Debt Collection Agency Croatia
Amicable Debt Collections Croatia
1. General information
As professionals in collection, Cosmopolite Collections are in a position to provide first-class services and individual treatment and analysis of each case in order to successfully recover overdue debts.
Our activity is based on checking debtors and taking appropriate action with regard to their existing financial situations and ability to pay.
Our debt collection activities consist of:
- Checking debtors’ circumstances
- Delivering written reminders
- Making telephone calls
- Undertaking personal visits.
It is widely known that, with regard to late payments, the efficiency of debt collections depends upon timely and appropriate action. The longer the creditor waits before deciding to act, the lower the chance that the debt will be recovered.
The Croatian business culture is not to pay interest fees, so it is difficult to obtain payment using amicable processes.
If, however, the debtor has agreed to pay the interest by prior agreement or negotiation, the client has to issue an invoice for the amount of interest, based on an appropriate interest calculation.
1.3. Debt collection costs Croatiia
The potential for requesting payment of debt collection costs varies from case to case. Cosmopolite Collections, as an agency, always quote the debt collection costs in the first reminder, but usually we collect only the claim amount.
There are some cases where the costs are collected, but the number of such cases is very low.
When a client insists on payment of such costs, we are asked by the debtor to provide the invoice regarding that issued by the creditor.
Based on that invoice, the payment should be received.
2. Legal collections Croatia
2.1. General information
The Croatian legal system is composed of the civil law, which regulates the relations between two people or companies, and the execution procedure law, which regulates forced collections of debts.
Entering into legal proceedings is possible without a prior warning to the debtor. A letter about the possibility of legal action can be sent to the debtor as the last and final reminder at the end of the amicable collection phase, and this letter can be used to prove that all pre-court efforts are fruitless.
However, the presence of such a letter does not guarantee that a court decision will be received faster.
2.2. Required documents
Here is a list of the necessary documents for legal action:
1. The contract signed by the parties with all appendixes
2. All unpaid invoices
3. A statement of account indicating payments and credit notes
4. Transportation documents with the debtor’s signature proving the goods’ receipt and the customs declarations
5. All correspondence and other documents related to the debt
6. An extract from the trade register about the creditor company
7. A power of attorney for our lawyer to represent the creditor
8. According to the new amendments to Distraint Law, which entered into force on 3rd August 2017, an execution motion has to include the PIN (OIB) of the legal representative (director) of the creditor and of the person signing the power of attorney (POA).
The following documentation for the representative(s) is required:
- A verified copy of their passport(s) or a verified copy of their European Identity Card(s)
- A signed power of attorney for each legal representative, in which it is necessary to add information such as addresses, places and dates of birth.
- All documents have to be provided as copies assured by a notary, or as original documents, as it is necessary to translate all papers into Croatian.
The original documents also have to be shown to the court in case the debtor denies the validity of the documents in any way.
Also, it is necessary to obtain information on the parents of the legal representatives signing the POA, since that data should be stated in the request for PIN, that is: name, surname, birth surname, date of birth. If any documents are missing, it is necessary to provide explanations about this fact.
2.3. Legal dunning procedure
The legislation of Croatia does not include the possibility for this kind of procedures.
2.4. Lawsuit / Motion for execution
The regular execution procedure is initiated directly after the amicable collection process has failed due to dispute by the debtor. The motion for execution is submitted to the public notary upon unpaid invoices or statement of account, on the grounds of which the public notary issues a writ of execution.
In case the debtor does not file an appeal, the writ of execution becomes valid, and it is possible to block the debtor’s account on grounds of a valid and enforceable writ of execution, until the collection is done.
In case the debtor has no capital, it is possible to continue the procedure upon other possible movable property and/or real estate of the debtor. The regular lawsuit procedure is initiated directly after the execution procedure collection has failed due to a dispute by the debtor or if the debtor has filed an appeal against the writ of execution.
A claim is submitted by the public notary to the court, which checks the documents and the grounds of the claim.
If the claim is prepared and submitted correctly, the court announces the date of a session at which both parties have to be present. If it is necessary, the court may postpone the session and announce a date for another hearing.
The parties will be informed about the outcome in writing by the responsible court.
2.5. Debt collection costs Croatia
Costs of the execution procedure and civil law procedure (public notary or court costs and fees) are determined by the provisions of the attorney tariff and the public notary tariff and are not subject to any negotiation.
All costs depend on the outstanding amount. There are different fees that can apply during the proceedings. It is difficult to declare the exact total sum of litigation costs.
A cost estimation will be provided case by case should legal action becomes necessary.
2.6. Expected time frame
The average duration of the execution procedure before the public notary can take up to one month. The court procedure can take from six months up to three years depending on the complexity of the case and the availability of the judge.
2.7. Interest and costs in the legal phase
The legal or arranged interest and costs can be claimed as part of the outstanding amount during the legal proceedings. Usually the court awards interest in the claim amount if it was requested.
