Debt Collection Lithuania
Debt Collection in LithuaniaUpdated on Friday 05th June 2015
Due to the last years’ economic context, with so many entrepreneurs affected by the economic crisis, is natural that some of them are facing the impossibility of paying their debts. Because of this fact many creditors chose to ask for prepayments on the delivered goods and services. This may lead to a blockage of the trades but it's much advisable to use this system than having outstanding liabilities.
If a legal entity is not paying its debts on time, the creditors are trying to determine them to cover those debts trough an amicable procedure, much cheaper than hiring a specialized entity.
In the first phase, the indebted is contacted and requested to pay the debt in a specific time frame (usually not longer than a month). In case of not payment, the creditor may try not to deliver the services to the indebted.
If the above procedure is not successful, the creditor can hire a debt collection agency or a law firm in order to recover the debts. The advantages of the last one is that the lawyers are very familiar with the law and can use it in order to recover those debts, while the first one is elected mostly because of the long experience in those cases. A debt collection agency is also advantageous as in most of the cases, if the debt is not recovered, no payment is requested. In case the debt is recovered a percentage of it is requested as payment.
The method of debt collection usually consists in two phases: an amicable procedure and a legal procedure. The amicable procedure is considered must cheaper than the last one as there are no external payments which must be made, such as Court costs.
The debt collection agency will try to contact the indebted through all the channels of communication such as the telephone, email and even regular mail send by post. The entity is requested to pay the debt and threated with legal actions if the claim is not settled.
Usually many of the indebted are paying their debts at this point because of the possibility of ending in Court. If the claim is contested is usually advisable to pay it on time and then continue the action of contestation.
In case of failure of the first step, the legal action can be initiated.
Usually, the average time before a judgment starts from depositing the claim, in case the debtor is not disputing it, takes around 1 to 3 months. The average time from judgment to the first enforcement method by the court takes around 1 month.
The indebted assets can be seized before the judgment and this is one of the reasons why the entities are choosing to pay the debts before being involved in a legal procedure.
In case the indebted has no assets which can be subject to enforcement, the procedure of bankruptcy can be initiated. From the moment a legal entity is declared bankrupt it cannot take any commercial action or act as a legal entity