Collecting debt in Estonia
There are many possible routes which you as a creditor may take for the purposes of the debt collection. Please find information regarding the possibilities below.
Verifying the debtor in Estonia
As a first step towards the debt collection we suggest to check information about the Estonian company in business register (balance sheet; pledges registered; legal address; board etc.) to get all information regarding the debtor and its financial situation available in the public registers.
Court order proceeding in debt collecting in Estonia
The Estonian judicial system is composed of three instances, county court, district court and the highest is the Supreme Court.
The most popular way of collecting debt in Estonia is by filing claim in Estonian Court. The exact proceedings is decided upon whether the debt is more or less than 6,400 EUR.
Usually, the process of debt collection in Estonia is divided in the following two stages - the pre-trial proceedings and the legal phase. The pre-trial proceedings include sending official notifications to the debtor and fulfilling all the necessary formalities before submitting claim.
Expedited procedure
In case the amount of debt with all the interests included is up to 6,400 EUR an expedited procedure can be used. A state fee in this case is the amount of three (3) per cent of the claim, but no less than 45 euros and it shall be paid upon the filing of a petition in a matter of expedited proceeding of a payment order.
If the court satisfies a petition for application of expedited procedure in a matter of a payment order, it makes a ruling to propose payment. The debtor enjoys the right to object the petition which will lead the court to change expedited proceeding into action. However, in case the debtor doesn’t file objection against the debt and pays it, the court termiantes proceedings in the matter of the payment order by a ruling. A petition for application of expedited procedure in a matter of a payment order (for debt up to 6, 400 euros) can only be filed electronically via the E-toimik portal. The portal can be entered by means of ID card or Mobile ID and the petition to be submitted must be digitally signed.
Procedure in regular proceedings
In case the amount of debt exceeds 6,400 EUR a claim needs to be filed in the county court in regular proceedings, or also when the debtor has objected the expedited procedure the claim will go to regular proceedings.
The amount of state fee depends on the value of the claim unless otherwise prescribed by law.
For example: for collecting 10,000 EUR, the state fee is 550 EUR and debt collection for 500,000 EUR the state fee is 3,400 EUR. Furthermore, ½ of the paid state fee shall be refunded if parties reach a compromise, the plaintiff discontinues the action and also when prior to the pronouncement of a judgment of a court of first instance in full, the parties waive the right to file an appeal. If debtor doesn’t file objection against the debt and is reachable in his address the length of the process may take up to 3 months.
Temporary protection measures in debt collection proceedings
In case of litigation it is prudent to secure yourself from the possible negative actions that the debtor might take and for the said purposes request court to apply temporary protection measures. This may be done at any stage of the court proceedings or even prior bringing the claim to the court. On the one hand, the court may secure an action at the request of the plaintiff if there is reason to believe that failure to secure the action may render enforcement of a court judgment difficult or impossible in case of the positive judgment. On the other hand, the court may do so based on petition which is done before the action is filed and the petition shows reasons for retarding the filing of the action. Court orders and decisions are promptly executed by the bailiff.
Bankruptcy proceeding in Estonia
Another way of getting your money back might be submission of bankruptcy petition against the debtor, which may lead to liquidation of the debtor as a result of bankruptcy proceedings. One of the circumstances which substantiate the debtor’s insolvency that the creditor may rely on is the debtor’s failure to perform an obligation within 30 days after the obligation has fallen due and the creditor has cautioned the debtor in writing of the creditor’s intention to file a bankruptcy petition and the debtor has thereafter failed to perform the obligation within 10 days. This is a very serious and effective route if the debtor does not want to go bankrupt. It is worth noting that in case of bankruptcy proceedings, growth of the debt will cease but debtor’s assets will be required to be distributed among the creditors. The bankruptcy procedure is quite time-consuming and in Estonia it usually takes 2 to 3 years.
To find out more about debt collection in Estonia or the Baltics, please contact our English speaking solicitors at info@gencs.eu.
T: +372 61 91 000
F: +372 61 91 007