Debt collection in Morocco

The debt collection process in Morocco begins with an assessment of the debtor’s solvency, their business sector, 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, 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 in order to achieve the fastest possible debt collection.

The average time for informal out-of-court collection is up to 60 days (except in cases where a debt repayment installment plan has been agreed upon). If this stage does not produce 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 limitation period for debt collection is 15 years. The limitation period for debt collection on the basis of a bill of exchange is three years. The consequences of the expiration of the limitation period are applied in court only at the request of the debtor. The running of the limitation period is interrupted by any act by which the debtor acknowledges the debt to the creditor. For example, if the debtor has paid part of the debt; if the debtor has requested a deferment of payment; if the debtor has provided a guarantor or other guarantee; if the debtor has invoked the set-off of claims in response to the creditor’s claim. After the interruption, the limitation period begins to run anew.

Moroccan law provides for judicial collection of debts in the ordinary court procedure and in the order of issuing an order for payment.

The ordinary court procedure begins with the filing of a written application to the court. The claim is then entered in a special register in the order in which it was received, indicating the names of the parties, as well as the date of the summons to court. Immediately after the registration of the application, the presiding judge appoints, depending on the case, the reporting judge or the judge who will conduct the case.

The judge also immediately summons the plaintiff and the defendant in writing to appear in court on the day specified by him. Between the notice of summons and the day appointed for appearance there must be at least five days if the party is in the judicial district or in a neighboring locality; and fifteen days if the party is in any other place in Morocco. If the person summoned is outside the Kingdom, the period for appearance is from two to four months, depending on the distance from Morocco.

On the appointed day indicated in the summons, the parties are required to appear in person or through their representative. The case is heard immediately. If the defendant or his representative, having been duly notified, fails to appear on the appointed day, the case is heard in absentia.

At the request of the parties or on its own initiative, the court may, before rendering a decision on the merits, order an expert examination, inspection of the scene, examination of witnesses, verification of the authenticity of documents or take any other measure to collect evidence. After completing the actions to collect evidence, the court holds a debate between the parties and makes a decision on the merits.

The procedure for issuing an order for payment is used to collect a debt, the amount of which exceeds 1,000 Moroccan dirhams and the debt is based on a document or an acknowledged obligation. To implement this procedure, the creditor must file a corresponding application with the court with documents confirming the validity of the debt. The application is not accepted if the defendant’s notice is to be given abroad or if the debtor has no known place of residence in the Kingdom. If the debt is found to be justified, the court issues an order requiring the debtor to pay the debt and costs. If the claim is not found to be justified, the chairman rejects it with a reasoned decision and refers the creditor to the court for consideration of the case in the ordinary procedure. The decision to reject is not subject to appeal.

The debtor must pay the amount specified in the order within eight days of notification, or object to the order within the same period. If the debtor does not object, the payment order may be executed by force. If the debtor files an objection, the court considers it and decides whether to uphold the payment order or cancel it. If the court concludes that the objection was filed solely for the purpose of delaying the process, it may impose a civil penalty on the debtor in the amount of 10% to 25% of the amount of the debt in favor of the treasury.

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 contested decision. The period for appealing a default judgment is 10 days. The decision of the court of appeal may be appealed to the Supreme Court of Morocco within 30 days from the date of notification of the contested decision. If the amount of the claim does not exceed 20,000 Moroccan dirhams, no appeal is allowed. A cassation appeal filed does not suspend the execution of the contested decision. In exceptional cases, the court may, at the request of the applicant, suspend the execution of the contested decision if it considers that its execution may lead to irreversible consequences. The decision of the Supreme Court is final and cannot be further appealed.

After the court decision comes into legal force, the creditor must initiate the enforcement procedure. The limitation period for the enforcement of a court decision is 30 years. As part of the enforcement of a court decision, the creditor’s claims can 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, seizing and confiscating the debtor’s property held by third parties.

An alternative to debt collection from a company or an entrepreneur is the procedure of judicial liquidation of the debtor. According to the Commercial Law of Morocco, the creditor has the right to initiate this procedure if the debtor has stopped making payments. The cessation of payments is established when the debtor is unable to pay off its obligations with its available assets. Within the framework of this procedure, if the debtor’s assets are insufficient to fully satisfy the creditors’ claims, it is possible to cancel the debtor’s transactions carried out during the suspicious period with the intent to harm the creditors. The suspicious period lasts from the date of cessation of payments until the date of the decision to open the procedure (it can be extended to an earlier period for certain contracts). Therefore, all actions carried out by the debtor after the date of cessation of payments, on a gratuitous basis, are invalid. In addition, the court can annul gratuitous actions carried out during the six months preceding the date of cessation of payments. The court may also annul any dubious actions performed on a reimbursable basis, any dubious payments, establishment of guarantees and security, if they were performed by the debtor after the date of cessation of payments. A claim for invalidity is filed by the manager of the judicial liquidation procedure. As a result of the cancellation of the above actions and 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 judicial liquidation procedure.

If you have any questions or need support for international debt collection in Morocco, 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 MAROCCO

27.11.2024

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