Debt Collection in Serbia

The debt collection procedure in Serbia begins with an assessment of the debtor’s solvency, field of activity, company history, availability of documentary evidence of the debt, current court cases and enforcement proceedings, as well as the possibility of disputing the debt. This assessment determines the strategy that will be used on behalf of the client in the debt collection process.

If the debtor has no current court cases or outstanding court orders to collect the debt, and is actively engaged in commercial activities, it is advisable to use the stage of out-of-court debt recovery.

This stage includes active negotiations with the debtor in order to reach an agreement on the payment of 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).

Communication with the debtor begins immediately after sending a notification by mail, email, phone, or messenger. This process includes intensive communication with the debtor in order to exert constant pressure. The main task is to establish contact with key decision-makers to achieve the quickest return of the debt.

The average time for out-of-court debt collection is up to 60 days (except in cases where a payment extension is agreed). If this stage does not produce the expected results, or after the initial analysis it becomes clear that it is not applicable, it is necessary to move on to debt collection through the courts.

Before initiating legal debt collection, it is important to pay attention to the statute of limitations. The Law on Obligations establishes a general statute of limitations of 10 years. The special statute of limitations for claims arising from contracts concluded between legal entities is 3 years. The legislation does not provide for the possibility for the parties to change this period. Expiration of the statute of limitations does not prevent the creditor from filing a lawsuit, but if the debtor files a motion for the application of the consequences of the expiration of the deadlines, the claim may be denied. The running of the statute of limitations may be interrupted in the event of a written acknowledgement of the debt by the debtor, as well as by the commission of indirect actions, among which are partial repayment of the debt, payment of interest, or provision of security.

In addition, the Republic of Serbia is a party to the United Nations Convention on the Limitation Periods in International Sale of Goods of 1974, and therefore if a foreign creditor is registered in a country that is also a party to this convention, the statute of limitations in such a case will be 4 years.

Depending on the value of the claim and the evidence of the debt, the legislation provides for the following options for judicial debt collection:

1. Standard lawsuit proceedings are applicable for cases in which the debtor challenges the payment order or if the amount of the debt is more than €30,000 for debtor companies and more than €3,000 for debtor individuals. This process is carried out by filing a lawsuit and holding a court hearing with the parties being summoned to hear their positions on the case. The statutory period for case consideration is 65 calendar days, but in practice it is longer. As a result of the consideration of the case, the court issues a decision on the case (“Presuda”), which becomes final after the expiration of the deadline for its appeal.

Each party to the case that is not satisfied with the decision of the first instance court has the right to appeal it in the appellate procedure within 15 days from the date of receipt of the transcript of the decision. As a rule, the appellate court considers the appeal without holding a hearing and the appeal must be considered no later than nine months from the date of receipt of the case materials from the first instance court. In case of court hearings, the appeal review period is correspondingly increased. The final decision of the appellate court can be appealed by filing an appeal with the Supreme Court of Cassation within thirty days from the date of the decision. However, the law does not allow appeals against decisions of second instance courts in cases with a claim value of less than €40,000.00 for ordinary disputes and €100,000.00 for business disputes.

2. The procedure for issuing a payment order (“Platnog naloga”) is applicable for overdue monetary claims that are supported by reliable documents and provided that the debtor has been sent a reminder to pay the overdue debt. The procedure for issuing a payment order can also be applied at the initiative of a judge, if debt collection was initiated as part of a general claim proceeding, but all the requirements for using the procedure for issuing a payment order are met. Once an application has been filed, the court may consider the asserted claims under this procedure without holding a hearing. As a result of considering the application, the court accepts a payment order, in which it orders the defendant to satisfy the demands in full within 8 days from the date of delivery or to submit an objection within the same period. If the defendant does not raise objections within the specified period, the payment order acquires the force of a final decision. If the debtor raises an objection within the specified period, the court holds a hearing during which it makes a decision to uphold or cancel the payment order. In case of cancellation of a payment order, the case is subject to consideration in the standard lawsuit proceedings.

3. The procedure for low-value disputes (“Postupak u sporovima male vrednosti”) is applicable to cases with a claim value of up to 3,000 euros for ordinary disputes, and up to 30,000.00 euros for business disputes. The procedure is generally of the same type as standard lawsuit proceedings, but with certain procedural simplifications and restrictions in appealing a court decision.

After receiving a final court decision, if the debtor refuses to voluntarily comply with court decisions, forced execution of the court decision should be initiated. As part of the execution of the decision, the creditor’s claims can be satisfied by writing off funds from the debtor’s accounts, seizing the debtor’s movable and immovable property with their subsequent sale, transferring property rights to real estate to the creditor, and foreclosure on the debtor’s receivables.

If the enforcement proceedings did not lead to positive results and the creditor was unable to satisfy his monetary claims through any option of forced collection, the debtor acquires signs of permanent insolvency and the creditor has the right to make a proposal to initiate bankruptcy proceedings. In the process of initiating such a case, the creditor can hold liable the participants of the debtor’s company, who are liable for the debtor’s obligations as joint and several debtors by virtue of the provisions of the Serbian Law on Commercial Companies, if there are signs in their actions of abuse of the rule of limited liability (For example, they disposed of the company’s property in such a way as to as if it were their personal property; used the company or its property to cause damage to the creditor (the list of such characteristics is not exhaustive and is determined in each case individually).

If you have any questions or need support regarding international debt collection in the Republic of Serbia, 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 SERBIA

12.04.2024

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