1.1 Amicable Phase
Accounts Receivable Poland is dedicated to maintaining a professional collection process for all of our clients. Our in-house collection agents focus primarily on maintaining a sound relationship between our client and the debtor, and they will urgently pursue those debtors via telephone contact and written correspondence to the debtor’s business or home address via postal mail. Our in-house collection agents adhere to all state and federal laws in Poland.
In the event of a dispute, our goal is to reach an amicable solution by examining and enforcing existing contracts, invoices, and other contractual documents. If an investigation must be completed, or if legal action must be pursued, it will be done only after consultation with our own legal team.
1.1.2 Local agent
We use a select network of field agents who can conduct direct collection of a debt. Our agents can visit debtors at their place of business and use this visit to learn about the debtor’s financial information. That information will then be prepared in a report delivered to us, and available to our clients. This information is critical when determining the next course of action against any debtor. For debtors that cannot be traced, our field agent network performs research and locates those debtors efficiently.
In the absence of an interest rate stipulated in the contract between the parties, Accounts Receivable Poland will charge a flat rate of 13 percent per year. This interest is charged during both the amicable and legal phases of collection. Interest rates are generally non-negotiable when collecting a debt in Poland.
1.1.4 Debt collection costs
Debt collection costs cannot be charged to debtors in Poland.
Transport claims have a statute of limitations that lasts one year from the date of the first past due invoice. Debts incurred under sale contracts have a statute of limitations that lasts two years form the date a payment became past due. All other debts are subject to a statute of limitations that lasts three years from the date of first delinquency.
After this period has expired, the debtor can ask a judge to dismiss any debt-related suit filed against them by the creditor. Legal action taken within the statute of limitations will interrupt the limitation and push it back accordingly.
1.1.6 Accepted and most common payment methods
Debtors prefer to pay with bank transfer. Direct debit services are not offered.
1.1.7 Types of companies
Jednoosobowa działalność gospodarcza (sole trader/sole proprietorship):
The business owner has unlimited liability for debts, and private funds or assets can be used to secure payment.
SC (spółka cywilna) (Civil law partnership):
This partnership enjoys no minimal capital requirements. Partners are subject to unlimited liability.
SP.J. (spółka jawna) (General partnership):
There is no minimum capital requirement, and partners have unlimited liability for debts.
SP.K (spółka komandytowa) (Limited partnership):
No minimum capital requirements; at least one partner has unlimited liability, while the other partners are liable only up to the company’s amount of capital.
S.K.A. (Spółka komandytowo-akcyjna):
Minimum capital of 50,000.00 PLN. At least one partner has unlimited liability with business and private assets.
SP.P. (Spółka partnerska) (Professional (service) partnership)
No minimum capital
Partners are independent professionals, such as lawyers, doctors or architects.
SP. Z O.O. (Spółka z ograniczoną odpowiedzialnością) (company with limited liability):
Minimum capital of 5,000.00 PLN. Partners are liable only with the company’s amount of capital.
S.A. (Spółka akcyjna) (company on shares):
The company’s capital must be at least 100,000.00 PLN divided into share. Liability is limited to the amount of capital held in those shares.
1.1.8 Sources of information
Credit reporting agencies are used to determine the assets and financial situation of debtors in Poland. These reports also include information about real estate and other holdings. This information is then combined with phone contacts and field agent visits to discern a full financial picture before proceeding through the next steps of the process.
Some debtors may be required to register with the Municipal Trade Office. If this is the case, we can receive that information when investigating a debtor’s situation. Companies with limited liability must register with the Trade Register, and this information can be accessed online. Debtors whose whereabouts are unknown can be traced by using information held at the Registration of Address Office. Every private citizen is required to register with this office, making location of a debtor rather easy and efficient.
1.2 Retention of Title
Retention of Title applies only to movable goods in Poland. The seller of those goods retains the title until the buyer has paid the outstanding balance in full. Typically, Polish ROT is used for safeguarding the goods and initiating sale agreements. It must be stipulated in the initial contract between the two parties to be enforceable in court. This agreement must also be notarized in order to prevent liquidation of any movable goods during bankruptcy if they’re still owed to the creditor.
