1.1 Amicable Phase

1.1.1 General

Accounts Receivable Romania is committed to delivering a professional collection process on behalf of each client we serve at all times. Our team of collection professionals is based entirely in-house, ensuring a commitment to quality that cannot be found at many competing collection agencies in the country. As part of this commitment to professionalism and excellence, our collection agents adhere to all state and federal laws and regulations in Romania. Our goal during the amicable phase of collection is to foster open communication and amicable relations between our client and the debtor, working to obtain payment without resorting to legal proceedings or other methods. To that end, our professional collection team will pursue the recovery of a debt via written correspondence to the debtor’s address, as well as via telephone contact.

In the event that a debtor does lodge a dispute against any debt Accounts Receivable Romania has been asked to collect, our professionals will review any contractual documents, invoices, account statements, and other documentation, in order to ensure an amicable resolution of the dispute. Our in-house legal team will be consulted during this process. If the case must proceed through the legal phase of collection, our in-house legal professionals will help us determine the best way to proceed based on the size and age of the debt in question.

1.1.2 Local Agent

Accounts Receivable Romania offers in-house field agent visits to most debtors throughout the country. The goal of such field visits is to determine the debtor’s financial situation and assess whether or not their financial situation allows them to satisfy the full and outstanding balance owed to our client. Our field agents will also look into the debtor’s solvency, largely by conducting interviews and pulling credit reports that contain valuable financial information about the debtor.

Our field agents are also able to negotiate settlements and payment arrangements with debtors during any visits to their business headquarters or residential address. Our field agent service is based in Bucharest, and is available upon request from any of our clients.

1.1.3 Interest

The primary source of any interest rate charged to a debtor is the contractual agreement between the parties. This contractual agreement must be produced by the client in order for any interest rate to be charged, and it must often be submitted to the court in order for the interest rate to be factored into the court’s judgment against the debtor. For international contracts, Romanian laws and regulations allow Accounts Receivable Romania to charge a flat interest rate of 6 percent per year. This interest rate can only be charged, however, if a contractual interest rate between the parties does not exist.

1.1.4 Debt collection costs

Collection costs can be legally charged to debtors in Romania, but they are exceedingly hard to collect. The chances of any client receiving compensation for the costs of collecting a debt are very low, and Accounts Receivable Romania often does not attempt to charge or collect these costs during debt recovery. Instead, clients will need to pay the full cost of collection themselves.

1.2 Legal Procedures

1.2.1 General

If the debt has been acknowledged by the debtor, often with their signature, it’s possible for Accounts Receivable Romania to pursue a greatly simplified legal procedure. This procure will require the submission of stamped invoices, signed contracts, and certain other documentation in special cases. It is extremely quick and far more affordable than traditional legal proceedings.

If a traditional lawsuit must be lodged against the debtor, it can only be filed after a conciliation procedure has been followed first. Lawsuits are subject either two or three different court instances, depending on their value and outstanding balance; based on the court system hearing the lawsuit, an appeal may be possible one or two times. This appeal must be filed with the judge at the court of first instance, and the judge must approve of the appeal and grant it. The case will then move to the court of second instance. If appealed in the court of second instance, the case will be transferred to the third instance court. For this appeal, legal procedures and execution will be reviewed, rather than the debt’s validity or the judgment’s terms.

1.2.2 Required documents:

Pursuing a court procedure in Romania is subject to relatively stringent documentation requirements. Additionally, lacking these documents can result in the rejection or dismissal of the case without a full hearing, significantly disadvantaging the creditor. Before Accounts Receivable Romania is able to file any lawsuit, our client should provide the following documents to us:

- Original Power of Attorney, signed and notarized
- Copies of all outstanding invoices
- Copies of the original contractual agreement
- Copies of conditions of sales, if any exist
- Copies of orders, delivery notices, and order confirmations
- Copies of any correspondence between the parties that may verify the claim

In some cases, it may be necessary for documents to be signed, notarized, and authenticated. If this is required, the judge will inform the legal professionals representing Accounts Receivable Romania, and the client will be informed. The client will then have a few days to produce the documents in order to satisfy the court and to ensure that the proceedings continue uninterrupted.

