Debt Collections In Tunisia

1.1 Amicable Phase

1.1.1 General

Tunisia, like many countries located in the Maghreb region of northwest Africa, is an increasingly difficult place to collect a debt of any size, form either private individuals or incorporated entities. Many debtors located throughout the country will avoid making a single payment toward a debt, using several delaying tactics that debt collectors are forced to deal with, navigate, and thwart. And, as if this attitude toward debt collection wasn’t bad enough on its own, the court system throughout Tunisia is notoriously slow, inefficient, and costly for clients to utilize. This places virtually every creditor at a significant disadvantage when attempting to recover a debt in Tunisia, and discourages many more.

The so-called “Arab Spring” that began more than a year ago, in early 2011, has significantly impacted debt collection efforts in the country. Collection opportunities have greatly worsened as a result of these events. The country’s ex-President, Ben Ali, has accumulated his own enemies and supporters over the past 15 months, and much of the country’s focus is on settling political scores, litigating the revolt that led to Ben Ali’s downfall, and attempting to reinstate Ali’s legitimacy as a leader in Tunisia. This has been carried out through incidents of vandalism and destruction. Many debtors’ assets burned, stolen, or otherwise destroyed, clouding the financial picture that might promote the recovery of a debt. Many companies have been forced out of business as a result of the Arab Spring, further complicating debt collection efforts made by Collection Agency Service Tunisia.

Despite the complicated nature of collecting a debt in Tunisia, Collection Agency Service maintains its commitment to a professional collection process that can provide results to clients whenever possible. The focus of Collection Agency Service Tunisia is primarily on maintaining an open and amicable relationship between the debtor and the creditor, thereby increasing the chances of full satisfaction of the debt. Debtors in Tunisia will be contacted via telephone and written correspondence, though both forms of communication may be hampered by the country’s unstable political status at the current moment. All operations conducted when pursuing debtors amicably are performed by in-house professionals with extensive experience in the industry.

If a dispute arises as to the validity of any debt, Collection Agency Service Tunisia will examine contractual documents, invoices, account statements, and other documentation, in order to ensure a smooth and effective resolution can be reached between the parties. Our objective is always to avoid legal action, especially given the inefficiencies and costs of the court system in Tunisia. Our professional collection experts adhere to all state and federal laws as decreed by the government of Tunisia and, due to political unrest, we are always monitoring changes to the legal, regulatory, or social landscape that might impact our ability to collect a debt.

1.1.2 Local agent

It is the policy of Collection Agency Service Tunisia to always pursue in-house contact with debtors before any alternatives are considered. If our in-house attempts to contact a debtor do fail, we will rely on our extensive network of local field agents throughout the country. These field agents have several responsibilities, but their task is the same: Each field agent is asked to meet with debtors in person to accomplish one or more objectives on behalf of Collection Agency Service Tunisia.

In the most minor of cases, our local field agents in Tunisia will be asked to discern more information about the debtor’s financial situation, assets, and ability to pay the debt immediately or over time. For more serious cases, our local field agents will actually contact a bailiff in an effort to force payment outside of court. This will result in the issuance of a formal court notice requiring the full payment of any outstanding debt, often forcing the debtor’s cooperation and payment of their obligations.

In some cases, we may ask a lawyer to conduct a field visit in place of a traditional local agent. This is especially true when we feel that there may be significant resistance to our in-person research and collection attempts. The goal of a lawyer-led visit is to agree on a settlement and avoid any legal procedures through the country’s slow-moving court system.

1.1.3 Interests

It is not very easy to charge interest when collecting a debt in Tunisia. In order for any amount of interest to be charged to a debt, the contract between the debtor and creditor must specifically allow for the charging of those costs during amicable collection. If this stipulation is not featured in the contractual agreement, then it is actually illegal for Collection Agency Service Tunisia to charge any costs to the debtor during the amicable phase of collection. The regulations that govern the charging of interest also cover the costs of any transferrable fees, including the cost of collection services when pursuing a debtor. This also makes it impossible, and illegal, to transfer any interest or costs to the creditor during the amicable collection process. These costs can only be charged and processed during the legal phase of collection, if such a phase is initiated by either side in the matter.

