Debt Collection Agency Bulgaria
Amicable Debt Collections Bulgaria
1. General information
Cosmopolite Collections and our local agents have a professional approach to each case. We try to establish a relationship of confidence with debtors and retain the relationships between our clients and their debtors whenever possible. The scope of action includes (but is not limited to) calls, sending reminder letters and attempting to realise personal contact with the responsible person within the debtor company.
1.2. Local agents
Our local agent is located in Sofia. At the present time, we cannot offer a field service for visiting debtors across the whole country, but we can do so in high-value cases. The agent can visit addresses of debtors in Sofia if phone contact is not possible to clarify the situation.
In Bulgaria, the legal interest to debtors can be calculated from the base rate set by the Bulgarian National Bank on 1st January (for the first half of the year) and 1st July (for the second half of the year), plus 10% on a yearly basis. It is possible to include interest, which will be calculated differently if this was agreed in the contract between parties. Usually our clients also include interest calculated by them when submitting a debt collection case. Cosmopolite Collections include this in the debt amount in our reminder. But in the majority of the cases, debtors do not pay this interest. From a cultural point of view, Bulgarian debtors are not used to paying late payment interest, though often the actual amount of the interest payment is considered a matter of negotiation between debtors and collectors.
1.4. Debt collection costs
Bulgaria have officially accepted recovering debt collection costs according to EU Directive 2011/7/EU, but in reality, this is not yet applied. The principal rule is adapted from the directive; clients may ask for an additional payment of EUR 40 for each invoice.
2. Legal collections
2.1. General information
Entering into legal proceedings is possible without prior warning to the debtor. When it concerns commercial claims, the statute of limitation in Bulgaria is five years, calculated from the next day after the due dates of the invoices. The creditor with the claims concerning late payment has two options to initiate legal proceedings against the debtor – via an ordinary court procedure or through simplified legal proceedings by submitting an application (proposal) for enforcement by the court.
2.2. Required documents
Here is a list of the documents Cosmopolite Colletions require from our clients to start a court proceeding:
-A power of attorney (POA), verified by a notary and with an apostille
-An extract from the trade registry of the creditor’s company with the name of the responsible person with the right to sign company documents. The same person should sign the POA. This document should also be verified by a notary and with an apostille.
-A statement of account from the accounting department, with a list of invoices and payments showing the final debt amount. The document should be signed and stamped.
-Copies of CMRs, verified with signature and stamp
-Copies of the SWIFT bank documents with partial payments (if any), verified with signature and stamp.
2.3. Legal dunning procedure
The simplified legal proceedings can be an option for small claims up to EUR 12,500. The proposal for enforcement can be submitted based only on a statement of account or open invoices, directly by the creditor or via an attorney in law. After receiving the proposal for enforcement, the court issues a decision, which is sent to the debtor. If the debtor does not object to the enforcement decision within two weeks after the document is delivered, the court’s decision will become final. Courts can issue a writ of enforcement, and the procedure continues with a receiver (bailiff). The actions of the bailiff can be connected with additional costs. The most common enforcement measure is the blocking of
the debtor’s bank accounts and transfers of the balance by
the debtor’s bank. If there is no possibility of collecting on the debtor’s bank accounts, other enforcement measures can be proposed, such as the sale of the debtor’s property. The debtor can appeal in both stages of the simplified procedure. Such an appeal will transfer the dunning procedure into a regular lawsuit procedure.
The regular lawsuit procedure is either initiated directly when the amicable collection fails due to a dispute by the debtor or follows the legal dunning procedure after the debtor’s appeal in the simplified procedure. After the creditor settles the court tax in time and presents a lawsuit, supported with the documentation of the case, the court will set a date for examination of the case. All documents have to be legally translated into Bulgarian. When the claim is served upon the defendant, the legal proceedings are fully instituted. The defendant has to send an answer supported with proof within one month; otherwise, the court will issue a default judgment. When the court receives answers to the complaint from the defendant, it sets a date for a court hearing. At the court hearing, both parties present their proof and statements. If necessary, the judge can demand hearing of a witness or a court expert (experts will need to be paid additionally). If the court decides in the creditor’s favour and the debtor does not pay, the creditor can start an enforcement procedure on the grounds of the final judgment.
