Debt collection

Debt collection in the Netherlands is fairly simple and quick. Legislation on seizure and enforcement is laid down in the Law on Seizure and Enforcement. If a debt remains unpaid, the creditor may consider seizing bank accounts, inventory, stock or even the debtor’s customers. In this article you read all legally defined procedures for seizure and execution.

Unpaid bills and debt collection

If a debtor does not pay and the creditor wants to take steps, the claim can be presented to the court. Prior to such legal proceedings, it is possible to make a prejudgment attachment against the debtor. The attachment is part of the right of seizure. A lawyer like Fruytier Lawyers in Business must submit the request to the court. The court evaluates the request and can then grant leave (permission) to make the attachment. Only when legal proceedings have taken place and the debtor still refuses to pay will the attachment for enforcement begin.

How the debt collection procedure works

In order to levy a prejudgment attachment, a petition must be filed with the court within the district where one or more of the goods on which the creditor wishes to levy the attachment are located or where one of the persons subject to the attachment lives. The filing of such a petition can only be done by a lawyer.

The court, on the basis of the petition, may or may not grant permission for the attachment of property. For the attachment itself, it is necessary to engage a judicial officer. The judicial officer performs a number of formal acts, after which he notifies the debtor in writing of the attachment. This written notification must be accompanied by the leave granted by the court, the application and the attachment notice.

What can be seized

In principle, all assets of the debtor can be seized by means of a prejudgment attachment. For example on a house, car or bank account, but attachment of shares is also possible. A debtor’s entire assets are liable to attachment. The claims that a debtor has on others also fall under the debtor’s assets. These others are also referred to as third parties.

Prejudgment attachment

In the event of a prejudgment attachment, assets are ‘frozen’ until the court has ruled on the collection of the claim. If the prejudgment attachment is successful, the creditor is given certainty that there are still possibilities for recourse against the debtor if an award follows. This is because the bank balances, real estate assets and movable property on which the prejudgment attachment has been levied remain available to the creditor. It ensures that the claim can actually be collected after the court has ruled in favor of the creditor. The attachment may be levied on the debtor’s entire assets.

An additional advantage of levying a prejudgment attachment is that the debtor will no longer be able to dispose of the seized asset with immediate effect. For example, if bank accounts are attached, the debtor can no longer dispose of his money, and if movable property is seized, the debtor can no longer dispose of this property. In some cases, this leads to a situation where the debtor will pay just for this reason. In that case, the debtor is more or less forced by the seizure to make full payment, which directly resolves the dispute.

Attachment among third parties

Attachment among third parties is also referred to as garnishment. This refers to all attachments made by a bailiff to a third party. An attachment is therefore made on someone who is not actually involved in the dispute between the creditor and the debtor. Nevertheless, this third party will have to comply with the bailiff’s instructions.

In the case of bank attachments, claims that the debtor has against a bank are seized. For example, if the debtor holds an account at that bank with a positive balance. The attachment of someone’s bank account or other bank balances is therefore a form of garnishment. This is because the bank is not involved in the dispute between the creditor and debtor.

The garnishment of someone’s wages or benefits is also considered a garnishment. We then speak of a so-called wage attachment. A debtor in employment has, in fact, on the basis of his employment contract, periodically to claim his wages from his employer. Because this claim also belongs to the assets of the debtor, a debtor can also attach these assets. Thus, the employer is seized. As a result, the employer may not simply transfer the wages to his employee (taking into account, among other things, the attachment free foot).

Voiding a seizure of collecting debt

It is not possible to appeal against an order of attachment given by the judge in preliminary relief proceedings. However, there are other possibilities for debt collection to lift the attachment. The debtor can initiate summary proceedings in which he requests the lifting of the attachment. Such proceedings can only be initiated by a lawyer.

Summary proof of defectiveness

In order for the attachment to be lifted, the soundness of the claim must be demonstrated summarily. The party seeking relief by way of summary proceedings that the attachment must be lifted must demonstrate (concisely) that the claim which the person levying the attachment claims does not or no longer exists or, for example, that it has been time-barred.

Security and debt collection

Another method that is frequently used in practice is the provision of security. If security is provided for the creditor’s claim, for example by means of providing a bank guarantee, then a judge will determine by judgment that the attachment must be lifted. The security provided will in that case replace the prejudgment attachment.

Disadvantaged creditor

If the distraining creditor is ultimately unsuccessful by judicial decision, the precautionary attachment will be lifted. The goods on which an attachment has been levied are then again at the free disposal of the alleged debtor. In some cases of debt collection, the damages suffered by the alleged debtor as a result of the wrongful seizure can be recovered from the distraining party.

Executory Attachment

If legal proceedings have already been conducted and the debtor has been ordered to pay, but this is not complied with voluntarily, then the debtor has the option of levying an attachment for enforcement. We then speak of the enforcement of the judgement and enforcement law applies.

As in the case of precautionary seizure, only the judicial officer can carry out the seizure. The difference is that, in the event of an attachment for enforcement, the court’s permission is not required first, which is the case with the prejudgment attachment. Once again, in principle all of the debtor’s assets can be seized by means of an enforcement order. If a prejudgment attachment has been made prior to the proceedings, then this prejudgment attachment will pass into an executory attachment by operation of law.

If payment of the debt collection is not forthcoming, the bailiff will start to enforce the attachment. It depends on where the attachment has been levied, how this is done. In the case of bank attachment, the bailiff will instruct the bank to pay out the money subject to the attachment. If the debtor’s home has been seized, the bailiff, in consultation with the notary, may sell the home at public auction. In the case of attachment of shares, the garnishee must ask the court to set a time limit and conditions for the sale, after which the sale will take place by public or private auction. All enforcement measures can, of course, take place without the debtor’s consent.

International attachment: European attachment order

Nowadays it is easier to seize foreign bank accounts within the European Union. Debt collection can be done by means of a European order. The attachment order is an EU regulation to which all member states – with the exception of Denmark and the United Kingdom – have had to adjust their legislation.

The attachment order is applicable if you wish to have the account or the assets of a foreign buyer seized (prejudgment attachment), for example. A creditor from the Netherlands can submit the request for the precautionary attachment to the judge in charge of preliminary relief proceedings in his own country. After the request has been reviewed, the judge will determine the amount against which an attachment may be levied. It is important to know that a European attachment order is subject to strict conditions and high demands are made on proving that the attachment is necessary.

This new regulation, which applies in addition to the procedures for attachment and enforcement that apply in the EU Member States, makes the levying of attachments internationally simpler and takes less time and money. In addition, Fruytier Lawyers in Business is part of Lawyers Associated Worldwide, an international network of law firms.

How to work with a lawyer on debt collection

In the decision in which the judge allows you to seize assets the judge will also set a date when a legal proceedings must be started. In general, this will be a writ of summons proceedings, which will start with the writ.

Writ of summons

The writ of summons or subpoena must contain the following information. You start the writ procedure by summoning the other party to appear before the court (subpoena). This summons is called a writ of summons. As the party who preliminary seized assets you are the plaintiff. A lawyer drafts the write the summons, takes care of issuing it to the other party (served by the bailiff) and sends it to the court. These are the contents of summons on debt collection: