Debt Collection in Lithuania

Our local debt collection agency in Lithuania.

If you have sold goods or services to a Lithuanian company, and if the company does not pay, you should let a debt collector with local presence n Lithuania handle the recovery process.

The reason why it is a good idea to use a Lithuanian Debt Collector is that national laws and regulations apply to the collection process.

We are proud to present our debt collection agency in Lithuania; UAB “Kreditų Valdymo Grupė”.

– Could you briefly describe your company?

We are small successful business with a few highly experienced professionals. Since all of us are shareholders of the company, we are deeply motivated to deliver the best result possible. Our clients usually appreciate rapid actions and personal touch in the process.

– Can you give us an overview of the collection process in Lithuania/ What actions are you taking in the amicable stage of debt collection?

During amicable stage of debt collection, first of all we gather all possible information about debtor, to see a full view of debtors solvency and possibilities to make payments. Just after that we contact debtor and demand to meet their financial obligations. This moment is always performed with professional manner and also represents some alternatives to debtor if our demands are not possible to meet within a timetable provided.

– How does it work in Lithuania when you need to take legal action?

If desired result is not achieved during the amicable stage, but debtor is a solvent subject and other legal requirements are intact, we recommend to start a legal action. There are few different processes and based on circumstances, debt documents, debtor’s situation, we always pick and recommend the most appropriate one. This stage of the collections starts once client pays legal and court fees, witch are we calculate and provide it in advance.

– If you are taking legal actions in a case and you win in court, can the costs for legal actions that the client has paid for be added to the debt?

The general practice, with some very rare exceptions, is that all legal costs are added to the main debt amount a long with contractual or/and process interest. It is worth to mention, that once the court order is received we start execution process through a bailiff. The additional upfront fee must be paid to bailiff, but it is always added to the amount in the court order and is collected from debtor too.

“Judicial” debt collection in Lithuania.

Sometimes it may be a fact that you need to take a case against a Lithuanian debtor to court. Our debt collection agency in Lithuania specialises in taking legal action in Lithuania when the need arises. Below is a brief overview.

Which court in Lithuania is the appropriate one to turn to with your debt collection case?

The rules on jurisdiction are set out in Articles 29-30 of the Code of Civil Procedure (Civilinio proceso kodeksas). An action may be brought before a court according to the domicile of the defendant. A claim against a legal person must be filed according to the seat of the legal person as indicated in the register of legal persons.

Is there a specific procedure for “order for payment” in Lithuania?

Yes, as in most other countries, there is a special procedure for “order for payment” in Lithuania. This is particularly suitable for cases of judicial debt collection in Lithuania as it is quicker, easier and cheaper compared to suing someone in the ordinary court procedures in Lithuania,

The procedure is used for undisputed monetary claims. There is no upper limit on the amount. The competent court for payment orders is the district court where the debtor is located.

The basic idea is that the court does not examine the correctness of the claim. If the debtor does not object to the claim, a judgment can be issued. However, if the debtor contests the validity of the claim, the creditor is given the opportunity to take the case to the ordinary litigation procedure.

An application for an order for payment procedure filed against a debtor in Lithuania needs to contain: the names and details of the parties involved (the creditor and the debtor), the amount of the claim, the circumstances of the claim and proof of the existence of the claim. A standardized form can be found at https://e.teismas.lt/lt/public/documentstemplates/ .

A debtor has twenty days to respond to the claim. (This is done in writing.) If a correct dispute is made within the time limit, the creditor still has the possibility to sue the debtor in the ordinary civil procedure. If no objection is made by the debtor within the twenty days, the payment order becomes enforceable and can be used as a basis for enforcement.

Enforcement.

Enforcement can be initiated after a creditor has taken his Lithuanian debt collection case to court, either the ordinary procedure or the order for payment procedure. If they were successful, they have obtained a judgment in the court process stipulating that their Lithuanian debtor is obliged to pay them a certain amount of money. But what happens if the debtor still does not pay the amount voluntarily? This is when enforcement comes into play. It is a way for a creditor to enlist the help of Lithuanian authorities to forcibly transfer assets from the debtor to them.

An application for enforcement is then made by the creditor to the Enforcement Authority. If there are no obvious obstacles to starting enforcement, the Enforcement Authority will start the process. An enforcement order based on a judgment may be submitted for enforcement within five years of the judgment coming into force.

If the debtor is a legal person, the enforcement order must be enforced by the Enforcement Authority at the place where the debtor has its registered office or where the debtor’s assets are located.

Insolvency proceedings in Lithuania.

In business, it is a fact that some companies sometimes go under and are unable to repay their debts. It is therefore a question of not being able to pay, rather than not wanting to. For these situations, there are special rules on insolvency proceedings, which are intended to ensure that all creditors are treated fairly (bankruptcy proceedings), and sometimes also to try to save a company that is going under (reconstruction proceedings).
Bankruptcy proceedings may be initiated against a legal person if the court has established that at least one of the following circumstances exists:
– the company is insolvent
– the company is in arrears in paying its employees,
– The company is or will be unable to meet its obligations.

What is meant by insolvency in Lithuania? It refers to a state where a company is unable to meet its obligations, and its past due obligations exceed half of the book value of its assets.