A new procedure in our judiciary system was recently implemented through changes to the Enforcement and Security Act (“Act”) – the procedure of voluntary debt settlement before Public Bailiffs, prior to enforcement procedure. The procedure of voluntary debt settlement is also regulated by the Rulebook on the procedure of voluntary debt settlement before enforcement proceedings (the “Rulebook”) that was enacted on 1 January 2020. Compared to the Act, the Rulebook manages the procedure of voluntary debt settlement in a much more concise and clear manner.
The Rulebook contains the following provisions:
- Only the creditor has the right to commence this legal procedure, by submitting the claim to the Public Bailiff;
- The creditor has the right to choose the Public Bailiff, except when the case originates from communal or closely related services;
- The Public Bailiff notifies the debtor about the claims;
- The Public Bailiff communicates with the debtor directly, by telephone or via email;
- Public Bailiffs have the right to arrange meetings between the creditor and the debtor in order to settle the debt through mediation.
The Rulebook considers the case closed if the parties sign an agreement that arranges the dynamic of debt settlement.
The advantages of this procedure are mutually beneficial for both parties, as follows:
- The debtors can get advice from the Public Bailiffs about the best ways/solutions to settle their debt;
- The debtors save considerable amount of money due to omission of the enforcement procedure, which lowers their costs significantly;
- The upside for the creditors is the fact that by commencing the enforcement procedure the statute of limitation is prolonged for the next 60 days;
- This procedure does not limit the creditor’s ability of initiating the enforcement procedure against the debtor.
The biggest benefit of this new procedure is that it reduces the costs for both parties, compared to the standard enforcement procedure. Specifically, fees for preparing, conducting and archiving the case amount to 20% of the fees for preparing, conducting and filing the case in the enforcement proceedings, and therefore other costs depending on that fee are also smaller. In addition, the fee for the successful procedure of voluntary debt settlement is 50 % lower than the fee for successful conduct of the enforcement procedure.
This text is for informational purposes only and should not be considered legal advice. Should you require any additional information, feel free to contact us.
By Radovan Grbovic, Partner, and Katarina Askic, Associate, Samardzic, Oreski & Grbovic