1.1 Amicable Phase

1.1.1 General

Accounts Receivable Australia is dedicated to maintaining a professional process throughout both the amicable phase and the legal phase of collections in the country. Our focus at all times is on maintaining a sound relationship between the debtor and the creditor and, for this reason, is it always our first priority to achieve an agreeable settlement, full payment of the debt, or an agreeable payment plan that can avoid legal proceedings against the debtor, while still satisfying the objectives of our client.

Our collections experts are based in-house, allowing for a smooth and efficient operation that produces fast results for a large number of our clients. Debtors are pursued via telephone contact and via written correspondence that is sent via postal mail to their last known physical address. During all communications with debtors, it is the policy of Accounts Receivable Austria to maintain a professional demeanor that adheres to all state and federal laws governing collections in Austria.

Due to the nature of the relationship between Germany and Austria, many of the collections procedures followed by Accounts Receivable Austria adhere to the German code of collection regulations and laws, though exceptions are made when Austria has a specific statute that differs from the German code, known as Rechtsanwaltsvergütungsgesetz, or RVG.

1.1.2 Local agent

Accounts Receivable Australia does not currently maintain its own facility to support field agent visits throughout the country. Because we prefer to maintain all of our collection-related activities in-house, we currently do not offer field visits to the homes of debtors in Austria. Should we establish our field agent facility in Austria, and change this policy, our clients will be notified and they will be able to take full advantage of the service. It should be noted that field agent visits are permitted in Austria by law.

Also worth noting is that Accounts Receivable Austria is always more than willing to meet with debtors at our own facilities in the country, and debtors are welcome to stop by at their convenience during our business hours. During such visits, it is our policy to discuss the debtor’s financial situation, their stance on repayment of the debt, and the nature of their business relationship with the client we represent.

1.1.3 Interests

It is the policy of Accounts Receivable Austria to always attach interest to a past due debt that we have been asked to collect. Due to regulations set by the European Union in European Directive 2000/35/CEE, this practice is somewhat governed universally across member states, of which Austria is one. For this reason, the interest rate attached to a debt will be the rate set by the Austrian National Bank plus an added charge of 8 percent. This interest rate will be charged to the debt’s outstanding balance on a daily basis.

This interest rate can be overridden by a higher or lower rate if a different rate is stipulated in the contract that exists between the debtor and the creditor. It is the responsibility of our clients to provide us with the documentation needed to pursue the proper interest rate attached to any outstanding debt’s balance.

Austrian debtors are, culturally, used to paying interest costs on a debt that has become significantly past due. While attaching interest to a debt is quite common and accepted, debtors will view the actual interest rate itself as a point of negotiation when figuring out a favorable settlement offer. We will do our best to negotiate an interest rate between the debtor and the creditor that works for both parties, and clients will always be consulted before any lowering of an interest rate is performed by our collections experts.

1.1.4 Debt collection costs

Austria’s procedure for recovering the costs associated with debt collection come in the form of damages awarded to companies based on the delay in receiving payment from the debtor. Known as “Delay for Pay” or “Inkassokosten,” these laws only go into effect when a debt is significantly past due. It is the policy of Accounts Receivable Austria to use the German code of collections, known as Rechtsanwaltsvergütungsgesetz, as a guide when determining the costs charged to debtors. That code is based on the statutory lawyers’ fees in Germany, and is an excellent way for clients to recoup a significant majority of the costs associated with the collection of the debt.

When passing on collected costs to our client, Accounts Receivable Austria will process the received money in one of two ways. In most cases, the money will be directly passed on to our client, who will use them to reduce the overall claim. In some cases, however, it is our policy to add them to a success fee that will be billed to our client at the conclusion of the collection process. The decision between either procedure is made in the contract that we present to our clients, and is agreed upon at the time the contract is signed.

1.2 Legal Procedures

1.2.1 General

In Austria, it is possible to begin legal proceedings against a debtor without any prior notification that those legal proceedings are about to begin. It should be noted, however, that a final notice and warning of legal action is often sent by many creditors as a courtesy to debtors, and as a way to reduce the time and money that must be invested in legal proceedings.