The defendant has to bear the court fee of the legal proceedings in accordance with the Civil Process Law.
Other expenses (e.g. experts’ fees) can be requested from the debtor; however, the decision on whether those are awarded depends on the court.
3. Insolvency proceedings
3.1. General information
There are two kinds of insolvency:
1. The pre-bankruptcy proceedings for so-called financial restructuring – The debtor company has to provide a debt repayment plan. If the plan is fulfilled, the company continues to operate.
The purpose of the pre-bankruptcy proceedings is to enable financial restructuring of the debtor company, which is threatened by insolvency, based on an approved and accepted restructuring plan to allow the debtor to continue their business.
The pre-bankruptcy agreement is an enforceable document for the creditors, which means that if the debtor does not fulfil their obligations according to the agreement, the creditors are entitled to commence a Croatia execution procedure against the debtor.
2. Bankruptcy proceedings – In cases of illiquidity and/or insolvency of the debtor, the court will start bankruptcy proceedings, in which the debtor should be finally liquidated.
The court appoints an administrator bankruptcy trustee to prepare the creditors’ list and receive the documents.
The company is liquidated once the proceedings are over.
Claims have to be submitted within 15 days after the court making the decision to institute pre-bankruptcy proceedings and within 60 days since the court decision to institute bankruptcy proceedings.
If a claim is not submitted within this term:
1. If the pre-bankruptcy proceedings are instituted – The creditor’s claim is considered lodged if the debtor stated the claim in the proposal for institution of prebankruptcy proceedings and no contestations were made in the amount stated in the proposal.
Otherwise, the court will reject the claim submitted after the term and the claim will not be taken into account.
2. If the bankruptcy proceedings are instituted – The claim will not be taken into account.
3.3. Required documents
In order to lodge a claim on behalf of our client, Cosmopolite Collections need all unpaid invoices and statements of account indicating payments and credit notes, an extract from the trade register about the creditor company and a power of attorney for our lawyer to represent the creditor.
3.4. Expected time frame and outcome
The deadline to lodge claims is 15 days since the court decision to institute pre-bankruptcy proceedings.
That is 60 days from the date when the information about the court decision is published in official sources.
The whole duration of the pre-bankruptcy proceedings is 120 days from the date of submission of the proposal for opening the proceedings. The whole duration of bankruptcy proceedings cannot be predicted exactly.
The outcome also cannot be predicted exactly and depends on the debtor company’s state at the moment when the insolvency starts.
Croatia is a country located in southeastern Europe, on the Adriatic Sea. Its capital city is Zagreb. Croatia is divided into 20 regions, also known as counties. The government of Croatia is a parliamentary republic. The official languages of Croatia are Croatian and Croatian Sign Language. The currency of Croatia is the Croatian Kuna.
It may be somewhat difficult for a foreign business to collect debts in Croatia, as the process may be unfamiliar and may require navigating the local legal system. It is generally recommended to seek the assistance of a local debt collection agency or legal professional to help with the process.
Debt collection agencies have been operating in Croatia for several years. There are a number of such agencies operating in the country, offering a range of services to help businesses recover outstanding debts.
The national credit bureau in Croatia is the Croatian Credit Bureau (CCB). Some private credit reporting companies operating in Croatia include CRIF, Erste & Steiermärkische Bank, and Zagrebačka Banka.
Debt collection laws in Croatia are generally the same throughout the country, but local laws may also apply in certain cases. It is important for businesses to be familiar with the relevant laws and regulations when attempting to collect debts in Croatia.
There are several benefits to using commercial debt collection services in Croatia:
- Expertise: Debt collection agencies have a wealth of experience and knowledge when it comes to recovering outstanding debts, and can provide valuable guidance and assistance throughout the process.
- Efficiency: Debt collection agencies are typically able to recover debts more quickly than businesses attempting to do so on their own, as they have the necessary resources and expertise to pursue debts effectively.
- Legal support: Debt collection agencies are typically able to provide legal support and representation if necessary, helping businesses to navigate the legal system and pursue debts effectively.
- Language support: Many debt collection agencies in Croatia have multilingual staff, which can be useful for businesses attempting to recover debts from clients who do not speak Croatian.
- Cultural understanding: Debt collection agencies operating in Croatia will have an in-depth understanding of the local culture and business practices, which can be helpful when attempting to recover debts from Croatian clients.
- Improved cash flow: By recovering outstanding debts quickly, businesses can improve their cash flow and financial stability.
- Increased profitability: By recovering debts that may otherwise have gone uncollected, businesses can increase their profitability.
- Stress reduction: Using a debt collection agency can help to reduce the stress and time involved in attempting to recover debts on one's own.
Our debt recovery agency has a very high success rate in Croatia 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 Zagreb, Split, and Rijeka.