If the debt being collected is between two commercial entities, then both parties may agree on a commonly used interest rate during collection. This interest rate is typically a standard rate set within the debtor’s industry by local banks. Any interest rate charged during collection cannot be deemed unnecessarily high, or it risks being thrown out by a judge during any resulting legal proceedings. This interest rate can be charged to a debt beginning on the first day when payment was past due, according to the contractual agreement between the parties. The interest rate is typically between six and ten percent, and it cannot be capitalized at any point during the amicable phase of collection in Tunisia.

1.2 Legal Procedures

1.2.1 General

Collection Agency Service Tunisia will recommend legal action on a case-by-case basis, only after several factors have been considered. First and foremost, it’s important for our collection professionals to determine whether or not they have the necessary documents to pursue legal action through the country’s court system. Due to the high cost of pursuing legal action in Tunisia, our collection professionals must also determine whether the costs are appropriate for the amount of money being sought from the debtor. Furthermore, we must decide whether or not the amicable procedure should continue, or whether it is simply no longer effective. If all three of these conditions are met at any point, our in-house professionals will contact the client to discuss the next phase of the process. The cost, timeframe, and practicality of legal action will all be discussed at this point. It is up to the client to either continue with legal action or continue with amicable collection efforts.

1.2.2 Required documents

Laws and regulations in Tunisia require that all documents submitted to the court for the recovery of a debt be original. Therefore, it’s very important that Collection Agency Service Tunisia be supplied with only original, and even notarized, documentation. The information required by our professional team before initiating legal action includes:

– Original invoices
– Original orders, shipping documents, and delivery notices
– Original account statements showing the full amount of the debt

While documents are generally only required to be original, some judges may demand that everything submitted to the court has been independently verified by a third party, often a notary or municipality within Tunisia. If this request is issued to representatives of Collection Agency Service Tunisia, clients will be notified. A small window of time will be granted by the court for notarization to take place.

All documents submitted to the courts in Tunisia must be in either the French or Arabic languages. Those documents that are in a different language will be translated by the court for a substantial additional fee. It is often recommended that creditors hire their own translators for any documents prior to submission, as such a practice is much more affordable.

1.2.3 Legal dunning procedure

If the debtor cannot dispute the claim, then the most efficient legal dunning procedure is a Payment Order issued by the court closest to the debtor’s main business address or primary residence. To be able to use this procedure when collecting a debt, Collection Agency Service Tunisia must be in possession of certain documents, like bills of exchange, a written and signed acknowledgement of the debt, and unpaid invoices for the goods or services rendered by the creditor. Otherwise, a payment order will be of very little use.

1.2.4 Lawsuit

If the creditor does not possess any documents considered by Tunisian law to be “indisputable,” then it is necessary for the creditor to pursue a traditional lawsuit against the debtor in Tunisia’s courts. This procedure is almost exceedingly long, complex, and costly, and it can be a serious burden on many creditors located outside of Tunisia itself. In many cases, lawyers representing the debtor will initiate several stalling tactics in order to delay the judgment and payment of any debt owed by their client. The court system in Tunisia is also extremely formal and subject to a large bureaucracy that can make it highly inefficient and hard to interact with. Judges can be hard to communicate with, and documentation of a debt’s validity often goes missing due to the large areas of inefficiency within the court system.

After a lawsuit has finally concluded, the judge hearing the case will issue a final judgment that declares the debt’s full amount. Often, the debtor must pay the debt immediately. If that payment cannot be made, the creditor pursues enforcement procedures. Enforcement, however, is extremely problematic in Tunisia. Very specific information is required, and long procedures are used, making the garnishment of wages very difficult. Seizure of movable or immovable goods can also take a very long time, and creditors may not see any form of payment toward a debt’s outstanding balance for a year or more, after the court has delivered the judgment. Enforcement generally takes so long that many debtors organize their own insolvency in order to avoid payment entirely.

