Debt Collection Agency France
Amicable Debt Collections France
1. General information
Cosmopolite Collections maintain a professional collection process, focusing on the relationships between our clients and their debtors at all times. Our team of collection specialists carry out the collection process in-house, contacting debtors both verbally and in writing whilst adhering to state laws. When there is a case of dispute, we aim to reach an amicable solution between the creditor and the debtor. We do this by analysing all contractual documents (e.g. signed contracts, orders, confirmations, invoices and delivery notes, as well as all standard terms that have been agreed upon). All investigations are completed with the assistance and agreement of our legal team.
1.2. Local agents
When our in-house collection efforts do not lead to a positive result, we will employ our agent network. They contact debtors to provide us with information regarding the debtors’ financial situation and solvency. The agents we use will report on any meetings they have with the debtors and provide a summary of the debtors’ business operations. The agents are able to collect money. If the agents negotiate a payment plan or a final statement with the debtors, they should ask Cosmopolite Collections for approval.
Cosmopolite Collections always charge interest to debtors. This rate is set by the government and multiplied by three in accordance with French law on the terms of payment.
1.4. Debt collection costs
Cosmopolite Collections charge a fixed cost of EUR 40 per case in accordance with the European directive and a penalty clause of 10% for the recovery’s costs. If the creditor has a special contractual agreement, this can be taken into account as long as the debtor actually agreed to the terms. From a cultural point of view, French debtors are not used to paying debt collection costs, and often the collection cost is used as a matter of negotiation between debtors and collectors.
In commercial matters, the prescription period is five years, which may be interrupted by the undertaking of a legal proceeding.
1.6. Accepted and most common payment methods
The most common payment methods are cheque payments and bank transfers. Cosmopolite Collections do not offer the direct booking off from the debtor’s accounts.
1.7. Types of companies in France
- Entreprise individuelle
Sole proprietorship with unlimited liability of the owner with their business and private funds.
- EURL (Entreprise Unipersonnelle à Responsabilité Limitée)
Sole proprietorship with no minimum capital and liability limited to company capital.
- SASU (Société par Actions Simplifiées Unipersonnelle)
Sole proprietorship with no minimum capital and liability limited to company capital.
- SARL (Société à Responsabilité Limitée)
A company with two to 100 partners, no minimum capital and liability limited to company capital.
- SNC (Société en Nom Collectif)
A general partnership company with a minimum of two partners, no minimum capital and unlimited liability of partners.
- SA (Société Anonyme) A public limited liability company with a minimum of seven partners, a minimum capital of EUR 37,000 and liability limited to company capital.
- SAS (Société par Actions Simplifiée) A simplified joint stock company with no minimum capital and liability limited to company capital.
1.8. Sources of information
In France, Cosmopolite Collections contract very experienced reporting agencies to assist with the assessment of the financial situation of debtors. Depending on the debtor’s legal form, we can also find further information, such as details about any property owned by the debtor, to determine the best course of action. We also have numerous tracing agents who employ investigators when necessary to locate debtors and their assets.
2. Retention of title
France have very comprehensive, supplier-focused regulations on retention of title (ROT), which must be explicitly agreed upon prior to delivery.
Most importantly, the debtor must acknowledge the retention of title before receiving the first invoice. Most companies include retention of title provisions in their general trading conditions. In this case, the debtor must either sign these conditions in advance or the client has to advise the debtor explicitly that the general trading conditions apply before sending the first invoice, e.g. with a note on the order confirmation.
It is vital to get proof that the trading conditions have been agreed; otherwise, the benefits of the more complex version of the French retention of title cannot be used to reduce the outstanding amount.
The retention of title is used in most cases before insolvency proceedings arise.
Cosmopolite Collections should be able to prove the existence of the goods in the inventory of the debtor at the date of the insolvency judgment, which can prove beneficial during a judicial procedure.
3. Safeguarding measures
In case the debtor is not able to settle a claim in a speedy manner, we can request the debtor to secure the debt in favour of our client. This can be done by providing a written acknowledgement of debt or by asking a special judge to allow us to take conservatory measures such as seizure of the debtor’s bank account.
4. Legal Debt Collections in France
4.1. General information
If the amicable phase fails to bring results, Cosmopolite Collections will send a letter advising the debtor of our decision to start legal proceedings. Our legal team will decide the best procedure to be undertaken, depending on the documents that are available in the case and the position of the debtor (e.g. acknowledgement of debt, dispute, litigation).
4.2. Legal system
For disputes between traders or businesses, the commercial court (‘Tribunal de Commerce’) is used.
The judges are business people elected by their peers, and evidence may be adduced by any appropriate means. For claims of an amount greater than EUR 4,000, it is possible to appeal the first instance court decision.
4.3. Required documents
In order to apply the legal dunning procedure, Cosmopolite Collections require copies of the contract, invoices and a clear statement of account indicating payments and credit notes that have been booked against the outstanding invoices.
In the case of a regular lawsuit procedure, copies of the complete contractual documentation should be available starting with the contract, orders, confirmations, delivery notes and invoices.
Every step of the trading relationship between the debtor and the creditor should be provable by documentation.
4.4. Legal dunning procedure
This type of procedure is used when the amount of the debt is fairly modest and not disputed. It allows Cosmopolite Collections to obtain an injunction against the debtor (‘injonction de payer’) without the presence of the debtor before the court. It is a very simple, quick and inexpensive procedure that does not require a lawyer, unless the debtor disputes the debt after the bailiff’s notification. It also allows Cosmopolite Collections to obtain an interim order (‘référé provision’) with or without the presence of the debtor before the court. If the debtor is present and disputes the case, the judge may decide to close the case and ask the creditor to start the common procedure (‘assignation au fond’). It is a very quick procedure but does require a lawyer to represent the creditor in court.
