Debt collection in North Macedonia

Debt collection in North Macedonia begins with an analysis of the debtor’s legal and financial position, business activity, company history, available debt documents, pending court cases, enforcement procedures, possible insolvency indicators and the risk that the debtor may challenge the claim. This analysis determines whether the creditor should start with settlement negotiations, a payment order, ordinary court proceedings, enforcement of an existing document or participation in bankruptcy proceedings.

If the debtor is still active, has no blocking insolvency indicators and the creditor has documents confirming the debt, it is usually reasonable to start with amicable debt collection. At this stage, the creditor may clarify the debtor’s position, obtain written recognition of the debt, discuss payment by instalments, agree on return of goods, transfer of debt, set-off or another lawful settlement option.

Amicable recovery should be based on lawful communication and settlement negotiation. Interaction with the debtor may begin after sending a written notice by mail, email, telephone or other business communication channels. The purpose is not to apply pressure, but to reach the debtor’s decision makers, document their response, understand whether the debt is disputed and determine whether voluntary payment is realistic.

The main task at this stage is to establish contact with persons who can make a payment decision, fix the amount of the debt, preserve evidence of default and prepare the next procedural step if the debtor does not pay.

For commercial debts, the Financial Discipline Law is also relevant. The standard statutory payment term is 30 days. The parties may agree to extend the payment term up to 60 days, and a longer term up to 120 days is possible only if it is expressly agreed in writing and is not grossly unfair to the creditor. Late payment may also lead to statutory compensation, penalty interest and administrative penalties. These rules make the first weeks after default important for sending a written demand and preparing the legal position of the creditor.

If this stage does not bring the expected result, or if the initial analysis shows that amicable recovery is not suitable, the creditor should proceed to recovery through court, enforcement or bankruptcy-related action.

Before initiating legal action, the creditor should check the limitation period for debt recovery in North Macedonia. The general limitation period is 5 years. Mutual claims of the parties arising from contracts for the sale of goods or the provision of services generally become time-barred after 3 years.

Missing the limitation period does not automatically prevent the creditor from filing a claim in court. However, if the debtor invokes the limitation period before the court, the claim may be rejected on that ground. The parties cannot change the statutory limitation period by agreement.

A separate rule applies to claims confirmed by a final court decision, a decision of another competent authority or a settlement before a court or another competent authority. Under the 2023 amendments, such receivables become time-barred after 5 years from the moment they become enforceable. Filing a request for enforcement before the competent enforcement agent interrupts the limitation period, after which the limitation period in the enforcement procedure runs for 10 years from the filing of the enforcement request.

The legislation of North Macedonia provides several options for judicial debt collection: a payment order, a notarial payment order, the general claim procedure and the small claims procedure. The correct procedural route depends on the amount of the claim, the available documents, whether the debtor disputes the debt and whether the creditor already has an enforceable document.

The general claim procedure is carried out by filing a statement of claim with the competent court. After preliminary preparation of the case, the court serves the claim on the defendant and invites the defendant to respond within the prescribed period, which may not be shorter than 15 days and may not exceed 30 days. After the expiry of this period, the court schedules a preliminary hearing within the procedural time frame.

After the preliminary hearing, the court schedules the main hearing, normally within up to 60 days, and in more complex cases within up to 90 days. During the main hearing, the court examines the parties’ arguments, written evidence, witness statements, expert opinions and other relevant materials. As a result of the case, the court issues a judgment. The judgment becomes final if it is not appealed within the applicable appeal period.

In commercial disputes regarding a monetary claim whose value does not exceed 1,000,000 denars, the parties are obliged to try to resolve the dispute through mediation before filing a claim. When filing the claim, the claimant must attach written evidence issued by the mediator confirming that the attempt to resolve the dispute through mediation was unsuccessful. If this evidence is not attached, the court will reject the claim.

