Debt Collection in Bulgaria: A Complete Guide for Creditors
Introduction
Debt collection in Bulgaria is a structured legal process that enables creditors to recover outstanding debts from individuals or businesses. Whether you are a local or international company facing difficulties in collecting payments from Bulgarian debtors, understanding the legal framework and procedural options available is crucial.
This comprehensive guide will walk you through the key stages of debt recovery, legal options, enforcement procedures, and best practices for ensuring a smooth collection process.
1. Legal Framework for Debt Collection in Bulgaria
Debt collection in Bulgaria is regulated by several legal acts, including:
- The Civil Procedure Code (CPC) – outlines judicial procedures for debt collection.
- The Commercial Act – governs commercial transactions and obligations.
- The Obligations and Contracts Act (OCA) – defines general rules for contractual obligations and liabilities.
- The Private Bailiffs Act – regulates enforcement mechanisms for unpaid debts.
- EU Regulations (for cross-border claims) – particularly Regulation (EC) No. 1896/2006 on the European Order for Payment Procedure.
Creditors can recover debts through amicable (extrajudicial) collection or judicial collection via court action.
2. Amicable (Extrajudicial) Debt Collection
Before initiating legal action, creditors are encouraged to attempt an amicable resolution. This phase involves:
2.1. Initial Contact and Payment Reminders
- Sending formal reminders to the debtor (written notices, emails, or phone calls).
- Offering negotiable repayment plans if the debtor is facing financial difficulties.
- Engaging a debt collection agency to handle negotiations professionally.
2.2. Notary Invitation for Voluntary Payment
A formal approach to amicable recovery is sending a notary invitation for voluntary payment. This acts as an official request for settlement and serves as evidence in potential future legal proceedings.
2.3. Mediation and Settlement Agreements
In some cases, mediation may help parties reach a mutually acceptable settlement, avoiding costly litigation. The agreement can be formalized before a notary public for added enforceability.
If the debtor fails to cooperate, creditors may proceed with legal action.
3. Judicial Debt Collection in Bulgaria
Judicial debt collection follows a structured legal process, allowing creditors to obtain a court order for debt enforcement. There are two main procedures:
3.1. Order for Payment Procedure (Fast-Track Collection)
This simplified court procedure applies to undisputed monetary claims (e.g., unpaid invoices, loans). Steps include:
- Filing a petition with the district court where the debtor resides.
- Court issues an enforcement order without a hearing.
- Debtor has 14 days to oppose the order.
- If unopposed, the order becomes final and enforceable.
This process is quicker and cost-effective, making it a preferred option for creditors.
3.2. Regular Civil Lawsuit (For Disputed Claims)
If the debtor contests the claim, creditors must initiate a full civil lawsuit. The process includes:
- Filing a statement of claim with the court.
- Holding court hearings and presenting evidence.
- Court issues a judgment, which can be appealed.
- If the creditor wins, they can proceed with enforcement actions.
Litigation is longer and more expensive but may be necessary for complex disputes.
4. Enforcement of Debt Collection in Bulgaria
Once a creditor obtains a court ruling, enforcement measures can be initiated through a private or public bailiff (enforcement agent).
4.1. Seizure of Bank Accounts
A bailiff can freeze the debtor’s bank accounts, forcing them to settle outstanding amounts. The bank must comply with the order.
4.2. Wage Garnishment
Creditors can claim a portion of the debtor’s salary, directly deducted by their employer. Bulgarian law protects a minimum wage portion from seizure.
4.3. Seizure of Movable and Immovable Property
If the debtor owns real estate, vehicles, or valuable assets, these can be seized and auctioned. Property foreclosure is a common method for high-value claims.
4.4. Enforcement on Business Assets
For corporate debtors, bailiffs may seize company shares, inventory, or revenue streams to satisfy the debt.
5. Debt Collection Against Foreign Debtors in Bulgaria
International creditors may face additional challenges in debt recovery. Bulgaria follows EU regulations for cross-border debt collection, including:
- European Payment Order (EPO) – Regulation (EC) No. 1896/2006
- European Small Claims Procedure – Regulation (EC) No. 861/2007
- Recognition and enforcement of foreign judgments – Regulation (EU) No. 1215/2012
These procedures simplify international debt recovery within the EU.
6. Statute of Limitations for Debt Collection
The limitation period varies by claim type:
- 3 years – General civil and commercial debts.
- 5 years – Loans and judgments.
- 10 years – Enforcement proceedings.
A creditor must interrupt the limitation period (e.g., by filing a claim) to prevent the debt from becoming unenforceable.
7. Costs and Timeframes of Debt Collection
7.1. Estimated Costs
- Court fees – Typically 4% of the claimed amount.
- Lawyer fees – Vary based on case complexity.
- Bailiff fees – Fixed + percentage of recovered amount.
7.2. Timeframes
- Amicable settlement – 1-3 months.
- Order for Payment Procedure – 1-6 months.
- Full litigation – 6 months – 2+ years.
- Enforcement process – Depends on debtor’s assets.
8. Why Choose Legal Frame Law Firm in Bulgaria for Debt Collection?
At Legal Frame Law Office, we provide professional legal assistance for debt recovery, ensuring fast and cost-effective solutions. Our expertise includes:
✅ Negotiating settlements to avoid lengthy court battles.
✅ Drafting and filing legal claims for enforcement.
✅ Handling cross-border debt recovery within the EU.
✅ Enforcing court rulings through bailiffs and asset seizures.
Contact a lawyer in Bulgaria today for a free consultation and effective debt collection strategies tailored to your needs.
Reference
Debt collection in Bulgaria involves legal and enforcement mechanisms to help creditors recover their dues. The best approach depends on the case complexity, whether the debt is disputed, and the debtor’s financial status.
By working with an experienced legal team, creditors can significantly improve their chances of successful recovery. If you need assistance with debt collection, reach out to LegalFrame.bg for expert legal services.
