Debt Collection in Palestine

The debt collection process in Palestine 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 on 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 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 courts.

Before initiating judicial collection, it is worth paying attention to the limitation period. The limitation period for debt collection is 15 years. For debt collection on bills of exchange and checks, the limitation period is 5 years. The limitation period is interrupted if the debtor recognizes the creditor’s right explicitly or indirectly. Indirect recognition is considered if the debtor leaves the property pledged as security for debt repayment with the creditor. After the interruption, the limitation period is calculated anew.

Palestinian law provides for judicial collection of debts in ordinary and simplified judicial proceedings.

Cases whose value does not exceed 20,000 Jordanian dinars or their equivalent in legal currency are heard by the magistrates’ courts. Cases whose value exceeds the said amount are heard by the courts of first instance.

The ordinary judicial process begins with the filing of a statement of claim, which is subject to registration by the court upon payment of the court fee. The claim is not accepted in the courts of first instance without the participation of a practicing lawyer.

The defendant must file a written response with the registry of the court within fifteen days from the date of service of the claim, enclosing documents evidencing his defense. The trial may be initiated if the defendant fails to file his response within the specified period. The court may allow the defendant to file a written response if he appears at the first hearing of the case.

On the day appointed for the hearing of the case, if the defendant fails to appear and the claim has been properly served on him, the court shall decide the case unilaterally. If the defendant has attended one of the court hearings and then is absent without good cause, the decision made against him shall be deemed to have been made in his presence and shall be subject to appeal.

The court shall oblige the parties at the first hearing of the case, after an exchange of written statements, to determine the points of agreement and disagreement on the issues related to the case, and shall record this in the minutes of the hearing. Each party shall clearly define the evidence it intends to present on the disputed issues, and the court shall set dates for hearings to consider the evidence of each of the parties. The court may postpone the hearing of the case from time to time depending on the circumstances, but not more than once for the same reason, unless the court is convinced of the need for a second postponement.

After examining the evidence and holding debates between the parties, the court shall complete the hearing of the case and make a decision immediately or at a subsequent hearing.

The simplified court procedure is used for cases in which the amount of the debt is confirmed by written documents. To use this procedure, the plaintiff must indicate this in the statement of claim. The plaintiff must notify the defendant of the exercise of the claimed right fifteen days before filing the claim, and this notice must be attached to the statement of claim.

The court shall set a hearing for the claim within fifteen days from the date of filing the claim and shall notify the parties thereof. If the defendant fails to appear at the hearing despite the notice, the plaintiff shall be required to prove his claim and the court shall decide the case. If the court finds that it cannot satisfy the plaintiff’s claim, another hearing shall be set for the case and the defendant shall be notified thereof. If the defendant appears and admits part of the claim, the court shall immediately rule on that part with the possibility of its execution, then shall consider the evidence of the parties on the remaining part in accordance with the ordinary judicial process and shall make a final decision.

The decision of the magistrate’s court may be appealed to the court of first instance, and the decision of the court of first instance may be appealed to the appellate court. The period for filing an appeal is thirty days. The decision of the appellate court may be appealed to the Supreme Court of Palestine. The period for filing a cassation appeal is forty days. Filing a cassation appeal does not suspend the execution of the contested decision, unless the court decides otherwise, with or without security, at the request of the cassation appellant. Decisions of the Supreme Court are not subject to further appeal.

Once the judgment has entered into legal force, the creditor must initiate enforcement proceedings. The judgment may be submitted for enforcement for 15 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 with their subsequent sale; seizing and confiscating securities; seizing and confiscating company shares.

An additional option for collecting debt from companies and merchants is bankruptcy proceedings. According to the Palestinian Trade Law, a debtor is considered bankrupt if he stops paying his commercial debts, or who does not maintain financial self-confidence except by means that are clearly illegal. At this stage, if the debtor’s assets are insufficient to fully satisfy the creditors’ claims, it is possible to cancel the debtor’s transactions made with the intent to harm the creditors. The following transactions or actions may be declared invalid if they were made by the debtor after the date of cessation of payments or within twenty days before that date: 1) gratuitous actions and gifts, with the exception of customary small gifts; 2) repayment of debts before they become due, regardless of the form of performance; 3) creation of a mortgage or collateral on the debtor’s property to secure a previously existing debt; 4) any transaction with the debtor’s counterparty who knew that the debtor had stopped making its payments. The limitation period for filing claims to cancel the above transactions or actions is eighteen months from the date of declaration of bankruptcy. As a result of cancellation of the above 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 on international debt collection in Palestine, 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 PALESTINE

30.10.2024

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