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All about debt collection
It is essential for business players to master the terms of collection in order to effectively manage their outstanding receivables, i.e. the total sum of sales made but not yet paid.
(Re)Discover all the terms and expressions used in the field of debt collection in our glossary.
What is the debt recovery procedure?
Debt collection refers to all the procedures used by a creditor to obtain payment of a debt from a debtor. This is generally done after several amicable reminders have been unsuccessful. It should be noted that debt collection is governed by law, with the aim of protecting the rights of both parties.
In the amicable phase, the creditor can send a warning letter or a formal notice, which tells the debtor that he must pay the amount due or face legal action. If there is no response, or if the debtor is unable to pay the debt, the creditor can then initiate a legal collection phase. This usually begins with an injunction to pay, which is a request to a judge to order the debtor to pay the debt.
If the debtor does not comply with the order to pay, the judge can then issue a writ of execution. This document allows the creditor to call in a bailiff to seize the debtor’s assets. In most cases, a lawyer will be required to assist the creditor with the legal procedures. It is important to follow the steps of the procedure scrupulously to ensure that it is valid and that the creditor can effectively recover the debt.
What are collective proceedings?
Collective proceedings are a legal mechanism designed to deal with a company’s financial difficulties. It is triggered when the company is no longer able to meet its liabilities with its available assets, a situation known as cessation of payments. The main aim of these legal proceedings is to ensure the company’s survival or, failing that, to pay creditors by selling off its assets under fair and transparent conditions.
Several parties are involved in insolvency proceedings, in particular the court-appointed trustee, whose task is to represent the interests of creditors, and the court-appointed administrator, when his appointment is deemed necessary, who assists or represents the company in difficulty.
The procedure may result in a continuation plan to turn the business around, or in its compulsory liquidation if it is irretrievably compromised.
What is the procedure for recovering funds?
The recovery of funds procedure is a set of legal steps taken by a creditor with the aim of recovering sums owed to it by a debtor. This can be a complex operation and requires a thorough knowledge of the legal tools available. The aim is to locate any financial assets that may have been hidden or not declared by the debtor, and to seize them to satisfy the claim.
In France, this procedure may involve various actors and actions such as bailiffs, lawyers and banking organisations in the search for sums owed. Once the presence of funds has been confirmed, it is possible to initiate actions such as seizure of allotment or seizure for sale to physically recover the amounts claimed.
It is important to note that the process may begin with a formal demand, known as a summons to pay. In some cases, before proceeding with seizure measures, creditors may need to obtain a court judgment confirming the debt and the amount owed.