Debt Collections In Greece

1.1 The Amicable Phase

1.1.1 General

Debt collection processes in Greece are a bit more limited and difficult than in many of the countries in Europe that surround the nation. This can sometimes lead to a much longer collections process than would be expected by many of our clients elsewhere, but Collection Agency Service Greece remains committed to using every single one of the country’s resources to investigate debtors and produce results for our clients.

To that end, Collection Agency Service Greece employs a number of attorneys and collection partners who act on our behalf to recover debts from the country’s companies and individual debtors. Our goal is to pursue this process as amicable as possible at all times, though we will pursue debtors both outside of court and through the legal process if necessary. Our interactions with customers will take place via registered postal correspondence and oral contact via telephone when we have the information needed to place the call.

Collections in Greece all start the same way: A double-registered letter is sent via postal mail to the debtor’s address. This is followed by our initial attempt at telephone contact with the debtor. Both forms of contact are aimed at providing Collection Agency Service Greece with financial information and other information about the debtor’s ability to pay. Our investigators also use Internet research sources and local contacts to gain additional information about a debtor’s location, financial position, and ability to satisfy the balance.

1.1.2 Local agent

The attorneys and agents employed locally by Collection Agency Service Greece are able to check a number of sources when searching for information about the debtor. Due to somewhat forgiving local laws, our agents can search through the Court Registries for debtor records; the Land Registry and the Registry of Mortgages can both be extensively checked for records of any real estate purchases or sales made by the debtor in the past several years. These services will cost our clients €150, but represent a great way to achieve better debtor contact and more information about their solvency overall.

Field visits are not traditionally done in Greece, and Collection Agency Service Greece does not typically pursue these visits unless there is a significant debt owed to our clients. If a significant balance is outstanding, we are prepared to send local field agents to meet with debtors in person, so long as those debtors are located in the greater Athens or Thessaloniki areas of the country.

1.1.3 Interests

Collection Agency Service Greece is permitted to collect interest and charge it to the debtor based on two different provisions. The first is known as contractual interest. This amount is set forth in the contract that was originally signed between the creditor and debtor at the beginning of their business relationship. This amount cannot be altered or changed if set in the contract, however, so be aware of this limitation before pursuing an amount of interest to be added to the debt’s balance.

The second form of interest that can be collected is a general interest rate of 8.75 percent per annum. This amount is determined by the European Directive 2000/35/CEE. The directive was brought into Greece’s current financial regulations by Presidential Decree, and cannot be manipulated to allow for a greater amount of interest attached to any outstanding debt. Furthermore, this interest can only be charged when a contractual interest amount has not been specified by the creditor. Otherwise, that amount will supersede Greece’s only general interest rate.

1.1.4 Debt collection costs

Collection Agency Service Greece is able to charge any of the costs associated with collection directly to the debtor during the amicable phase. However, these costs can only be charged when the contract initiated between the debtor and the creditor specifies such a policy. If the contract makes no mention of collection costs being charged to the debtor, then they legally must be paid by the creditor.

It’s worth noting that debtors are not used to paying for the costs of a collection procedure in Greece. It has been the experience of Collection Agency Service Greece that these costs are more often used as a strong negotiation tool. Creditors pursuing a debt should understand that they might be required to pay these costs regardless of the wording in their own contract, especially if it means receiving payment from the debtor to satisfy their outstanding balance.

1.2 Legal Procedures

1.2.1 General

Legal action in the pursuit of debts is possible in Greece, though it only commences after the amicable collection phase has failed to secure a payment, or a repayment plan, from the debtor in question. There are two distinct ways to use the legal system in order to obtain payment toward the debt from the debtor:

– A payment order can be issued by the court requiring the debtor to satisfy their obligation immediately

– A lawsuit can be filed as per usual, with a judge deciding the outcome of the case and rewarding any claims or damages to the creditor

If legal action is pursued, it follows standard procedure and is subject to Greek civil law. Civil law covers virtually every legal proceeding between two individuals, or between companies, in Greece.

1.2.2 Required documents

Most creditors choose to first pursue a payment order through the Greek legal system. If this is the case, our clients will need to provide us with extensive documentation to verify the debt and make sure that the proper amount can be assessed for repayment by the debtor. This documentation includes the following items:

– A notarized acknowledgement of the debt (or a private acknowledge of the debt with tax stamps)
– An original bill of exchange
– A promissory letter regarding payment of the debt
– Copies of any bounced cheques written by the debtor
– Copies of all invoices
– Copies of any proof of delivery documents, signed by the debtor
– Any other documents proving that goods were received by the debtor

If a traditional lawsuit is pursued in place of a payment order, creditors should provide the above documentation as well as the following:

– Copies of all contracts made between the creditor and the debtor
– Copies of orders, order confirmations, and delivery notices
– Copies of any invoices, outstanding or otherwise, issued to the debtor

When these documents have all been received by Collection Agency Service Greece, legal action can proceed in order to either file a lawsuit or requested a payment order against the debtor. We will wait to proceed until all required documentation has been delivered to us either via postal mail, email, or fax. Original documentation is often not necessary, as copies are accepted by the courts.

1.2.3 Payment Order

The process of filing for a payment order begins with the Payment Order Application. This application must be obtained by the creditor, filled in with information regarding the debtor and the relevant debt and then submitted to the court of first instance. Alternatively, this application can be filed at the Justice of the Peace in some cases. As a rule, smaller amounts can be filed with the Justice of the Peace, while larger cases must go directly through the court of first instance in Greece.

After the application has been submitted to wither the court of first instance or the Justice of the Peace, the court will begin examining the documents used to verify the debt and hold the debtor accountable for satisfaction of the balance. After a review, the court will decide whether or not the debt is legally due for payment via an official payment order. If they decide in favor of the creditor, a payment order will be issued by the court anywhere between fifty and sixty days after the application’s acceptance and the debt’s verification.

