Debt recovery and enforcement of claims

• drafting an attorney’s letter of demand, with a preliminary examination of the legal basis of the claim and of the limitation period
• commencing and conducting the order for payment procedure and, where the procedure turns into a court action, continuing the representation in litigation
• enforcement proceedings: applying to the court for the issue of a writ of execution, or, in the case of a final and binding order for payment, to the notary public, and conducting the enforcement proceedings in full
• notification of a creditor’s claim, and representation in liquidation proceedings and in legality supervision proceedings

When proceedings must be commenced by way of an order for payment

Under Act L of 2009 on the Order for Payment Procedure, a matured claim for the payment of money may also be enforced by way of an order for payment. There is, however, a band within which there is no choice: a matured claim directed exclusively at the payment of money, the amount of which, calculated in accordance with the rules on the value of the subject matter of the dispute, does not exceed three million forints, may be enforced only by way of an order for payment — provided that the parties have a known domestic address for service and that the claim does not fall within the exceptions listed in the Act.

In practice this means that below three million forints the court will not consider on its merits a statement of claim submitted directly to it. The procedure is conducted before a notary public, and the procedure of the notary public — being civil non-contentious proceedings — has the same effect as a procedure of the court.

The path of the claim

The first step is to examine whether the legal basis of the claim stands and whether the claim is time-barred. This is followed by the attorney’s letter of demand, which in many cases settles the matter on its own, and the omission of which may later carry weight in the bearing of costs.

If the letter of demand is unsuccessful, the next step is the application for the issue of an order for payment. The obligor may lodge a statement of opposition with the notary public within fifteen days of service of the order. If no statement of opposition is received, the order becomes final and binding and is enforceable. If one is received, the procedure turns into a court action, and I continue the representation in the court stage.

On the basis of a final and binding order for payment, enforcement is ordered by the notary public by the issue of a writ of execution; on the basis of a decision of a court, by the court. Thereafter the proceedings are carried out by an independent court bailiff.

The structure of the costs

In the order for payment procedure — subject to a few exceptions — no court duty is payable, but rather the notary’s procedural fee. Where the procedure turns into a court action as a result of a statement of opposition, court duty is payable in the court proceedings, but the amount of the procedural fee is to be set off against the court duty of the court proceedings. This structure is important because the order for payment is not a wasted step even where the dispute ultimately comes before a court.

Frequently asked questions

How long does it take for an order for payment to become final and binding?

If the obligor does not lodge a statement of opposition, the order becomes final and binding upon the expiry of the fifteen-day time limit available for opposition. The overall duration is determined by whether service is successful.

What happens if the obligor lodges a statement of opposition?

The procedure turns into a court action. The legal dispute is then determined by a court, and the application for an order for payment serves as the statement of claim forming the basis of the action.

Is there any point in sending a letter of demand if we are going to litigate in any event?

Yes. The letter of demand records the content of the claim and the time limit for performance, documents the good-faith attempt at settlement, and many matters are concluded at this stage.