The court system in Austria is heavily weighted in favor of reaching a settlement between the creditor and the debtor. A settlement between both parties is also a far less costly avenue to pursue than full legal action a defended trial. It is the policy of Accounts Receivable Austria to advise our clients on a case-by-case basis when presented with the option to settle the case or move forward with prolonged and defended legal actions.

1.2.2 Required documents

The legal procedure in Austria is not a generally prolonged one, as it can be in many of the country’s neighboring court systems. The judicial system does require a great deal of paperwork to begin legal proceedings, however, and Accounts receivable Austria will not file any motions with the court until we are in possession of the following documents:

- Copies of the contract between the creditor and debtor
- Any outstanding invoices
- Copies of account statements that show an outstanding balance, payments, or credits, if relevant

If the legal action proceeds to a lawsuit instead of an amicable settlement between the creditor and the debtor, Accounts Receivable Austria will need an even larger number of documents to ensure our client’s best chance at success in the court system. These documents include the following:

- Copies of all contractual documentation and correspondence
- Delivery confirmations, orders, and order confirmations
- Further backdated invoices
- Documents proving the business relationship between both parties
- Documentation of debt-related correspondence or agreements
- Evidence of oral agreements between both parties, including witnesses

After all of the relevant documentation has been received by Accounts Receivable Austria, legal action — including a fully defended lawsuit — can proceed against the debtor quickly and effectively.

1.2.3 Legal dunning procedure

The legal dunning procedure regulated by Austrian law contains only a single step for those claims involving a debt up to 75,000.00 EUR. In this case, the legal dunning procedure directly results in the issuance of a Payment Order, or “Zahlungsbefehl,” issued to the debtor. This payment order is delivered by the local court nearest the debtor’s home address or main business offices. For debts that are far larger than 75,000.00 EUR in size, the case is handled by the district court nearest the debtor’s main business address. In these larger cases, a Limited Payment Order, or “bedingter Zahlungsbefehl,” is issued to the debtor via service.

In both cases, the debtor has a full four weeks from the date of delivery or service, during which they can object to the debt, dispute it in court, or even choose not to respond to the order for payment at all. If the debtor does choose to make a payment to eliminate the debt, they will need to pay the entire outstanding balance due, as well as all applicable interest charges, within 14 days of the order having been delivered or served. If the debtor does not pay within 14 days, and does not file an objection within the allotted period of four weeks, the payment order immediately becomes final. The court can then choose to begin execution of the debt against the debtor. If an objection is filed during the four-week timeframe, legal action will begin to determine the validity of the debt and the terms of payment between the creditor and the debtor.

1.2.4 Lawsuit

Lawsuits between creditors and debtors in Austria are started due to one of two incidents. The first is a dispute filed by the debtor, against the creditor, during the course of the amicable phase of collection. The second time a lawsuit is initiated occurs if a debtor files an objection to a payment order issued by the court during the legal dunning procedure. In both cases, a written pre-procedure is followed. During this time, the creditor and debtor exchange evidence, opinions, and proofs, with the judge who is overseeing the lawsuit itself. There is no requirement to present in the courtroom until the judge has determined whether or not enough evidence exists to lodge a dispute and pursue a formal lawsuit between the parties.

Once the judge does have the information needed to accept the lawsuit, a hearing will be called. This hearing takes place in the court itself, and both parties are required to attend. During this time, the judge will set a date for the publication of the final judgment in the case. Both parties in the lawsuit will be informed about this final judgment via writing by the court on the date issued by the judge. Notification will often take place via postal mail, rather than service.

