hearing without a valid excuse or fails to file a statement of his defence, the court shall issue a preliminary ruling against the defendant if it finds the plaintiff’s claims to be lawful, admissible and well founded.

If the parties appear at the hearing, the court shall hear the case and, after the conclusion of the pleadings, the presiding judge shall decide on the conclusion of the trial and shall set a date for the final decision within a period not exceeding six weeks. Each party may, within three days of the conclusion of the pleadings, submit a written application for clarification or correction of certain points. If, after the conclusion of the pleadings but before the decision is rendered, new circumstances arise or previously unknown facts appear, the court may, on its own initiative or at the request of one of the parties, resume the proceedings and re-include the case in the pleadings schedule.

The decision of the court of first instance may be appealed to the court of appeal within 30 days from the date of notification of the decision, provided that the amount in dispute is more than three million Lebanese pounds. The decision of the Court of Appeal may be appealed to the Supreme Court of Lebanon within 2 months of notification of the decision, provided that the amount in dispute is more than six million Lebanese pounds. An appeal by way of cassation does not stay the execution of the contested decision until it is set aside, unless the court decides to stay the execution, subject to the provision of a proportionate guarantee. The decision of the Supreme Court is final and cannot be appealed further.

Once the judgment has entered into legal force, the creditor must initiate enforcement proceedings. The judgment may be brought for enforcement within 10 years. Within the framework of the enforcement of the judgment, 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 and then selling them; seizing and confiscating securities; seizing and confiscating the defendant’s debts.

An alternative way to collect a debt from a company or a merchant is the bankruptcy procedure of the debtor. According to the Lebanese Commercial Code, every merchant is considered bankrupt if he stops paying his commercial debts and maintains his financial reputation by clearly illegal means. At this stage, if the debtor’s assets are insufficient to fully satisfy the claims of creditors, it is possible to cancel the debtor’s transactions made with the intent to harm the creditors. The following actions are recognized as invalid in relation to all creditors if the debtor made them after the date of cessation of payments established by the court, or within twenty days before this date: gratuitous transactions and transfers, with the exception of ordinary small gifts and the establishment of charitable foundations; payments on obligations before their maturity, regardless of the form of payment; fulfillment of monetary obligations not in money, but by means of bills of exchange, acceptances, transfers and other methods of fulfilling obligations through the transfer of property; execution of a contractual or judicial mortgage, pledge of movable property or the right to use the debtor’s property to secure a previously incurred debt; any transaction concluded for a fee with a counterparty who knew about the debtor’s insolvency. The limitation period for filing claims for the annulment of the above actions is 18 months from the date of opening of bankruptcy. As a result of the annulment of the above actions, it is possible to return back to the debtor what he lost from such transactions and, due to this, 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 on international debt collection in Lebanon, our company is ready to provide its expert assistance to effectively resolve your financial issue. Contact us to get additional information and professional support from specialists of the leading debt collection agency.

# DEBT COLLECTION AGENCY LEBANON

28.10.2024

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