4.5. Lawsuit in France
The regular lawsuit procedure is initiated directly after the amicable collection has failed due to a dispute by the debtor or because the debtor has ignored payment demands.
The main goals of legal action (‘assignation au fond’) are to determine the existence and the amount of the debt and to define the relationship between the creditor and the debtor. It will also decide if the outstanding amount is owed and if the debtor must pay it immediately or with a payment plan.
It is usual practice to issue a pre-procedure notice. Both the plaintiff and the defendant exchange opinions and proofs by letter until the judge is happy that all the relevant information needed to come to a decision has been received. A hearing will then be scheduled and both parties must be present.
Postponing hearings is a common habit when the defendant’s lawyer asks for it. After multiples hearings (with no time limit), the judge sets a date to publish the final judgment, and both parties will be informed about the outcome in writing by the relevant court.
The plaintiff or defendant can appeal the judgment if they are unhappy with it. One party can appeal the judgment within one month from the notification of the original judgment. Judges at the court of appeal will then re-hear the case within two years.
4.7. Debt collection costs in France
Costs of civil law procedures are determined by the court fees and the lawyers’ fees, which are fixed by each lawyer. As the costs do not depend on the outstanding principal amount but on the complexity of the case,
Cosmopolite Collections have negotiated preferential tariffs with our lawyer network. Cost estimations will be provided on a case-by-case basis should legal action become necessary. The costs of a legal dunning procedure are only 30% of a full court procedure.
4.8. Expected time frame
A non-complex commercial case will take approximately eight to ten months to be heard, which can be doubled for complex commercial cases, a technical dispute or in case of appeal. Some jurisdictions, where the judicial system has been rated below the average performance of the country, may take longer to judge cases. The expected time frame of an appeal is almost two years.
4.9. Interest and costs in the legal phase
There are two kinds of recovery costs in legal cases. These are the charged-back costs that the debtor has to pay, which are often liquidated by the judge and, in most cases, the costs derive from the judicial procedure and the notification’s costs.
The second costs are those that cannot be charged back to the debtor, such as lawyers’ fees.
Each party has to bear their own lawyers’ fees, but the winning party could ask the judge to obtain an indemnity to compensate their expenses. In practice, the amount approved by the court constitutes only a minor share of the expenses, and this indemnity is charged to the debtor. In addition, costs of experts might also arise.
5.1. Enforcement in debt
After the judgment is notified to the debtor, the debtor has one month to appeal. After that, the judgment becomes executive, meaning that a bailiff can start forced execution. In France, only bailiffs have the authority to handle the enforcement of a judicial decision. At this stage, the debtor has no choice; the debtor either has to pay or become bankrupt.
5.2. Enforcement in movable property
This is the standard procedure where the bailiff visits the debtor to take away movable property for liquidation in favour of the creditor. The bailiff cannot seize the property necessary for the debtor’s basic daily life or that enables them to maintain their business activity. The bailiff will always ask our opinion on the seizing and selling of the property.
5.3. Enforcement in immovable property
If the debtor owns real estate, the bailiff can issue an order of attachment of real estate (‘saisie immobilière’). In France, very few companies own any real estate, so the enforcement in immovable property is very rarely used.
5.4. Expected time frame
The enforcement time frames depend on the financial situation of the debtor.
6. Insolvency proceedings
6.1. General information
The legal definition of insolvency is when a debtor is not able to pay their due debts considering their available assets. The two main procedures are: Receivership Bankruptcy. Receivership can be converted into bankruptcy, and in fact, almost 90% of receiverships end up in bankruptcy.
Receivership allows the debtor’s activity to be saved due to a continuation plan, meaning that the creditors can expect dividends. Bankruptcy means the liquidation of the assets when the situation is totally compromised, meaning that the creditors cannot expect any dividends.
The delay to lodge a claim is two months for French creditors and four months for foreign creditors from the date of the publication in BODACC (official journal). The debt may also be disputed and a convocation from the court is planned to justify the debt.
6.3. Required documents
In order to lodge a claim on behalf of our client, Cosmopolite Collections need: An original power of attorney.
It must be in French, signed by the legal representative of the creditor, sealed with the commercial stamp and must mention the name of the debtor.
Copies of the complete contractual documentation should be available, starting with the contract, orders, confirmations, delivery notes and invoices.
6.4. Expected time frame and outcome
The duration can be important, as it is mandatory to check the debts of all the creditors who lodged the claims before making a proposition of a plan of payment (in general in ten years by annual payment).
6.5. Limited companies
Consequences in the insolvency proceedings for limited and unlimited companies are the same as the consequences in the receivership and bankruptcy proceedings for both kinds of companies.
6.6. Unlimited companies / individuals
Consequences in the insolvency proceedings for unlimited and individual companies are the same as the consequences in the receivership and bankruptcy proceedings for both kinds of companies.
6.7. Pool of creditors
There are two creditor pools that the court may decide to build. The first is made up of committees of credit institutions, and the second one contains the main suppliers of the goods or services.
These committees are invited to comment on a draft recovery plan. The creditors’ representatives inform the creditors of the opening of the proceedings, receive their declarations of claims and ask the bankruptcy judge to accept or reject these claims.
They alone are empowered to perform acts in the collective interests of the creditors.
The suspect period starts on the date of the cessation of payments, and all acts of payment during this period may be declared void if the contracting party was aware of the cessation of payments.
7. Arbitration and mediation
Arbitration and mediation are allowable by law in France, but it is very unusual for either party to request them.