If the judgment is appealed, the case is considered by the court of second instance. The absence of the parties does not prevent the appellate court from considering the appeal. The court of second instance should decide on the appeal within three months, and in more complex cases within six months from the date when the case was accepted for proceedings.

The appellate court may not modify the judgment to the detriment of the appellant unless the opposing party also challenges the judgment.

The decision of the court of appeal is final, but in cases allowed by law it may be challenged before the Supreme Court of the Republic of North Macedonia within 30 days from delivery of the second-instance decision. As a rule, review of a second-instance decision is not available if the disputed amount does not exceed 1,000,000 denars, or 1,500,000 denars in commercial disputes.

Filing an application for review does not suspend enforcement of the challenged decision. The Supreme Court reviews the challenged decision within eight months from the date when it accepted the case. The decision of the Supreme Court is final and is not subject to further appeal.

The payment order procedure applies to monetary claims based on reliable documents. Such documents may include official documents, bills and checks with protest and return receipts where required, invoices and documents that have the meaning of public documents under special rules.

After the claim is filed, the court may issue a payment order without holding a hearing. In the payment order, the court states that the defendant must fulfil the claim within eight days, and in bill and check disputes within three days, after receiving the payment order. Within the same period, the defendant may file objections against the payment order.

If the defendant does not file objections within the specified period, the payment order becomes final. If the debtor files objections in time, the court may schedule a preliminary hearing or a main hearing depending on the circumstances of the case and then decide whether the payment order remains in force or is cancelled. The legislation establishes three months for this procedure.

A separate practical route is the notarial payment order. This procedure is useful for due monetary claims supported by reliable documents, especially unpaid invoices and other documented commercial debts. If the debtor files an objection against the notarial payment order, the notary must send the case file to the competent basic court within three days. The competent basic court then decides on the objection under the civil procedure rules.

The procedure before the first-instance court on an objection against a notarial payment order must be completed within six months from the date when the court receives the case. If an appeal is filed against the first-instance decision, the second-instance court must decide within 30 days.

For a foreign creditor, the payment order route is most effective when the debtor’s identity is clear, the debt is due, the amount can be calculated precisely and the documents prove the claim without the need for complex factual examination.

The small claims procedure applies to claims not exceeding 600,000 denars. This procedure is similar to the general claim procedure but is intended to be faster and is conducted without a preparatory hearing. The parties must present the relevant facts and evidence at the first main hearing, because the procedural opportunities to supplement the case later are more limited.

A judgment or ruling resolving a small claims dispute may be appealed only on limited grounds, including a significant violation of civil procedure rules, an erroneous or incompletely established factual situation and incorrect application of substantive law. The appeal period is eight days. Review of the final decision of the second-instance court is not permitted.

If, after the court decision becomes enforceable, the debtor does not voluntarily comply with it, the creditor may initiate enforcement proceedings by submitting a written request to the competent enforcement agent together with the original enforcement document. The enforcement document must allow identification of the creditor, the debtor, the subject of enforcement, the type and scope of the obligation and the time for its fulfilment.

The enforcement procedure is opened at the creditor’s request and is aimed at forced satisfaction of the creditor’s claim. In cross-border and commercial cases, it is important to identify in advance which enforcement measures are realistic: seizure of bank accounts, transfer of funds, seizure and sale of movable property, seizure and sale of immovable property, seizure and sale of securities or shares in commercial companies, transfer of the debtor’s monetary claims, conversion of other property rights into money and transfer of funds held by a payment transaction holder.

For receivables established by a final court decision, a decision of another competent authority or a settlement before a court or another competent authority, the 2023 amendments provide a 5-year limitation period from the moment the receivable becomes enforceable. Filing a request for enforcement before the competent enforcement agent interrupts the limitation period. After that, the limitation period in the enforcement procedure runs for 10 years from the filing of the enforcement request.