1.3 Safeguarding measures
If a quick satisfaction of any debt cannot be achieved, the debtor may be asked to provide some form of security to guarantee payment. This is typically done amicably by requesting an acknowledgement of the debt from the creditor. It will be notarized and legally enforceable, with any notary costs being charged to the debtor.
The debtor can also offer security in the form of mortgages or debt assignments. These forms of security must be notarized.
1.4 Legal Procedures
A written payment request must be submitted to the debtor before legal action can be begin in court. This notice does not, however, have to be sent by an attorney. If both parties dispute the debt’s validity or amount, the Business Court will review the matter in an effort to speed up the lawsuit procedure.
1.4.2 Legal System
Poland’s courts are divided into two sections, comprised of the Arbitrary Court and the Common Court. An online court, known as the E-Court, is also available. A notice of pending legal action will be sent to the debtor prior to beginning any court case.
The Arbitral Court handles matters where an existing contractual agreement is in place with an arbitration clause. The proceeding is generally very fast, but is more expensive than a traditional lawsuit. A judgment will typically be issued, and the creditor must apply for enforcement to begin execution of the judgment.
The Common Court will decide two different proceedings. The first is known as an injunction procedure, which allows creditors to file for a writ of payment without a traditional hearing. This can only be done if proper documentation is included at the time the writ is filed. If those documents cannot be provided, the court will pursue a Writ Proceeding instead. This is similar to a traditional lawsuit, and will involve a thorough investigation of any existing documentation between the parties. A writ of payment will generally be issued after all documents have been submitted, and all hearings have been concluded. The Writ Proceeding is often very expensive for creditors.
1.4.3 Required documents
To begin any legal proceeding, Accounts Receivable Poland must be in possession of the following documentation:
- A confirmation or acknowledgement of the debt, signed by the debtor
- Contractual agreements between the creditor and the debtor
- Any unpaid invoices signed by the debtor, with proof of delivery, not older than 2 years
- The debtor’s original order of goods
- Documentation showing disputes
- Order confirmations
- Copies of correspondence between the creditor and the debtor
- Proof of address, signed
- Current extract from the Trade Registry, showing power of attorney
- Transport documents
It is very important for documents to be signed, and for the address of a creditor and a debtor to be verified and proven. If these conditions are not met, a lawsuit will often be unsuccessful and the judge will throw out the case.
1.4.4 Legal dunning procedure
To obtain a judgment that can be enforced, it is necessary for Accounts Receivable Poland to obtain a court order. A copy of that court order, along with the enforcement clause, must be served to the debtor. The debtor then has the right to appeal the judgment, which begins a traditional lawsuit.
A lawsuit begins immediately after amicable collection has failed, or when the debtor has disputed a judgment during the legal dunning procedure. A written pre-procedure is issued to the debtor, and both parties must exchange proofs and opinions with the court via postal mail until the judge has enough evidence to schedule a hearing. Attendance at the hearing is mandatory. The judge will issue a date for the publishing of the judgment, and both sides will be notified via postal mail from the court as to that judgment’s terms.
Judgments can be appealed to the court of second instance.
The creditor generally pays for Court fees, at least at the beginning of the lawsuit procedure. For cases that are filed in order to force payment of a debt, the creditor will be responsible for paying 5 percent of the debt’s outstanding balance to the court. This fee must be paid before an action can be filed with the court, and proof of this payment must be attached to any action that is filed with the proper office. if the case requires the issuance of a write of payment, a fee of 25 percent will be charged based on the outstanding balance of the debt, no less than 30.00 PLN. Lawyer fees are charged based on the amount of the outstanding debt.
After the court procedure has finished, the court costs paid by the creditor will be charged back to the debtor as part of the full outstanding balance of the debt owed in any judgment.
1.4.8 Expected timeframe
Legal dunning generally takes between two and four months, while a lawsuit or court action can take up to 12 months.
1.4.9 Interests and costs in the legal phase
Interest incurred outside of court can be charged to the debtor as part of the debt’s outstanding balance during legal dunning.
1.5.1 Enforcement in debt
Creditors are permitted to block the bank account of a debtor in order to enforce a debt. The debtor’s claims against tax offices, life insurance products, salaries, and shares of a business, can all be garnished in order to repay the balance owed to the creditor. This is generally very effective and saves the creditor a significant amount of money. Very specific information will be required to pursue this type of enforcement, however.
