Debt collection in Norway

The debt collection procedure in Norway begins with an assessment of the debtor’s solvency, his 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 assessment determines the strategy that will be used on behalf of the client during the collection process.

If the debtor does not have current court cases or outstanding court decisions on debt collection, and he is actively engaged in commercial activities, then it is advisable to use the stage of out-of-court debt collection.

The extrajudicial debt recovery stage is regulated by the Law on Debt Collection and Other Collection of Overdue Monetary Claims. According to this law, companies that have a license to carry out debt collection activities or lawyers on the basis of a Norwegian lawyer’s license have the right to collect debts. Collection of debts must be carried out in accordance with good debt collection practices. Therefore, using debt collection methods that expose anyone to unreasonable pressure, harm or inconvenience is, by default, contrary to good debt collection practice.

Interaction with the debtor occurs by sending the debtor a written notice of payment of the debt within 14 days from the date of sending the notice. If the debtor does not pay the debt, the debt collection company or attorney should send a written demand to pay the debt and inform the debtor of his right to file a defense to the demand within a period of at least 14 days. If the debtor ignores the demand or objects to it, the debt collector has the right to go to court. The stated requirements do not apply to the collection of debts associated with bills and checks.

The statute of limitations for debt collection is 3 years. The legislation does not provide for the possibility of changing the specified limitation periods by agreement of the parties. If the specified period expires, the creditor loses the right to claim and the debt is considered expired. The running of the limitation period is interrupted when the debtor acknowledges an obligation to the creditor directly or by his actions, for example, by promising payment or paying interest. After performing one of the specified actions, the statute of limitations is interrupted and begins to count again.

If the debt is international, then Norway is a party to the 1974 UN Convention on the Limitation Period in the International Sale of Goods, and therefore if the foreign creditor is registered in a country that is also a party to this convention, the limitation period will then be 4 years.

Norwegian law provides for judicial debt collection in the form of a general court procedure and a small claims procedure.

The general judicial procedure is carried out by filing a summons to court. The summons serves as the basis for the proper consideration of the case for the parties and the court. The summons must provide the court with a basis for assessing its judicial powers and provide the necessary information for its service and communication with the parties.

If the court does not decide that the answer should be given in court, then it obliges the defendant to provide a written response to the plaintiff’s request within no more than three weeks. After receiving an answer or the expiration of the deadline for providing it, if the defendant does not provide an answer, the court draws up a plan to consider the case and make a decision. Typically, the case is resolved after an oral hearing at the main hearing. The parties may, with the consent of the court, agree that the decision will be made by written proceedings or a combination of written proceedings and a hearing. Consent can only be given if it will lead to a more efficient and cost-effective resolution of the dispute.

If it is clear that the asserted claim cannot be satisfied to any extent or it is clear that the defense to the claim as a whole is untenable, the court may, upon motion, resolve the claim through summary judgment.

After considering the case at the main hearing, the court makes a decision, which becomes final after the expiration of the period for appealing it.

The small claims procedure is applicable for disputes with a claim of up to NOK 250,000 or for disputes involving a larger amount, provided that the parties to the dispute request the court to carry out this procedure and the court agrees. The case is considered in court, either in written proceedings or in absentia. Under this procedure, a decision must be made within four months from the date of receipt of the summons to court.

An interested party who is not satisfied with the decision of the court of first instance has the right to appeal it on appeal within a month from the date of the decision of the court of first instance. The court receiving the appeal conducts a preliminary examination of the complaint to determine its compliance with the requirements for the appeal. If the complaint is accepted, the court will serve it on the defendant and allow three weeks to respond to the complaint. Upon expiration of this period, the court immediately transfers the case materials to the Court of Appeal. If the value of the claim exceeds NOK 250,000, the additional consent of the Court of Appeal must be obtained in order to accept the appeal. The Court of Appeal hears cases by written procedure. Oral proceedings shall be held when the interests of a reasonable and fair proceeding so require. Oral communication may be limited to specific issues. After considering the case, the appellate court makes a decision, which comes into effect from the moment it is announced.