1.2.5 Costs

Court costs in Tunisia are relatively uniform across all procedures, with very little variation between pursuing a payment order and proceeding through a typical lawsuit. In Tunisia, creditors are responsible for paying the full cost of any legal proceeding against a debtor, including the costs of hiring a bailiff or notary. The fee for hiring any bailiff or notary in the country must be added into a 50.00 EUR charge that applies to any legal proceeding. Registry fees and judgment stamps will also add to the cost of a legal procedure, coming in at about 100.00 EUR. A writ will cost 50.00 EUR, and a payment order will carry the same 50.00 EUR price tag.

If one of the parties appeals a judgment issued by the court, they will have to pay a 20.00 EUR appeal fee and a 50.00 EUR fee to summon the other party to appear in the appealed case. Once again, registry fees and judgment stamp fees will apply during the appeals process. During an appeal, those fees total 40.00 EUR, and the party who wins the appeal of the initial judgment pays them.

In both cases, the fees for hiring legal representation will vary based on the total amount of outstanding debt. Typically, these fees range from a low of 400.00 EUR to a high of about 1,000.00 EUR. An appeal will add extra costs to any fees paid to lawyers, ranging from 500.00 EUR to 1,000.00 EUR depending on the complexity of the case. An execution costs will further add to this bill, and will vary based on the execution methods utilized by the creditor after a judgment has been issued.

1.2.6 Expected timeframe

The inefficiencies throughout Tunisia’s court system can be seen in how long it takes just to get a judgment. In most cases, it’s not possible to get a court-issued judgment in less than two years. The debtor can then appeal any such judgment, extending the process another two years — or more — depending on the complexity of the case and the nature of the appeal.

1.2.7 Interest and costs in the legal phase

During the legal phase, interest can be added to the case while adhering to Tunisian laws and regulations. This interest rate is set at the current commercial rate in the country, which has long been 6 percent. The interest rate itself is set by the country’s central bank and, should it change, Collection Agency Service Tunisia will update its procedures when charging interest during a legal proceeding.

During a legal proceeding, interest rate charges can be determined by the court even if no contractual agreement exists between the parties that permits the charging of such interest to a debt. The interest period will run from the time the summons was issued to the debtor until the date that the debt was fully paid and satisfied. Attorney’s fees can be charged back to the debtor if the judge agrees to do so.

1.3 Insolvency Proceedings

1.3.1 General

Insolvency proceedings in Tunisia are generally focused exclusively on liquidating the debtor’s assets and providing an equal dividend of that amount to all creditors with a valid claim against the debtor. Enforceable income can also be collected as part of this process, ensuring a slightly higher dividend is paid to creditors. It should be noted that only individuals who have been declared bankrupt can have their income enforced as part of the outcome.

1.3.2 Proceedings

Bankruptcy is declared upon receipt of a written declaration by the debtor, or a summons by the creditor. The court is responsible for declaring bankruptcy in both cases. After the declaration or summons, creditors lodge their claims against the debtor and supply sufficient evidence to verify their right to a portion of the dividend payout. Creditors have eight days from the publishing of the bankruptcy during which they can lodge a claim. Claims lodged after this deadline will not be considered.

The appointed receiver managing the bankruptcy will send a statement of debts to the clerk of the court. The clerk will then notify creditors of this statement being received. Creditors are then informed about the validity of their claim and then nature of the dividend payout.

1.3.3 Required documents

The following documents must be submitted when lodging a claim against a debtor during an insolvency case:

– Documentation of correspondence that proves the debt’s validity
– Copies of invoices
– Copies of account statements

These documents must all be notarized before they can be submitted to the court. An appointed receiver sends the documents to the court. A registered letter stating receipt of the documents will be returned to the creditor when the court has processed the documents.

1.3.4 Expected timeframe and outcome

Insolvency procedures in Tunisia are subject to the same inefficient court system that traditional lawsuits use. This means insolvency will generally require a great deal of time on behalf of creditors, which can be a serious disadvantage. In most cases, insolvency will complete within five or six years of the proposal first being lodged with the court. The vast majority of cases produce no dividend at all, or a negligible dividend that does not help the creditor offset losses incurred during the process.