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Debt Collection– Part 1: What Is the Debt Collection Procedure and How Is It Launched?

It is particularly important for start-ups to receive their remuneration on time. Unfortunately, it is not always the case. If payment reminders do not help and negotiations fail, the last resort is a debt collection procedure. If needed, an outstanding debt is caused to be paid under duress. In a series of four articles, STARTUPS.CH explains what the debt collection procedure is about and how to proceed with it. This first article explains what exactly the debt collection procedure is and how it can be launched.

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What is the debt collection procedure?

The debt collection procedure is a process by which the debtor can be obliged under state duress to satisfy the creditor’s claim. There are three different types of debt collection procedure: (1) the procedure to obtain an attachment of earnings order (article 42 of the Debt Collection and Bankruptcy Act); (2) the procedure to recover debt (article 41 of the Debt Collection and Bankruptcy Act); and (3) the procedure to declare bankruptcy (article 39 of the Debt Collection and Bankruptcy Act). It is up to the Debt Collection Authority’s officer which procedure will be applied (article 38 III of the Debt Collection and Bankruptcy Act).

How can a debt collection procedure be launched?

The debt collection procedure is opened by filing a debt collection request, which can be made, either orally or in writing, at the Debt Collection Authority where the debtor lives (article 46 of the Debt Collection and Bankruptcy Act). For this purpose, the creditor has to specify the following information (article 67 of the Debt Collection and Bankruptcy Act):

  1. Creditor’s name and residence (and where necessary those of the creditor’s attorney)
  2. Debtor’s name and residence (and where necessary those of the debtor’s attorney)
  3. Due sum or amount of collateral requested. It is to be specified in Swiss currency. If interest is to be collected, the interest rate and the date from which interest is to be calculated should be specified.
  4. Document substantiating the claim, including document date. If such a document is missing, substantiation of the claim should be provided.

The Debt Collection Agency does not make any inquiries into the correctness of such information. Therefore, it is at any time possible to start a debt collection procedure almost against anyone. Should this happen to you, then you should raise an objection against it. How to do that is explained in part 2.

 

Do you have any business idea you would like to make come true? Use STARTUPS.CH experts to become self-employed.

 

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