2.5. Debt collection costs
All court fees have to be paid in advance and depend on the amount of the claim. In Bulgaria, there is a fixed percentage of the court fee as follows:
-For ordinary court procedures – 4% of the claim
-For simplified court procedures – 2% of the claim.
-Lawyers’ fees are also paid in advance according to the Official Minimum Lawyers’ Tariff and also depend on the amount of the debt. Legal translation of documents is minimum EUR 25 per page (depending on the language). The final cost estimation will be provided on an individual case level when legal actions become necessary.
2.6. Expected time frame
The average duration of a legal dunning process is about 12 weeks, whereas a court procedure can take up to 12 months or longer depending on the complexity of the case and the availability of the judge and the lawyers on all sides.
2.7. Interest and costs in the legal phase
Extrajudicial interest and costs can be claimed as part of the outstanding amount during the legal proceedings. Usually courts acknowledge additional claims, but the outcome is highly dependent on the court and the judge. In all cases, the losing party has to bear the costs of the legal proceedings.
3. Insolvency proceedings
3.1. General information
The aim of the insolvency proceedings is to pay all creditors with the same quota by liquidating the assets of the debtor company or collecting the enforceable income of an individual who is declared bankrupt.
After the debtor or a creditor files for the debtor’s insolvency, a preliminary liquidator is appointed to check if sufficient assets are available to cover the costs of the proceedings (court costs and costs of the liquidator). If these costs are deemed to be covered, the insolvency proceedings start and a liquidator will be appointed – usually this is the preliminary liquidator. If the costs are not covered, the court will reject the declaration of bankruptcy due to insufficient assets. The creditors can then lodge their claims and take back any goods delivered under retention of title. For goods on stock, the liquidator can choose whether to pay the original price to the creditor or to return the goods. After the proceedings start, lodging claims is possible within a given deadline. The liquidator can either accept a lodged debt or dispute it. If the claim is disputed, the creditor may only file a claim in court to prove the justification of the claim when further documentation does not convince the liquidator to confirm the debt.
3.3. Required documents
In order to lodge a claim, Cosmopolite Collections require:
-An original power of attorney
-Copies of invoices
-Copies of contracts
-Copies of orders, order confirmations and delivery notes
-Copies of general conditions of sale, if there are any
-Copies of any other correspondence that may verify the claim.
3.4. Expected time frame and outcome
The deadline for lodging claims is one to three months depending on the complexity of the procedure and starts from the adjunction order. The whole duration of an insolvency proceeding is at least two to three years.
Collecting business debts in Bulgaria can be a challenging process for foreign businesses, especially if they are unfamiliar with Bulgarian laws and procedures. There are a few specificities that foreign businesses should be aware of when collecting debts in Bulgaria:
- The capital city of Bulgaria is Sofia.
- Bulgaria is divided into 28 regions.
- The government of Bulgaria is a parliamentary republic.
- The official language of Bulgaria is Bulgarian.
- The currency of Bulgaria is the Bulgarian lev.
- There are a number of debt collection agencies in Bulgaria, and the industry has existed in the country for many years.
- The national credit bureau in Bulgaria is the Credit Information Bureau. Some of the private credit reporting companies in Bulgaria include Experian, TransUnion, and Creditreform.
- Debt collection laws in Bulgaria are generally the same countrywide, although there may be some local variations.
There are several benefits to using commercial debt collection services in Bulgaria:
- Expertise in Bulgarian debt collection laws and procedures.
- The ability to communicate with debtors in Bulgarian.
- A network of local debt collection agents.
- Experience negotiating settlements and payment plans.
- Professional and respectful approach to debt collection.
- Timely and efficient debt recovery process.
- Regular updates and transparent communication.
- A high success rate in recovering debts.
Our debt recovery agency has a very high success rate in Bulgaria thanks to our multilingual debt collectors located in the country and our 24/7 online debt recovery report website. We have local debt collection managers in the main cities of Sofia, Plovdiv, and Varna.