Debt collection

In principle, you can be pursued by debt collection agencies at any time. Creditors generally resort to debt collection if you have failed to pay a bill even after you have received three reminders. In order to give you a brief and simplified outline of how the debt collection procedure evolves, the following steps are discussed below:

1. Debt collection request

The creditor submits the debt collection request to the collection office responsible for the area where you live and pays an advance on costs, which is dependent on the size of the debt that is being collected.

2. Notice to pay

After receiving the debt collection request, the debt collection office sends you a notice to pay, giving you 20 days to settle the outstanding debt. Following the receipt of notice to pay, there are two options open to you. You can either pay within 20 days or go down the legal route within 10 days and challenge the claim. If you settle the debt on time, the collection procedure ends. However, the debt remains in the collection register.

3. Legal option

If you take the legal option, the collection procedure is stalled for the time being. The creditor cannot proceed any further without the intervention of a judge. The legal option does not need to be substantiated because the burden of proof rests with the creditor to show that this debt exists.

4. Setting aside the legal option

There are two ways in which the creditor can have the legal option set aside: summary disposal and legal action. If the creditor has a written acknowledgement of the debt, a certificate of indebtedness or even a judgment against you, the creditor can institute legal proceedings quickly and cost-efficiently. If the claim for the debt is not based on a document like this, the creditor attempting to collect the debt must assert the claim with enforcement by action. This is a more complicated and more expensive procedure.

5. Resumption of the collection of the debt: seizure of assets or bankruptcy

If the legal option is definitively set aside by the court, the creditor can ask the debt collection office to resume the collection procedure. The debt collection office decides whether to pursue the debt through seizure of your assets or through bankruptcy. To put it in broad terms, if a person is registered as a business person in the commercial register, the debt is pursued through bankruptcy. Assets are normally seized in all other cases.

When debtors are pursued in relation to tax and maintenance payments, property is always seized. When the property is seized, your assets will be used to cover the debt being collected provided it is not absolutely vital for living or for work. There may be attachments to your future earnings following deduction of the minimum that you require to live under debt collection law. The attachment of earnings will last up to one year. In the event of bankruptcy, the entire assets, which could be seized, will be used. Income is not included in the bankrupt's estate.

6. Issuing of a certificate of indebtedness

If the realisation of the assets and the attachment of earnings fail to bring in sufficient funds to satisfy the creditor completely, the debt collection office will issue the creditor with a certificate of indebtedness after waiting for a year. This is a document, which states the amount that remains to be recovered during the debt collection process. This amount does not attract interest. The debt being pursued becomes statute-barred after twenty years. However, the issue of the certificate of indebtedness does not necessarily mean that things will ease off for you. The minimum amount, which you are entitled to live on under debt collection law, does not include on-going taxes. During the year when there is an attachment to your earnings, there is a very good chance that new debts will have accrued. Furthermore, the certificate of indebtedness enables the creditor to request that your assets be seized again immediately.

Further Information

Debt collection proceedings

Subsistence level

Conference of the Swiss debt collection and bankruptcy executives