15-Mar-2022
written by: Hana Bishara, Karen Abi Younes & Nasser Messaike
What is a debt?
A debt is defined as an obligation which is a legal bond that could arise out of the applicable law, contractual relationship, unilateral disposition or could be due because of the responsibility of unlawful acts or unjust enrichment, all these sources create a debt obligation and gives a natural person or an entity the capacity of a debtor towards one or more person described as creditor(s).
When a customer fails to pay his debt on time (upon receipt of the purchase order, invoice, or goods according to the terms agreed upon at the beginning of the relationship), his non-performance of the obligation towards the creditor becomes a payment delay or debt.
This is way, the company or individual who owes money becomes a debtor, and the company or individual that is waiting to be paid by the debtor becomes the creditor. The money due is the subject of the legal bond between them.
What is a debt collection?
This is when debt collection comes into play; according to Cambridge Dictionary it means “the job of collecting payments from people who have failed to pay the money they owe for goods, services, etc. that they have already received”.
The forms of a debt collection
The debt collection may be launched through two forms.
The first form is the amicable recovery (1) also entitled as the extrajudicial debt recovery process and constitutes sending several reminders and amicable resolution of the debt.
On another hand, the judiciary recovery (2) constitutes the formal form of recovering a debt by a court order.
- The Amicable Recovery
This is the most used and opt for method conducted by law firms or recommended by legal practitioners when recovering a debt in order to get the debtor to voluntarily pay his debt.
The creditor shall contact the debtor directly by phone or email, notify the debtor of the cruciality of recovering the debt amicable otherwise the judicial collection procedure shall be taking place.
And lastly the creditor during this amicable debt collection form should consistently send to the debtor one or more follow up emails in case the debtor does not respond.
However, when the debtor cannot be reached with the contact information provided by the creditor, private investigations will be conducted to allow verification as to whether the debtor is still active and whether recovery chances are at best.
In addition, it is essential to be aware of the debtor’s solvency status, the debt term and the financial condition generally as this will affect the time to reach an amicable settlement.
- The Judicial Recovery
According to article 241 of the Qatari Civil Code no. 22 of 2004 (the “Civil Code”), “Where the obligor fails to perform his obligations voluntarily, such obligation shall be enforced”.
Therefore, in case the extra-judicial attempts to recover the debts are not successful, the creditor will have no other available options but to resort to the court to secure the satisfaction of his/her money.
In this case, the creditor shall initiate a claim against the debtor.
Before initiating any claim, it is very important to send to the debtor a formal notice in order to pay the debt. The formal notice must be given in such a way as to preserve a means of proof.
This procedure can be carried out by a creditor with a judge to issue a judgment against a debtor so that he/she can settle his/her outstanding payments.
In such event, the creditor must:
(i) prepare a request for an injunction to pay which will be containing certain mandatory information like the name of the debtor should be demonstrated in the lawsuit, the financial position; and
(ii) in the same vein the creditor must attach supporting documents to prove the existence of unpaid debt and the reason behind the debt, its amount and should be attached to the lawsuit’s file any other submissions deemed necessary.
In order to construct a strong claim, the creditor must prove that the debt is:
(i) certain as its existence is undisputable;
(ii) liquid as its amount can be assessed;
(iii) due as its payment date has effectively passed; and
(iv) not “seriously contestable” by the debtor.
In the event where the claim is “seriously contestable” or it appears that the evidence provided is insufficient, the debtor shall have the right to appeal/ object, and the court shall have the discretionary power to rule over the matter.
The judge competent to receive the request differ depending on the nature and amount of the claim.
In such event, the court may order your debtor to settle the outstanding payments and the conviction may possibly be accompanied by default interest.
As soon as the judicial recovery is pronounced, it shall include all remedies admitted by law and as a creditor you will obtain a writ of execution allowing you to force the debtor to reimburse the unpaid due debt.
Writ of execution
Judicial recovery includes all remedies that allow obtaining a writ of execution.
As soon as a writ of execution is issued by a judge, the creditor is empowered to force his debtor to reimburse him for his unpaid debt, in particular using the mechanism of seizure of properties/assets.
This case shall be applied if the debtor has assets.
The seizure of assets can take different types according to the assets of each debtor. It can be a distraint of goods, seizure of real property or the attachment of shares, debentures, dividends and sale thereof.
The time limit for legal proceedings
It is important to take into consideration that every creditor should address its request of debt collection to the judge when it is the case of judicial recovery before the end of the limitation period.
The limitation period for judicial recovery proceeding is three (3) years from the maturity date of the debt according to the Civil Code of the State of Qatar.