If you use the legal criterion, then the main methods that involve the collection of debts from legal entities, existing in the practice of property disputesis best divided into:
- traditional
- unlawful;
- non-traditional.
The non-legal method of collection involves pressure on the debtor and his relatives by psychological and physical methods prohibited by law, and most cases provide that the creditor and persons who assist him in the implementation of such actions may be held criminally liable for this.
Voluntary debt settlement methods
Debt collection from a legal entity may be carried out on a voluntary basis. Among the methods include:
- fixing the debt by agreement of the parties and signing the schedule for making payments;
- drawing up an agreement on compensation;
- transfer of the right of claim to the other party.
These methods mean simple conversations and persuasion of the debtor, that is, while debt collection from a legal entity by court decision is not carried out.
Debt fixing and repayment schedule
This method should be used when the debtor has some temporary financial difficulties, and the likelihood that he will be liquidated or declared bankrupt is very small. In this case, usually the collection of debts from legal entities is carried out by drawing up an agreement on the provision of installment payments, indicating the circumstances due to which the debt appeared. It is recommended that the creditor insist not only on the signing of an agreement, but also on drafting reconciliation statement according to primary documents, which confirm the presence of debt. If it is not possible to obtain information from the primary documentation that could confirm that the creditor is fulfilling all its obligations, then the reconciliation act will not be such a valuable document. When a debt is collected from a legal entity, the methods can be very different. Let's talk about them further.
Lease Agreement
This method is used when the debtor cannot repay the debt, being guided by the terms of the original contract. The Civil Code stipulates that, according to an agreement between the parties, the obligation can be considered terminated if the compensation is executed in return, for example, if the debtor pays a certain amount of funds or the property is transferred to the creditor. In addition, the collection of debt from a legal entity under a contract in this case involves the determination of the size, timing and procedure for payment or provision of property as compensation. This is all agreed upon by the parties to the transaction.
The lender will benefit from an agreement to conclude a lease agreement if:
- there are suggestions that the debtor’s financial condition will not get better in the near future, or that he is generally close to bankruptcy;
- the total cost of compulsory debt collection will exceed the amount of the debt itself;
- property received as compensation can be quickly sold, which will make it possible to eliminate debt without additional costs.
Transfer of debt to third parties
When signing agreements on the assignment of debt, special attention should be paid to the conditions of the main contract: are there any restrictions on the transfer of rights and obligations.In the presence of such provisions, debt collection from a legal entity excludes the right to assign the right to claim a debt to a third party without obtaining the consent of both parties. In another situation, such an agreement will be deemed null and void, without any legal consequences. If the new creditor tries to get the debt, the court will simply refuse to accept the claim.
The assignment of a claim, which is based on a transaction concluded in writing, must have the appropriate written form in order to recover a debt from a legal entity. Judicial practice shows that the assignment of claims involves state registration in the prescribed manner.
Now we should talk about what measures are being taken to promptly affect the debtor. The legal basis is in the civil code. Usually, obligations can be fulfilled by paying a forfeit, by providing a pledge, withholding property, a guarantee, and in other ways.
The lender's right to retain the debtor's property
In some situations, the creditor company is given the right to dispose of the property of the debtor. For example, he can dispose of materials, equipment, transferred for some time by the customer to the contractor, as well as property, transferred under a storage agreement and so on.
According to the Civil Code, the creditor, if the debtor fails to fulfill his obligations to pay or reimburse the costs, has the right to retain property until this obligation is fulfilled. If the fulfillment of obligations has not yet occurred, then in this case the debt can be collected from the legal entity, it is in the liquidation stage or not - this is not important.
If the debt is not paid by the due date, then the creditor has every reason to suspend the performance of its obligations.
The conditions under which the suspension of obligations is carried out should be most carefully described in the contract, indicating the procedure for suspension, the timing, methods of notifying the debtor of such a measure. In another situation, the suspension of obligations may be considered unlawful, and this may lead to legal proceedings in connection with the occurrence of losses. Thus, the suspension of the supply of fuel and energy for production with a constant cycle can lead to irreversible consequences, such as damage to property, therefore, the creditor's right should not be in doubt.
Fulfillment of obligations at the expense of the debtor
The Civil Code stipulates that if the debtor does not fulfill its obligations to manufacture and transfer the thing to the creditor or to perform any work for him or to render the service, the creditor has the full right to assign these obligations to third parties for payment in a certain period of time, as well as to demand from the debtor to compensate all losses.
Compulsory debt collection from a legal entity
Well, now we should talk about the enforcement of debt collection. Having tried all available means for a peaceful settlement and without having achieved payment of the debt, the company can file a lawsuit. But before applying the enforcement mechanism, you must first evaluate the possible outcome of the events. For this, it is necessary to draw up a complete picture of the current financial situation of the debtor, as well as to collect information about it by all available and legal methods. In particular, it is possible to inquire about the company (debtor's counterparties, mass media, etc.), check if there is any property, bank accounts, analyze existing evidence of debt. Contracts, bills of lading, accounts and so on should be checked for the presence of negative parties in them, which the debtor company can use in court proceedings.
What happens after the final decision?
If the decision that the collection of debt from a legal entity is to be enforced is final, the company that provided the loan will file a lawsuit in court. According to the results of the proceedings, a writ of execution is issued.
The proceedings may be supported by the creditor both on their own and with the help of a legal organization.
Basically, the first option should be chosen when the creditor has specialists who can work with receivables, as is usually the case in large organizations.
Law firms provide services in pre-trial settlement, in court and in enforcement proceedings.
Penal Method
This method of collection can only be used when the signs of any crimes can be traced in the actions of malicious debtors. This is mainly fraud, damage to property through the use of fraud or breach of trust, deliberate evasion of debt repayment, false business and other crimes. In this case, legal grounds arise in order to initiate a criminal case, which provides an opportunity for debt collection. In addition, debt collection is carried out from a legal entity under a writ of execution.
What methods lead to debt repayment?
Using the criminal law method of debt repayment, it can be paid using three methods.
If an attacker, in the guise of a civil law transaction, committed a mercenary crime, for example, theft in the form of fraud, then the responsibility of the preliminary investigation body includes the search and return of the stolen property to the owner.
The injured party has every right to sue for damages. In order to ensure the claimed claim, law enforcement bodies and the court take the necessary measures related to the detection and seizure of the property of suspects, accused and defendants, at the expense of which the claims are satisfied. The lawsuit can be considered and satisfied with the conviction. At the same time, the main damage from the crimes under investigation falls on outstanding debts. In other words, the execution of a contract in criminal matters, in particular in a civil lawsuit, actually means that the creditor collects the debt and compensates for the costs involved.
After threats of criminal prosecution and subsequent punishment in order to mitigate their fate, the perpetrators often compensate for the damage caused by their crimes. Moreover, the law makes them stimulate to this. In addition, the damage can be repaid by other persons who bear moral responsibility for what actions are committed by those responsible or those who, for various reasons, are interested in their further fate.
In some cases, the effectiveness of traditional collection methods is too low. Civil proceedings can be extended for one year or more, and by this moment the debtor may not have the necessary property that could be seized to pay off debts. Therefore, in most cases, it is best to use the penal method of recovery.
