Debt collection in Montenegro

The debt collection procedure in Montenegro 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 10 years. 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 Republic of Montenegro provides for three options for debt collection through the court, by issuing a payment order, in general claims proceedings and in the procedure for considering small claims.

The procedure for issuing a payment order is applicable for overdue monetary claims of the creditor, confirmed by authentic documents. Authentic documents include: official documents; private documents on which the creditor’s signature is certified by the body responsible for certification; bills and checks with protest and return accounts; extracts from certified business books; invoices; documents that, in accordance with special rules, have the meaning of state documents.

A payment order is issued by the court, even if the plaintiff did not request the issuance of a payment order in the claim due to all the conditions for issuing a payment order are met. If, on the basis of an authentic document, enforcement can be demanded in accordance with the law governing enforcement proceedings, the court will issue a payment order only if the plaintiff proves the likelihood of having a legitimate interest in issuing the payment order. If the plaintiff does not prove the existence of a legal interest in issuing a payment order, it will be refused.

If the claim contains information about an overdue monetary claim, the amount of which does not exceed 500 euros, the court issues a payment order, even if no authentic documents are attached to the claim, and the validity of the claims is established on the basis of the list of evidence specified in the claim.

A payment order is issued by the court without holding a court hearing. In the payment order, the court indicates that the defendant is obliged within eight days, and in case of bill and check disputes – within three days after receiving the payment order, to fulfill the claim along with the costs assessed by the court or, within the same period, to file objections to the payment order. A copy of the claim with attachments is handed over to the defendant along with the payment order.

If the court does not satisfy the proposal to issue a payment order, it will continue proceedings on the claim in general procedure. A payment order can only be contested by way of objection. A payment order acquires legal force to the part that it is not disputed. If objections are filed in a timely manner, the court will evaluate whether it is necessary to schedule a preliminary hearing or whether a main hearing can be scheduled immediately. During the preliminary hearing, the parties may present new facts and offer new evidence, and the defendant may raise new objections to the disputed portion of the payment order. In the decision on the main case, the court will determine whether the payment order remains in full or part in force or whether it is canceled.

The general claim procedure 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 does not submit a response to the claim and there are no conditions for making a decision in connection with the failure to submit, the court schedules 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.

At the preliminary hearing, the court decides by decision: the day and time of the main hearing, the issues that will be discussed, the evidence that will be presented, and the persons who will be invited to the main hearing. Generally, the main hearing will take place no later than 60 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 fifteen days (for bill, check and commercial disputes after eight days) from the date of delivery of the transcript of the verdict, provided that it is not appealed. A party may waive the right to appeal upon receipt of a transcript of the decision.

The appeal is filed through the court of first instance, after which the court of first instance transfers it to the opposing party, who may, within eight days (for commercial disputes, within three days) from the date 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 or on the basis of a court hearing. The failure of the parties to appear at the court hearing does not prevent the consideration of the complaint.

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. An appeal is not allowed in property disputes in which the claim concerns a claim for money, for the delivery of things or for the commission of another action, if the value of the disputed part of the decision that has entered into legal force does not exceed 20,000 euros (for commercial disputes up to 40,000 euros), except in the case of when such an appeal is necessary to address a legal issue relevant to ensuring legal certainty or uniform application of the law. As a result of the consideration of the case, the Supreme Court makes a decision that is final and not subject to further appeal.

The small claims procedure applies to monetary claims not exceeding €1,000 (for commercial disputes up to €7,000). 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. A decision or decree to terminate a dispute in accordance with the procedure for disputes of small value 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 eight 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. After the opening of enforcement proceedings, the executor sends a notice of voluntary execution to the debtor within eight days, and for bill and check disputes within three days. If the debtor does not pay the debt within the specified period, the executor begins enforcement.

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; cashing out non-property rights, selling securities and shares of business companies..

If the debtor has signs of insolvency (a debtor is considered insolvent if he cannot fulfill his financial obligations within 45 days from the date of fulfillment of the obligation and if he has completely suspended all payments for a period of 30 continuous days) or excessive debt (the debtor is considered to have excessive debt, if its assets are less than its liabilities, but the debtor will not be considered to be over-indebted if, depending on the circumstances of the case, such as available sources of funds, the type of assets and insurance purchased, it can be reasonably expected that the continuation of the business will adequately satisfy its obligations when due period of their repayment) it is worth considering an alternative option of 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 Montenegro, 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 MONTENEGRO

12.04.2024

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