Hungary is a member of the European Union since 2004 and this status is reflected in the manner in which enforcement of foreign judgments is applicable in the country. As in all EU member states, the domestic laws and regulations govern the enforcement process for debt collection. In Hungary, these are the Civil Code and the Code of Civil Procedures.
Because Hungary is an EU member state, there is no need for special guidelines or procedures for the implementation of an EU Court Decision. In most cases, the EU regulations will apply directly (except in those cases in which an EU ruling might contravene with a local one). The Brussels I Regulation (Recast) is the legislative document that is important for the recognition of a European Union Court Decision in Hungary as it sets forth the mutual enforcement and recognition of judgments from courts in other EU member states.
Debt collection in Hungary will take place by observing the EU legislation and the court that will hear the case and that will recognize the enforcement of the foreign judgment will be the district court in the area where the debtor is domiciled.
Another law that is relevant for debt claims is the EU Regulation 20152421 which simplifies cross-border disputes and it is relevant for small claims of up to 5,000 euros.
Individuals who are looking to recover debts in Hungary should know that recognition and enforcement are two distinct situations and no all judgments that are recognized will be enforced. In some cases, recognition will be the step before enforcement. Below, we answer some common questions about the recovery of debts in Hungary.
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What are the general steps for debt collection in Hungary?
Some debt collection cases can have a different starting point. The list below highlights the most important steps that can take place
- Send the first demand letter: the first attempt is to send a friendly reminder to the debtor regarding the payment amount.
- Propose a payment plan: the creditor can come up with a mutually beneficial payment plan for the due amount.
- Make the second attempt: the creditor can make a final attempt to contact the creditor before starting legal action.
- Commence the legal proceedings: either through an EU Order or by taking the case to the competent Hungarian court.
Apart from the European Order for Payment and the judicial phase, creditors have another option in Hungary out of court proceedings that are undertaken by civil law notaries and have the effect of court proceedings.
A good practice before starting to do business in Hungary is to perform a company check with the company registry. Businesses that are registered and operate according to the law are included here and by performing this search you will also gain access to the company information that might need to be included in the court order when filing a claim.
One of our debt collection lawyers in Hungary can help you with more information about due diligence and the information the creditor is required to have on the debtor.
How are EU Court Orders enforced in Hungary?
When the creditor has a European Order for payment proceedings, the debtor will be informed thereof and will have a limited time to object the claim (if this is the case). Should the debtor fail to respond, then the order may be enforced (through a subsequent procedure with the court). The enforceable judgment will, therefore, be valid in any member state (in this case, for Hungary, because this is the state where the debtor resides). This process can be the suitable solution in many cases involving Hungarian debtors, however, if the debtor objects the claim, then this particular procedure is terminated and the creditor will need to seek a resolution through ordinary civil proceedings.
How is debt collection handled in Hungary?
Debt collection in Hungary is a process that can commence with an amicable, extrajudicial phase. When an EU Court Order is in place, this means that the creditor has already decided to take legal action against the debtor. However, when choosing to work with our agents, we can first start by attempting non-judicial recovery.
By working with our debt collection agency in Hungary, individuals can recover their due debts as easy as possible and by using the adequate measures (not always in-court proceedings) .
Contact us for more information about how to recover debts when and European Union Court Decision has been issued. One of our lawyers will be able to assist you throughout the entire process, from the application for the order to the enforcement thereof and the seizure of assets.
