Enforcement & Collection

An enforcement file can develop quickly. A debtor who does not respond to the warning may face attachment of a bank account, salary or vehicle, restrictions, an ability investigation and realization proceedings. On the other side, a creditor holding a judgment, promissory note, cheque or an enforceable obligation needs an effective collection strategy rather than the automatic activation of proceedings that do not lead to payment. The Or Rovner Law Office represents both debtors and creditors in enforcement files, adapting the course of action to the legal situation, to financial capacity and to the client's objective.

Proper representation in enforcement proceedings begins with identifying the type of file, the deadlines and the possible arguments. An objection to the execution of a promissory note differs from a motion pleading "I have paid"; a request for a payment order differs from a debt arrangement; and an attachment imposed on a joint account requires a different examination from an attachment on an asset belonging to the debtor.

Representing Debtors in Enforcement Proceedings: The Type of File Determines the Course of Action

The enforcement system handles various tracks, each with its own opening documents, deadlines and defence arguments. Among others, these include:

• A file for the execution of a monetary judgment
• A file for promissory notes and cheques
• A claim for a fixed sum
• A maintenance (alimony) file
• Execution of a mandatory order or an eviction
• Realization of a pledge or a mortgage

Before filing a motion it is important to identify the source of the obligation. For example, a dispute over the very existence of the debt in a promissory-note file may be clarified by way of an objection, whereas a claim that the obligation under the judgment has already been performed may be suited to an "I have paid" motion. A motion that does not match the type of file may be dismissed even if a justified factual argument stands behind it.

Objection to the Execution of a Promissory Note or a Claim for a Fixed Sum

When a file is opened on the basis of a cheque, a promissory note or a claim for a fixed sum, in suitable cases an objection may be filed and the dispute may be transferred for clarification before the court. The date of service of the warning, the documents opening the file and the defence arguments must be examined immediately, such as:

• Forgery
• Failure of consideration
• Payment
• Set-off
• Absence of any engagement
• A dispute regarding the amount of the debt

A delay generally requires a separate motion for an extension of time together with a well-founded explanation.

A Motion Pleading "I Have Paid"

This plea is appropriate where the debtor argues that he has complied with the judgment or that the obligation is no longer enforceable, in whole or in part. For example: the debt was paid, a recognised set-off was carried out, the parties reached an arrangement that was performed, or the creditor is demanding sums beyond the obligation. The motion requires a factual foundation and documents proving the payment or the expiry of the obligation.

Payment Order and Ability Investigation

A debtor who cannot repay the full debt immediately may request a payment order matching his capacity. A full financial picture must be presented, including income, expenses, assets, debts and family circumstances. A motion that is not supported by documents, or that proposes a sum inconsistent with the data, may be dismissed.

Consolidation of Files and Arranging Multiple Debts

Where several files are pending, it is possible to examine consolidation of the files, a comprehensive arrangement, a voluntary payment or a move to the insolvency track. The purpose of this examination is to prevent a situation in which each file is handled separately without a comprehensive solution, while interest and expenses continue to accumulate.

Cancelling or Narrowing Attachments

It is possible to request the cancellation or narrowing of an attachment on an account, salary, vehicle, movable property or rights held by a third party, where a legal cause or circumstances justifying it exist. The motion must address the source of the funds, the harm caused to the debtor and to his family members, the subsistence or occupational need, alternative collection avenues and the documents proving the arguments. In urgent cases one must act quickly and request a stay until a decision is given.

Cancelling Restrictions and Staying Proceedings

Various restrictions may be imposed depending on the type of file and the decisions given. It is possible to examine a motion to cancel a restriction, to stay proceedings, to stay an exit-from-the-country order or to obtain a specific permit, in accordance with the cause, the debtor's conduct and the security that can be offered.

Pledge, Mortgage and Eviction Files

Realization of an asset or eviction from a residential apartment are proceedings with severe consequences. The charge documents, the outstanding debt balance, the warnings, the options for clearing the arrears, self-sale, defence arguments, alternative housing and the provisions of law applicable to the case must all be examined. Early handling may significantly broaden the range of options.

You Received a Warning or Discovered an Attachment – What Now?

• Keep the warning, the envelope and the notice of service, and photograph all the pages.
• Obtain an up-to-date printout of the file and check who the creditor is, what the source of the debt is and what the amount demanded is.
• Gather payment records, correspondence, agreements and judgments connected to the debt.
• Check immediately the deadline for filing an objection, a motion or an appeal.
• If funds needed for subsistence were seized, or funds originating in a benefit payment, salary or a joint account, collect documents proving their source.

Common Mistakes Made by Debtors

• Ignoring the warning in the hope that the file will not progress
• A direct payment that is not documented or is not updated in the file
• Filing a general motion to cancel an attachment without supporting records
• Proposing a monthly payment that does not match the financial data
• Handling each file separately without mapping all of the debts
• Missing the deadline for an objection and then attempting to raise arguments without a motion for an extension of time

Common Mistakes Made by Creditors

• Opening a file in a track that does not suit the debt document
• An erroneous balance calculation or failure to credit a payment that was received
• Defective service of the warning
• Taking numerous proceedings without information about assets and without economic worthwhileness
• Neglecting existing security, or failing to file a proof of debt on time after insolvency proceedings have been opened
• Agreeing to an arrangement that does not include security and a clear mechanism in the event of breach

Representing Creditors and Debt Collection: Opening a File and Choosing a Track

A file may be opened for the execution of a monetary judgment, a promissory note or cheque, a claim for a fixed sum, and further obligations that the law permits to be executed. It is important to choose the correct track, to attach the required documents, to calculate the debt and to serve the warning lawfully.

Locating Assets and Activating Proceedings

Collection may include requests for information, attachments on banks and salary, vehicle attachment, monetary rights, movable property and real estate, a summons to an ability investigation and further proceedings. The decision as to which proceedings to take should rest on information and on a reasonable cost-benefit ratio.

Realization of Assets and Receivership

Where a valuable asset has been located, a realization proceeding or the appointment of a receiver may be required. This is a supervised proceeding that includes motions, appraisal, publication, a bidding process, approval of the sale, payment of debts and transfer of the rights. Precise management is important in order to prevent delays and objections.

Responding to Objections and to Insolvency Proceedings

A debtor may file an objection, an "I have paid" plea, a request for a payment order or an application for insolvency. The creditor is required to file a well-founded response, to prove the debt, to file a proof of debt on time when insolvency proceedings have been opened, and to preserve any security and guarantees that exist.

What Does the Firm's Handling Include?

• Examination of the file and the documents
• Assessment of risks and collection prospects
• Preparation of motions and responses
• Representation before the Enforcement Registrar and in court
• Conducting negotiations towards an arrangement
• Handling attachments and restrictions
• Monitoring decisions and payments
• Examining a comprehensive solution where several files exist

Early Action Can Change the Outcome

In enforcement proceedings, the deadlines, the documents and the type of motion carry great significance. Whether a file has been opened against you or you are seeking to collect a debt, it is advisable to obtain advice before taking a step that may narrow the options later on.