1.2.5 Costs

The costs associated with a legal procedure against the debtor are largely based on the amount of the debt that is still outstanding. These costs are calculated in a way that takes both parties’ financial situations into consideration, making it difficult to calculate or estimate the exact costs that will be incurred during a lawsuit against the debtor. Other costs and fees may arise during the trial that were not planned for at its outset, including the costs associated with hiring experts or providing witness testimony about oral agreements or other matters. For these reasons, Accounts Receivable Australia maintains a policy that allows it to give cost estimations only on a case-by-case basis when legal action is pursued against the debtor.

1.2.6 Expected timeframe

The judicial system in Austria is rather expedient when compared to several other European countries. The average length of time needed to complete the legal dunning procedure is between just eight and twelve weeks. A fully defended lawsuit in the country’s courts can take up to 12 months in some cases, with more complex matters requiring an even longer duration. Even so, this is among the shortest amounts of time for a lawsuit to conclude in any European country. It should be noted that the availability of the judges and lawyers working the lawsuit will also help to determine its overall duration.

1.2.7 Interests and costs in the legal phase

Accounts Receivable Austria seeks to add the interest and debt collection costs to the debt’s outstanding balance in court. This is permitted by Austrian law, and is frequently granted at the conclusion of the suit in the final judgment issued by the court. Any court costs incurred by the creditor, as well as lawyers’ fees paid by the creditor, can additionally be attached to the outstanding balance of the debt when the court issues the final judgment.

If a settlement is reached between the creditor and the debtor, both parties will be responsible for covering their own proportion of the costs as it relates to the agreed settlement terms.

1.3 Insolvency Proceedings

1.3.1 General

Insolvency proceedings in Australia are subject to a relatively new law, known as the Insolvency Code of 2010. For reference, the law’s name in Austrian is known as “Insolvenzordnung.” The new code governs all insolvency proceedings, including those involved with liquidation, restructuring, and bankruptcy. While the law is available in the local language, the local government has not yet provided an English version of the law.

1.3.2 Proceedings

Like many European countries, the focus of insolvency proceedings in Australia is almost always restructuring of the company’s debt and a reorganization of its management. To that end, the “Zwangsausgleich” procedure is still the first one pursued by any debtor or creditor who has filed for insolvency. Known as the Insolvency Plan in English, its focus is to ensure that any debtor company can restructure its finances, pay off creditors, and achieve long-term financial stability.

As part of this plan, the debtor company is required to offer a minimum dividend of 30 percent to their creditors. This dividend must be paid within two years from the date that insolvency proceedings have begun, and more than 50 percent of the company’s current creditors must agree to the terms of the dividend’s payment. Furthermore, every creditor who agrees to the terms of the dividend must also agree to accept a minimum of 50 percent of the outstanding debt as part of the dividend’s settlement. Both requirements must bet met by the debtor company in order to pursue a restructuring of their debt, and the judge must agree to the plan as developed by the debtor. The insolvency procedure then commences, and lasts anywhere from two to twelve months, based on the company’s size and financial complexity.

The dividend payment to creditors can take up to two years, as this is the maximum period of time permitted by Austrian restructuring laws. The average dividend paid out to creditors in the country in 2009 was roughly 9.7 percent of the debt’s full outstanding balance. This amount may have changed significantly since 2010, however, given the new laws. There is not yet enough data available to determine if that has been the case. It is the goal of the new law, however, to increase the average dividend received by creditors as part of insolvency.

Insolvency is managed either by a qualified attorney or by the creditor who files for insolvency proceedings against the debtor. The court makes the determination when insolvency proceedings are given approval and restructuring is allowed to proceed.

1.3.3 Required documents

To file a claim on behalf of our clients, Accounts Receivable Austria requires the following documents:

- Original Power of Attorney
- Copies of invoices
- Copies of contracts or terms agreements
- Copies of delivery notices, orders, and confirmations
- Copies of conditions of sales, if relevant
- Copies of any correspondence to help verify the claim against the debtor

1.3.4 Expected timeframe and outcome

Claims typically must be filed within 1 to 3 months of insolvency proceedings having begun. The deadline will depend on the company’s complexity, and will be set by the judge overseeing the process.

To get started today, call us at321-710-3530 to speak with an associate
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