1.5.2 Enforcement in movable goods
A bailiff will visit the debtor and take away any movable goods that can be liquidated and used to pay off the debt. Goods necessary to daily life and regular business activity cannot be seized, however.
1.5.3 Enforcement in immovable goods
Debtors who own real estate can have that real estate seized and sold to cover the cost of any outstanding debt. More common, however, is the attachment of the debt to any outstanding mortgage owed on the real estate. This is a very expensive procedure, and it’s easily the longest way to enforce a debt.
1.5.4 Expected timeframe
Financial enforcement generally takes between two and three months. Enforcement via movable goods can take up to ten months, while enforcement via immovable goods can take far longer.
1.6 Insolvency Proceedings
Insolvency in Poland is split into regular insolvency, a restructuring plan, and individual insolvency. All three procedures are viewed as a collective enforcement process for all of the creditors and a single debtor. At the start of any insolvency proceeding, all enforcements and collection procedures are suspended pending the outcome of the procedure.
The goal of insolvency in Poland is to pay an equal dividend to creditor by liquidating the debtor’s assets or a company’s assets. Any enforceable income will also be collected in order to increase the size of an issued dividend.
Generally speaking, Polish insolvency either pursues liquidation or restructuring. During liquidation proceedings, the debtor is declared bankrupt. This generally occurs if the debtor has consistently failed to pay all debts due, or if their total debt load exceeds the value of their assets. Debtors or creditors can file a motion for bankruptcy and liquidation.
After making a full list of all debts, a liquidation and distribution plan is drawn up for the debtor’s assets. This plan will determine the size of the dividend that will be paid out to creditors. This dividend is paid in a regulated order, which starts with public liabilities and then proceeds to business-to-business debts, followed by employee salaries. Of the private creditors owed money by the debtor, secured creditors will receive the first dividend payments.
If a debtor is not sufficiently bankrupt, the court will mandate a restructuring process instead. This process allows the debtor to propose an arrangement that will allow for payment of their debts, and a return to fiscal solubility, within an estimated period of time in the near future. The plan must be submitted to all creditors at a court-scheduled meeting. If it is approved, the debtor will go through a period of exemption from their liabilities in order to repair their finances. After the conclusion of this period, repayment will begin in earnest.
To lodge a claim during either proceeding, creditors will need to pay a fee of 1,00.00 PLN.
1.6.3 Required documents
The following documentation will be required to lodge a claim:
- Original Power of Attorney
- Copies of invoices
- Copies of conditions of sales, if relevant
- Copies of the contract
- Copies of confirmations, delivery notices, and orders
- Copies of correspondence related to the claim
- Extract from the trade register
1.6.4 Expected timeframe and outcome
Claims must be lodged within 1-3 months. Approval is granted within 3 to 6 months of the claim having been lodged. Insolvency itself can take between three and five years.
1.6.5 Limited companies
Limited companies must file for bankruptcy when they experience an inability, or an expected in ability, to pay all debts.
1.6.6 Non-Limited companies/individuals
Non-limited companies and individuals are not required to file bankruptcy. Even so, they are permitted to file for bankruptcy due to an inability to pay debts. The debtor’s assets will cover any costs.
The court will appoint a liquidator who may dispute payments made by the debtor within six months of declaring bankruptcy.
1.7 Arbitration and Mediation
Both parties can agree to pursue arbitration or mediation in place of a traditional lawsuit. A private tribunal has a number of advantages, including a quicker process and more affordable costs. The hearing is confidential and a third party, impartial mediator or arbitrator is always appointed.
It should be noted, however, that mediation is not a popular way of settling debts in Poland. This is largely due to 2005 regulations that set prices very low. These low prices can make it difficult to call witnesses or experts during mediation or arbitration, and the creditor largely shoulders such a disadvantage.
Arbitration is slightly more popular, but can only be conducted if the original contract between the parties stipulates that it is an option during debt recovery. Any decision reached during arbitration is treated as an enforcement title.To get started today, call us at321-710-3530 to speak with an associate