If the enforcement document provides for collection of interest, interest is no longer calculated without limit until the funds are deposited into the special account of the enforcement agent. Under the 2023 amendments, unpaid penalty interest stops running when it reaches the amount of the principal debt. This rule is important when calculating the recoverable amount, preparing a settlement proposal and assessing whether the debtor’s payment offer is economically acceptable.

The creditor should also examine transactions made by the debtor before enforcement. Transactions that prevent or obstruct enforcement, reduce the debtor’s available assets or place certain creditors in a more favorable position may be legally challenged. If such transactions are treated as ineffective or invalid for enforcement purposes, their invalidity must be established by a final decision in civil proceedings.

This issue is especially relevant where the debtor transferred property, securities, shares, receivables or other valuable rights shortly before enforcement, after receiving a demand notice or after becoming aware of the creditor’s claim. In such cases, ordinary enforcement against bank accounts may not be enough, and the recovery strategy should combine enforcement measures with analysis of asset transfers and possible civil action against transactions damaging creditors.

If the enforcement agent rejects the request, fails to take an enforcement action or acts unlawfully during enforcement, the creditor, debtor, participant or third party whose rights are affected may use the procedural remedies provided by the Law on Enforcement before the competent basic court. This makes enforcement in North Macedonia not only a mechanical collection stage, but also a separate procedural phase where timing, asset tracing, objections, appeals and the debtor’s transactions may directly affect the final recovery result.

If the debtor has signs of insolvency, the creditor should consider bankruptcy as an alternative recovery route. A debtor who is unable to pay the amount due within 45 days may be treated as insolvent. Before filing a court claim or enforcement request, it is useful to check whether the debtor is active, whether bankruptcy or liquidation data exists, whether accounts are blocked and whether individual enforcement is still commercially realistic.

The Bankruptcy Law obliges persons and bodies authorized to manage, represent and supervise a legal entity to submit a proposal to open bankruptcy proceedings no later than the twenty-first day from the date when the grounds for opening the bankruptcy case arise.

If they fail to fulfil this obligation, these persons and bodies may bear personal and joint liability for damage caused to creditors of the debtor legal entity.

When opening bankruptcy proceedings, the court checks the availability and value of the bankruptcy estate. If the estate is not sufficient to cover the costs of the bankruptcy procedure, the proceedings may be closed unless the creditor agrees to finance these costs at its own expense.

As part of this procedure, at the request of the bankruptcy trustee, personal unlimited liability of participants in the debtor company for the obligations of the debtor company may be established.

It is also possible to challenge transactions that caused damage to creditors, including transactions made ten years before the opening of bankruptcy proceedings with persons who knew that such transactions would damage the debtor’s creditors, as well as gratuitous transactions or transactions with insignificant consideration made four years before the opening of bankruptcy proceedings.

As a result of cancellation of such transactions, assets or value lost by the debtor may be returned to the bankruptcy estate, increasing the pool available for creditor satisfaction.

If the creditor already has a foreign court judgment, recovery in North Macedonia usually starts with recognition and enforcement of foreign judgments before the competent basic court. The foreign judgment must be final and enforceable under the law of the country where it was issued. The application should include the original or a certified copy of the judgment, confirmation that the judgment is final, and a certified translation into the official language used before the court.

After recognition, if the debtor does not comply voluntarily, enforcement of the foreign judgment may be carried out through the competent enforcement agent. The debtor may oppose recognition or enforcement on limited grounds, including exclusive jurisdiction of North Macedonian courts or authorities, contradiction with public order, existence of a prior final decision on the same matter or serious procedural defects affecting the debtor’s right to defend the case.

If you need support with debt collection in North Macedonia, Grandliga can analyze the debtor, documents, limitation period, financial discipline issues, mediation requirement, payment order options, court proceedings, enforcement measures, bankruptcy risks and recognition of a foreign court decision. Our team can help prepare a practical recovery strategy for commercial and international debt collection in the Republic of North Macedonia.

12.04.2024

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