Debt collection in Switzerland

Anyone who believes that they have a claim against a person, whether a natural or legal person (companies, bodies, etc.), can enforce their right in Switzerland through a number of very efficient instruments which lead, more often than not to successful collection , as will be shown below.

1. The procedure: from application for enforcement to attachment / bankruptcy

The procedure may be initiated by the creditor on simple request, which itself initiates execution without the need for the provision of reasons. The debtor who receives the notice to pay, known as an “enforcement order”, has a term of 10 days in which to lodge an opposition and also in this case does not have to provide a reason.

In the face of opposition, the creditor has one year to ask the court to reject it. The administrative procedure provides for two routes:

1. the creditor may initiate the procedure for final rejection of the challenge if they are in possession of a final rejection title (art.80 LEF). This refers to enforceable judicial decisions and all equivalent measures such as judicial settlements, judicial acknowledgments of debt, enforceable public documents, or decisions of the Swiss administrative authorities, etc.
2. the creditor may also initiate the procedure for the provisional rejection of the challenge if they are in possession of an acknowledgment of the debtor’s debt established by a public or a private deed (Art. 82 LEF). In this case, the debtor may only raise such objections that invalidate the acknowledgment of the debt.

If, on the other hand, the aggrieved party is not in possession of either of the above-mentioned types of documents in support of the claim, it must initiate a court case under to the ordinary rules of the Code of Civil Procedure (CPC) . In the final judgment, the judge, in granting the plaintiff’s claim, will declare the opposition to be definitively rejected.

Once the creditor has obtained the rejection of the opposition, they can ask the enforcement office to proceed with the enforcement. The procedure is entirely handled by the debt enforcement office if the debtor is a natural person, or by the bankruptcy office if the debtor is a legal person or one otherwise registered in the Commercial Register. In the latter case, it will be necessary that the bankruptcy be first decided by the competent Pretore [Magistrate].

Subject to the particularities of the two different enforcement procedures, they will end with the identification of some or all of the debtor’s assets necessary to satisfy the claim, with a positive or negative outcome depending on the debtor’s state of solvency.

2. How much does it cost to recover a debt?

The creditor is obliged to advance the costs of enforcement, which are requested from time to time by the debt enforcement office and which are proportionate to the value of the claim (see tables of enforcement costs here). The creditor must also advance the costs of the rejection procedure . If the rejection judge accepts the application, the court will then charge the debtor with all the enforcement and court costs advanced by the creditor.

Enforcement proceedings present numerous pitfalls, especially if the debtor is a person who knows the law, as is generally the case with companies or those that are instructed by lawyers. The assistance of a lawyer is therefore strongly recommended.

Lawyers’ fees in Switzerland are generally regulated according to an hourly rate system, ranging from a minimum of CHF 200 per hour to a maximum of CHF 350 per hour, or even more if the claim is particularly large. The lawyer and the client may also agree on a flat fee and also on a percentage fee: in the latter case, there is always a minimum fixed amount to which the percentage is added and which, as a rule, decreases as the claim increases.

The execution judge may award the creditor a repeatable indemnity, i.e. an indemnity for the advocacy costs the creditor has to bear. These amounts generally cover part of the amounts actually incurred by the creditor for the assistance of a lawyer.

3. What are the chances of a successful recovery.

Apart from the ordinary risk of insolvency of a person or company, the chances of a positive outcome are generally high in Switzerland. There are a number of factors that contribute to this:

• on the one hand, the intervention at the enforcement phase of a public office with full powers of investigation over all the debtor’s assets;
• on the other hand, the highly competitive court time (two to three months in the case of an administrative rejection procedure, one to two years for an ordinary court case);
• the strict application by judges of the principle of awarding costs to the winning party.

These are all factors that induce the debtor in most cases to reach an agreement with the creditor or, in any case, to pay what is owed at the latest before attachment or bankruptcy takes place.

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Ciamei Law Firm deals with such matters and is available to be contacted.

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