Best way to recover the debt.

The situation when contractual payment terms are not being respected is, unfortunately, very common these days. When a company or businessman is indebted to a lot of creditors, simple reminders and written notifications are not as effective as they were a few years ago. After a number of departures from promises to settle the debt on time, the creditor, naturally, comes to a decision to look for legal assistance and recover debt in judicial manner.

It is important to know that a creditor may choose at least three different trial debt recovery procedures, each of which has particular advantages and disadvantages. The first way is to present an application for the issuance of a court order. The advantage of this procedure is its short term effect, in comparison an easy preparation of documents proving the debt, and a lower court fee (one quarter of the amount payable for the statement of claim, with a minimum of 10 litas). However, this procedure is only possible when the dispute concerns monetary demands arising from an agreement, tort, labor relations, a maintenance order and as well the awarding of real property.

What is more, one cannot present such an application in cases where these conditions are present: a creditor has not carried out his liabilities (or a part thereof), for which payment is being demanded; it is impossible to perform the liability in installments and the creditor demands part of the liability be performed; the debtor lives abroad or the debtor's registered office is abroad; the debtor's place of residence and work are unknown.

If one has written documents proving the debt, and has presented an application that the court finds acceptable, the court shall immediately but no later than the next day, issue a court order to the creditor. If the debtor, after receiving a court order, does not cover the debt or files objections--the court order becomes enforceable, which happens in most of the cases. However, if a debtor's objections (even unmotivated) are presented, the court order is revoked. In case the court order is being revoked, or even without trying to present an application for the issuance of a court order, a creditor may chose another procedure and present a claim.

In spite of the longer terms of proceedings, the advantage of a claim procedure is that all arguments of the debtor must be motivated, based on evidence, and simple objections cannot stop proceedings. It should be pointed out that if one presents a claim, he can also choose if he wants it to be heard by means of documentary proceedings, or in a regular way. The court fee, terms of hearing and the possibility to present evidence also differs, depending on the procedure (regular or documentary) chosen. The official fee paid for a claim filed by means of documentary proceedings shall be equal to half the amount which should be paid for hearing a claim in court by general contentious proceedings, but no less than 20 litas.

The terms in documentary proceedings are also shorter because regular verbal hearings are not being organized: the court passed an interlocutory judgment no later than within fourteen days of the day the claim is accepted. As prior to passing an interlocutory judgment, the filed claim is not being reported to the defendant (debtor), he can present motivated objections during a term of twenty days only after receiving an interlocutory judgment, or pay the sums indicated in it. Usually debtors seeing the court's decision do not prepare any objections and pay the debt, or the decision becomes enforceable. If one chooses a regular claim procedure, the whole 'trial story' becomes longer and more expensive because of national regulation, and the large number of cases in courts.

In conclusion, it can be said that before choosing a particular procedure for debt recovery the creditor should evaluate documents that show proof of the debt, the importance of terms, the official fee and debtor's ability to prepare objections, and arguments denying the duty to pay.

By Attorney at Law Jovita Stagniunaite [ECOVIS]