Enforcement
What does enforcement mean?
Enforcement is a legal process allowing creditors to collect debts from a debtor who refuses to pay voluntarily. It involves state intervention to secure the owed money or assets.
How does enforcement work?
Enforcement title: A court ruling or payment order confirming that the debtor must pay.
Enforcement order: The creditor instructs a bailiff or enforcement authority to recover the debt.
Execution: The bailiff may seize the debtor's assets, such as accounts, wages, or valuables.
Key points:
Creditors must first obtain an enforcement title.
Bailiffs have the right to enter the debtor's residence.
Wage garnishment redirects part of the debtor's income to the creditor.
Enforcement ensures creditors can pursue unpaid debts when the debtor is unwilling to pay voluntarily.
What are the costs of enforcement?
Enforcement can involve various costs, which are typically borne by the debtor if they fail to pay voluntarily.
Court costs:
Enforcement application: Fees for submitting an enforcement request to the court.
Bailiff fees: Charges for bailiff services.
Attorney fees:
Legal representation: Costs for hiring an attorney to carry out the enforcement process.
Procedural costs:
Seizure: Fees for account, wage, or asset seizures.
Auction: Costs associated with auctioning seized items.
Other expenses:
Disbursements: Additional bailiff expenses, such as delivery or travel costs.
Appraisals: Costs for appraisals needed to value seized items.
Cost examples:
Basic garnishment orders: Starting at approximately €20.
Bailiff fees: Typically between €25 and €150, depending on the effort required.
Attorney fees: Often several hundred euros, depending on case complexity.
Exact costs vary by case. It’s advisable to get an estimate in advance to avoid surprises.
What measures can be taken during enforcement?
Creditors have several options to enforce their claims:
Asset seizure:
Seizure of movable property: Bailiffs can confiscate valuable items like electronics, jewelry, or vehicles.
Auction: Seized items may be publicly auctioned to settle the debt.
Account garnishment:
Garnishment and transfer order: Creditors can freeze the debtor's bank account and use the funds to cover the debt.
Wage garnishment:
Third-party declaration: The debtor's employer is instructed to transfer part of their wages directly to the creditor.
Forced mortgage:
Forced mortgage registration: A creditor can register a forced mortgage on a debtor's property to secure their claim.
Affidavit:
Asset disclosure: Debtors must provide a sworn declaration of their financial status, offering creditors an overview of attachable assets.
Insolvency application:
Personal insolvency: If all other measures fail, creditors can file for insolvency proceedings to liquidate the debtor's assets.
Important notes:
Creditors may pursue multiple actions simultaneously to improve success rates.
Debtors have certain protections, such as minimum exempt amounts in wage garnishments.
Some actions, like account garnishment, require court approval.
These measures aim to enable creditors to recover outstanding debts efficiently.
What assets can be seized?
Bailiffs can seize specific assets but must adhere to rules that protect basic living standards.
Seizable assets:
Valuables: Jewelry, high-end electronics, collections, and artworks.
Vehicles: Cars or other vehicles, unless essential for work.
Cash: Up to a certain exempt limit.
Luxury items: Non-essential goods with high resale value.
Non-seizable assets:
Essential items: Clothing, furniture, household appliances (e.g., a washing machine or refrigerator), and basic electronics.
Work tools: Laptops, tools, or vehicles crucial for work.
Health aids: Glasses, prosthetics, and other medical devices.
Pets and supplies: Pets and their basic needs.
Religious items: Objects for religious practices, valued under €500.
Wedding rings and honors: These are exempt regardless of their value.
These rules ensure that debtors can maintain a basic standard of living and continue working.
Can enforcement be prevented?
Debtors can take steps to avoid enforcement:
Settle the debt: Paying the outstanding amount in full ends enforcement immediately.
Installments: Agreeing to a payment plan with the creditor can avert enforcement.
Settlement: Negotiating a reduced payment can lead to an out-of-court agreement.
Protected account (P-account): Converting a regular account into a P-account shields a minimum exempt balance from garnishment.
Enforcement protection request: Filing with the court can temporarily halt enforcement due to hardship.
Insolvency application: Declaring insolvency stops enforcement and allows for debt restructuring.
Debt counseling: Professional advice can help identify the best course of action and facilitate negotiations with creditors.
These options provide ways to avoid or delay enforcement proceedings.
What rights do I have during enforcement?
Debtors have rights to ensure fair and lawful enforcement:
Appeals and objections:
Enforcement objection: For procedural errors, an objection under Section 766 ZPO can be filed, e.g., if enforcement rules are violated.
Garnishment objection: Debtors have two weeks to contest a garnishment order for reasons like exempt assets or prior payments.
Appeal: If an objection is rejected, a further appeal can seek judicial review.
Protection of exempt assets:
Basic necessities for modest living, such as clothing, furniture, and work tools, cannot be seized.
Health-related items like glasses or prosthetics are also exempt.
Protected account (P-account):
A regular account can be converted to a P-account to safeguard a minimum exempt amount from garnishment.
Proportionality:
Enforcement measures must be proportionate, avoiding undue burden or harm to the debtor.
Insolvency proceedings:
If debt cannot be sustainably managed, filing for personal insolvency halts enforcement and enables structured debt relief.
Understanding and asserting these rights ensures that enforcement remains fair and legally compliant. Legal advice can help navigate the process effectively.