The payment order that is issued by the court becomes immediately enforceable as long as the debtor does not oppose or dispute its validity. Upon being notified of the payment order’s issuance, the debtor has 15 days to file an objection. If the debtor does file an objection with the court, the payment order itself will effectively be suspended. A traditional lawsuit will then be pursued and the debtor will become the defendant in the case.

1.2.4 Lawsuit

In the event that a creditor has insufficient documentation to pursue a payment order against a debtor, or if a debtor objects to a payment order that has been issued to them by the court of first instance, a lawsuit will begin and it will follow the traditional legal procedure set forth by Greek law. There are no special conditions that apply specifically to a debt-related lawsuit.

The process begins when the creditor files a writ with the court that provides the full identity of all parties involved in the proceeding. This writ also includes information pertaining to the business relationship between the creditor and debtor, and asserts a legal basis for filing the lawsuit with the court. There should be a written contract paired with the writ for verification of the lawsuit’s validity. If no such written contract is provided, the basis of the lawsuit has to be proven otherwise. This will force the creditor to bring in witnesses to prove the claim, or sign an affidavit attesting to the authenticity of the suit.

For claims that exceed 80,000.00 EUR, lawsuits against debtors will be heard by the Greek Chamber of the District Court, which consists of a three-member panel. For disputes that are less than 80,000.00 EUR, the case will be heard and negotiated by a traditional judge in one of Greece’s lower courts.

1.2.5 Costs

Court costs in debt-related cases are calculated based on the outstanding balance of the debt itself. These calculations are done by using a percentage-based system. Percentages are based on a number of different things that can apply during the procedure, including filings and actions undertaken by the creditor and the duration of the case itself. This percentage-based system has no fixed costs, and that means it is virtually impossible for Collection Agency Service Greece to come up with general cost estimations. Instead, these estimates are offered on a case-by-case basis.

Additional costs will apply if the creditor needs to add witnesses or experts to the case to help prove the authenticity of the debt and their entitlement to the claim.

1.2.6 Expected timeframe

Generally, the process of filing for a payment order takes between eight and twelve weeks, depending on the court’s availability and the size of the outstanding balance. Traditional lawsuits are comparatively much longer, often lasting at least twelve months in most cases. Lawsuits with a bit more complexity can naturally be expected to last even longer, often extending several years from the date of first filing.

As in all legal cases, the duration of any legal procedure depends on the availability of the judges overseeing the case and the solicitors responsible for litigating it. Greater availability can lead to a completed suit in as little as four months in the most rare cases.

1.3 Insolvency Proceedings

1.3.1 General

Greek insolvency proceedings typically take two different tracks. The first is a more traditional bankruptcy proceeding, which is initiated when the company forecasts a long-term inability to meet all of its financial obligations to its creditors and others who rely on its services. That filing is easily the most common in Greece, but it’s not the only type of insolvency proceeding undertaken by individuals and companies in the country.

As of 2007, companies are now able to file for Article 99 protection under the new Greek Insolvency Code. That code is less about liquidation and more about a structured way to repay debts while keeping the company’s doors open and its employees on the payroll. Article 99 also states that a reorganization of the company is necessary to ensure its continued success and to make sure that it meets its financial obligations in the future.

1.3.2 Proceedings

Greece’s new Insolvency Code is a major departure from the country’s prior approach to insolvency, and was largely passed to institute a new culture of reorganization instead of one that revolves almost entirely around liquidation. The law seeks to maintain a delicate balance between the ongoing operation of the company and the satisfaction of outstanding debts that are owed to creditors that serve the company’s interests. It also seeks to treat both the company and its creditors equally during the process, preventing insolvency and working toward the best interests of both parties involved in the proceedings.

The general goals of the Greek Insolvency Code include the following:

1. It is the goal of the Insolvency Code to establish a Plan of Reorganization for the company that is deemed close to insolvency. This plan is drafted based on all of the company’s financial information, a supplied to the courts, during the reorganization hearings. The company pulls its information together and suggests a plan that will result in the full satisfaction of its creditors, though this does not mean the company repays the full amount of the debt. In most cases, the company commits to a 20 percent repayment of their outstanding debts; the plan, when finalized, is reviewed by the court within 20 days of its submission. Creditors can either accept or deny the plan with a 60 percent majority. Of that majority, 40 percent must represent any privileged claims against the company.

2. It is also the goal of the Greek Insolvency code to allow for the filing of bankruptcy if the reorganization attempt under Article 99 fails to satisfy creditors and the company’s partners. To enter into a bankruptcy proceeding, the debtor must be completely unable to pay any creditors, and they must have a permanent inability to recover from any existing debts. This more traditional type of insolvency does urge the debtor’s creditors to lodge claims for a dividend repayment of the debts that they are owed. Such claims are done by the local lawyers that work for Collection Agency Service Greece, as they can be quite complex to verify, submit, and argue. They also have to be written entirely in Greek. Because of these regulations, the actual bankruptcy process in Greece is notoriously long and inefficient.

1.3.3 Required documents

In order to file a successful claim against a debtor who is going through the bankruptcy process, creditors must forward certain information to Collection Agency Service Greece so that it can be used by our creditors to ensure a speedy and verifiable claim to a dividend of the debtor’s assets. This information includes the following:

– Copies of any relevant invoices signed by the creditor, notarized before submission
– Any original documents that prove the debtor’s owed balance is on the company’s books in an official manner, also notarized
– All documents should bear the Apostil of the Hague Convention
– A witness may need to testify to the court on behalf of the creditor to verify the claim
– A notarized Power of Attorney document stamped with the Apostil of the Hague Convention