The decision of the court of appeal can be appealed, but to do this it is necessary to request permission to appeal from the Supreme Court of Norway within a month from the date of announcement of the decision of the court of appeal. Leave to appeal can only be granted if the case raises particularly important issues of principle on which it is important to obtain the Supreme Court’s position quickly. Leave to appeal cannot be granted for appeals of small claims decisions or decisions made following summary judgment. If necessary for the proper consideration of the case, the Supreme Court Appellate Panel may decide to hold hearings to further review portions of the appeal case. Also, the Supreme Court may decide that the parties must submit written arguments on more precisely specified factual and legal issues in the case. As a result of consideration of the case, the Supreme Court makes a decision that is not subject to further appeal and enters into legal force from the moment of its announcement.

After receiving the final judgment, the creditor must present it to the bailiff for enforcement. A court decision may be brought for execution within ten years from the date of entry into legal force. 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; seizure of movable and immovable property of the debtor with their subsequent sale; arrest and sale of the debtor’s assets in the possession of third parties; seizure of securities and intellectual property rights.

In the event that the debtor has signs of insolvency (when the debtor cannot fulfill his obligations when they fall due, unless the inability to pay should be considered temporary. However, insolvency does not exist if it is assumed that the assets and income of the debtor taken together are capable of providing full coverage of the debtor’s obligations, even if the fulfillment of obligations will be delayed due to the fact that coverage must be sought through the sale of assets), the option of bankruptcy proceedings for the debtor should be considered.

During bankruptcy, the debtor may not, without the consent of the court, travel outside the country or, in violation of an injunction, leave the jurisdiction or more specifically defined area around it.

As part of bankruptcy proceedings, a debtor may be placed in quarantine by the court if the person concerned is reasonably suspected of committing a criminal offense in connection with the bankruptcy or business that led to insolvency, or due to irresponsible business conduct, the person is unable to found a new company or be a member of the board of directors or a manager of such a company. Bankruptcy quarantine means that for two years, counting from the opening of bankruptcy, the debtor cannot create a company or occupy or effectively perform new positions as a member or deputy member of the board or manager of such a company. The court may decide that the two-year period should be counted from the date of the court’s decision. Bankruptcy quarantine rules apply to all controlling persons of the debtor who managed the debtor one year before the opening of bankruptcy proceedings.

During the bankruptcy process, the debtor’s property/proceeds from the sale of this property will be distributed among creditors in accordance with the rules of the insolvency process.

It should be noted that the Law on Debt Negotiations and Bankruptcy provides for a stage of debt negotiations, which takes place before the initiation of bankruptcy proceedings. The essence of this stage is that a debtor who cannot fulfill his obligations on time can request open debt negotiations through the court to agree with his creditors on a voluntary settlement of the debt or a forced settlement. During debt negotiations, the debtor retains freedom of action over his business and his assets in general, but under the control of a debt council of creditors. The debtor is required to give the debt board full access to supervise its business conduct and financial affairs and to comply with the board’s orders in this regard. The debtor shall not, without the permission of the debt council, create or extend debts, mortgage, alienate or lease his real estate, his business premises or any asset of significant importance. If debt negotiations are unsuccessful, the court closes them and opens the bankruptcy stage.

As an alternative to debt collection, the possibility of bringing the debtor or the debtor’s controlling persons to criminal liability for committing crimes against creditors should be considered. The Norwegian Criminal Code contains a whole section of such crimes (Chapter 31), among which it is necessary to highlight: unreasonable disposal of money; giving preference to a particular lender; failure to comply with debt negotiation requirements. Creating a threat of bringing the debtor to criminal liability can have an effective influence on him to repay the debt in order to avoid the consequences of criminal punishment.

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

# DEBT COLLECTION AGENCY NORWAY

15.07.2024

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