Banks' way to recover their receivables

Service Business

The current crisis and the deteriorating situation not only in the labor market, contributes to lowering the wealth of households and worsening the efficiency of enterprises, which may result in their lack of financial liquidity.Unfortunately, to the disadvantage of customers, failure to pay the loan installments on time may lead to the initiation of enforcement proceedings by the bank and termination of the contract. Credit institutions are entitled to issue a bank enforcement order based on the customer's written declaration contained in the contract.

What is a bank enforcement order?

Banking institutions may issue banking enforcement orders on the basis of their books or other documents related to the performance of banking activities. It may be the basis for enforcement carried out in accordance with the provisions of the Code of Civil Procedure after the court issued an enforcement clause only against the person who performed a banking transaction directly with the bank or is the bank's debtor for securing the bank's receivables resulting from banking operations. At the same time, this person must submit a written declaration of submission to the said enforcement.

The declaration referred to above should specify the amount of debt up to which the bank may issue the said writ of execution and the date by which the bank may apply for an enforcement clause.

The given bank enforcement title has the same force as judgments or court orders, and the possibility of issuing them by credit institutions on their own is a significant facilitation. The only thing that the bank has to do is to submit an appropriate application to the judicial authorities for them to issue an enforcement clause for the enforcement order in question. During the verification, the court checks whether the bank enforcement order has the legally required elements, is consistent with the statement issued by the borrower, and whether the application has been submitted within the required deadline. Everything happens without notifying the debtor during a closed session. The bank, having an enforcement clause, may then refer the case to a bailiff.

How to defend yourself?

In practice, most often the debtor learns only from a bailiff with a bank enforcement order issued. However, the borrower is not completely defenseless in this situation. Well, it has the right to lodge a complaint against the court's decision granting an enforcement clause or to bring an action against the bank for deprivation of the enforcement title in whole or in part.

  1. Complaint against a court decision - is based on when the formal conditions for granting the clause have not been met, for example, the deadline indicated in the declaration by which the bank had the right to apply for the clause has expired. In the event that, through the complaint, the debtor tries to question the validity of the termination of the loan agreement - it is not effective.
  2. Action for deprivation of the writ of execution - the debtor may, by means of an action, demand that the writ of execution be deprived of the writ of execution in whole or in part, or a limitation (Civil Procedure Code Art.840). Accordingly, it may submit objections relating to claims covered by the enforcement clause, which may include: claims that there are no grounds for terminating the contract, set-off or incorrect calculation of the debt amount. However, this is not tantamount to suspending the bailiffs' actions. For this purpose, the borrower should file an application for securing the claim by suspending the enforcement proceedings. In addition, there is a designated claim fee of 5% of the amount at issue.

Limitation of claims

Applying the provisions of the Civil Code (Article 118), banks' claims shall be time-barred after three years, because they belong to activities related to their business activities. The initial date of the limitation period is the date of repayment of the loan installment specified in the contract. In a situation where the bank decides to terminate the loan agreement, the installments not yet due - became due at the time of terminating the agreement, so the limitation period should be counted from that date. However, submitting an application for an enforcement clause causes the limitation period to be charged from the beginning.