1.2.3 Legal dunning procedure

The legal dunning procedure in Romania is only required by the country’s laws and regulations if the creditor is seeking the payment injunction procedure. It is typically used as a last resort before a conventional lawsuit can be filed with the court of first instance.

After receiving the legal dunning notice, a debtor will have a short period of time during which to pay the debt, dispute the claim, or fail to respond at all. In the case of a dispute, the lawsuit procedure begins immediately. If the debtor does not respond, a default judgment is often issued. Full payment will stop any legal action from proceeding against the debtor.

1.2.4 Lawsuit

Lawsuits lodged in Romania are typically known as “primary lawsuits” when a debt is involved. This type of lawsuit is far more efficient than many alternatives, and it presents a significant cost savings to the creditor. It does require, however, that the debtor has acknowledged the debt with their signature. Additionally, copies of signed and stamped invoices must be submitted to the court, as well as copies of the contractual agreement that was agreed to by both parties.

If the creditor cannot pursue a primary lawsuit, Accounts Receivable Romania will recommend a normal lawsuit procedure instead. This procedure typically takes a far greater amount of time, and creditors can expect it to cost quite a bit more than a primary lawsuit. In 2012, Romania did pass a law that was designed to shorten the normal lawsuit procedure. That law has not yet gone into effect, but may reduce the average time in court by as much as 10 or 20 percent. As this modification of the Civil Code goes into effect, Accounts Receivable Romania will keep clients informed of any procedural changes or changes in the estimations of the lawsuit’s duration.

1.2.5 Appeal

The losing party in either a primary lawsuit or a normal procedure does have the right to appeal. Such an appeal must be filed with the judge who decided the original case. The judge will be able to either grant that appeal or turn it away, based largely on the reason for the appeal and the supporting evidence that is submitted with the appeal’s paperwork. The entire decision can be appealed, or the appealing party can choose to appeal only a portion of the decision that was handed down by the judge.

It’s important to note that the party who makes an appeal will have to pay for half the court cost of the first instance trial. This payment must be made before the appeal can proceed to the court of second instance. Additionally, creditors who appeal are often not able to charge this cost back to the debtor under any circumstances.

1.2.6 Costs of legal proceedings

An LDC fee will apply as soon as the paperwork is filed for either a primary lawsuit or a normal procedure. Court fees will also be charged, as well translation fees for documents that are not supplied in the local language. Transport fees are included in the court costs, however, saving some creditors a great deal of money.

1.2.7 Expected timeframe

Most cases filed against a debtor will take just a few months to complete, as long as the case is accepted as part of a primary lawsuit. For those cases that simply do not qualify for a primary lawsuit, the duration is far longer. in many cases, the typical lawsuit filed via Common Law procedures can take between one year and four years to fully complete. If the court issues a payment injunction, that injunction can last between 45 and 60 days. If a creditor or debtor files for insolvency, that proceeding can take as long as 18 months.

1.2.8 Interests and costs in the legal phase:

It is the policy of Accounts Receivable Romania to always ask for court costs to be charged to the debtor, largely in an effort to save our client the significant expense that comes from pursuing a lawsuit through the country’s courts. The judicial system in Romania does tend to favor creditors in this instance, and any court costs requested during the trial are typically granted to the creditor as part of the judge’s final judgment lodged against the debtor.

During legal proceedings, interest will continue to accrue. In cases where a contractual agreement already exists between the parties, and stipulates an interest rate, that rate will be charged during the trial on an annual basis. If no such rate is stipulated in the agreement between the parties, then Accounts Receivable Romania will request that the legal interest rate of 6 percent per year applies to the total outstanding balance of the debt. Interest rate is very often enforced in a judgment issued by the court against the debtor.

1.3 Enforcement

Pursuing enforcement of a judgment requires the use of an Enforcement Bailiff. The fee for an Enforcement Bailiff typically ranges from a low of 300.00 EUR to as much as 1,000.00 EUR. If a debtor does not pay voluntarily following a decision from the court, it will be necessary for a lawyer to file for enforcement on behalf of our client. This will count as a new legal procedure, known as the Forced Execution Proceeding. This procedure is needed so that the debtor’s assets can be researched, evaluated, and garnished, by Accounts Receivable Romania. Any money gained via enforcement will be in favor of the creditor, and will pay down the outstanding balance of the debt. Any enforcement of assets or bank accounts must be performed by a legal executor, which is typically the Enforcement Bailiff.

1.3.1 Enforcement in movable goods

A bailiff will evaluate the value of the debtor’s movable goods, or assets, and liquidate those goods in order to cover the outstanding balance of the debt. Those goods or assets that are essential to daily life or everyday business will not be seized or liquidated, however.

1.3.2 Enforcement in immovable goods

Real estate owed by the debtor can be seized and auctioned to cover the outstanding balance of the debt, although this is very uncommon in Romania. Instead, bailiffs will often request the attachment of any debt to the property’s existing mortgage or other lending instruments. This will prevent the sale or transfer of the property until the debt has been satisfied. It’s worth noting, though, that this can be a very timely process that costs creditors a significant amount of money.

1.3.4 Expected timeframe

Enforcement of any judgment can take quite some time. Enforcement into financial accounts or movable goods can take a few months, while enforcement of real estate and other immovable goods can take up to a year in the most complicated cases. Accounts Receivable Romania will advise clients on a case-by-case basis as to how much time it will take for this process to complete, as well as how much of a payment they can expect from any enforcement procedure.

1.4 Insolvency Proceedings

Insolvency proceedings can begin at the request of either the debtor or the creditor A Judicial Administrator is appointed to the insolvency proceeding by the court, and acts as a middleman between the debtor, the creditor, and the judge overseeing the case. The appointed administrator will also be in full control of the debtor’s activity, including any payments made or any other disputes that might arise during the process.

1.4.1 Proceedings

In Romania, creditors have the right to file for insolvency against any debtor who they believe will not be able to fully satisfy their outstanding obligations. A judge must approve the procedure, and an appointed administrator must oversee it. Furthermore, any insolvency procedure in Romania must be closely monitored by a lawyer. The creditor who files for insolvency proceedings against a debtor will often be required to attend several hearings in order to determine the debtor’s solvency, assets, and any potential dividend that might be issued as part of the process.

Meetings of all of the debtor’s creditors may also be convened during insolvency proceedings. In that case, the creditor who initially filed the insolvency action will preside over the meetings and manage any concerns lodged by the other creditors.

1.4.2 Required documents

To lodge a claim during an insolvency proceeding, Accounts Receivable Romania will require the following documentation:

- Original Power of Attorney, signed and notarized
- Copies of all outstanding invoices
- Copies of the original contractual agreement
- Copies of any correspondence between the parties that may verify the claim

1.4.3 Expected timeframe and outcome

Insolvency proceedings in Romania are rather long, and generally last about an average of three years. More complex proceedings will take a bit longer, however, making it hard to estimate just how long a creditor may be waiting for the payment of a dividend. If the debtor chooses to forego bankruptcy in favor of restructuring, the process can take even longer. Creditors can expect a relatively small dividend at the conclusion of any bankruptcy proceedings. Debtors who restructure their debts will often pay out a more robust settlement to creditors than they might expect via a dividend.

1.4.4 Limited companies

Limited companies can be subject either to full bankruptcy or liquidation, based on their financial situation.

1.4.5 Non-Limited companies/individuals

No legislation is currently in place for insolvency among individuals or non-limited companies.

1.4.6 Rescission

Debt transfers from up to three years prior to the insolvency procedure can be cancelled if they are deemed to defraud the debtor’s creditors.

1.5 Arbitration and Mediation

Arbitration and mediation are increasingly popular in Romania, and must be done by a lawyer or third-party professional. These hearings are generally managed by either the Court of Arbitration or the Chamber of Commerce and Industry in Romania. Mediation has only been permitted since 2007, and is in its early stages in the country.

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