Debt collection in Bulgaria mainly refers to the process of collecting due payments from debtors and defaulting payers.
Debt collection in Bulgaria refers to the legal and procedural methods used to recover outstanding payments from debtors who have defaulted on their financial obligations. Whether the debt arises from unpaid invoices, breached contracts, or other legal obligations, creditors have specific legal avenues to ensure the recovery of their funds.
The process of debt collection in Bulgaria can be divided into two primary categories: out-of-court (amicable) debt recovery and court proceedings (pre-litigation and litigation). While out-of-court solutions are generally preferred due to their efficiency and lower costs, legal action may be necessary when debtors fail to cooperate.
Preliminary Considerations for Debt Collection in Bulgaria
Before initiating any debt collection process, it is essential to gather all necessary documentation regarding the debtor and the outstanding debt. The required documents include:
- Contracts or agreements proving the existence of the debt.
- All correspondence with the debtor, including emails, letters, and notices.
- The debtor’s identification details, including their full name, registered address, and company information (if applicable).
Having a complete record of these documents will strengthen your position during both out-of-court negotiations and legal proceedings. Additionally, seeking the assistance of a qualified Bulgarian lawyer is highly recommended to ensure compliance with legal requirements and increase the chances of successful debt recovery.
Out-of-Court Debt Collection in Bulgaria
Out-of-court debt collection is the preferred approach when seeking a swift and cost-effective resolution. This method involves direct communication with the debtor and encourages them to settle their outstanding obligations voluntarily.
Step 1: Initial Contact and Reminder Notice
The first step is to contact the debtor to notify them of their outstanding balance. This reminder can be made via phone, email, or official letter and serves to confirm that the debtor is aware of their financial obligations.
Step 2: Formal Demand Letter by a Lawyer
If the debtor does not respond to the initial contact or refuses to pay, the next step is to send a formal demand letter, written by a lawyer. This letter should:
Clearly state the amount owed.
- Specify the due date of the original payment.
- Provide a deadline for settling the debt (usually within 7-14 days).
- Mention the possibility of legal action if the debt remains unpaid.
A well-drafted demand letter by a lawyer demonstrates seriousness and often motivates the debtor to settle their dues before court involvement.
If these out-of-court measures fail, the next stage involves legal proceedings.
Legal Proceedings for Debt Collection in Bulgaria
When out-of-court measures are unsuccessful, creditors have two main legal avenues: pre-litigation (order for payment) proceedings and litigation (standard court claims).
Pre-Litigation Proceedings
Pre-litigation is a faster and less expensive process, typically resolved within six months. It does not require court hearings, and creditors only need to provide basic documentation, such as invoices and contracts. The procedure involves:
- Filing an Application – The creditor submits an application for an order for payment with the court.
- Court Review – The court examines the claim and, if deemed valid, issues an enforcement order.
- Notification to the Debtor – The order is sent to the debtor, who has the right to object within 14 days.
- Writ of Execution – If no objection is filed, the court issues a writ of execution, allowing a bailiff to enforce the debt collection.
The court charges a fee of 2% of the claimed amount for this process. However, if the debtor objects to the claim, litigation becomes necessary.
Litigation Proceedings
Litigation is a formal court process used when the debtor disputes the claim or refuses to comply with the enforcement order. Unlike pre-litigation, this process requires:
- A full court trial with hearings and legal representation.
- A court fee of 4% of the claimed amount (or an additional 2% if the pre-litigation process was already initiated).
- A final court judgment that legally confirms the debtor’s obligation to pay.
Litigation can be time-consuming, but it is sometimes the only option when a debtor actively refuses to settle their debts.
Law Enforcement and Asset Protection in Debt Collection
Before initiating legal proceedings, creditors should take steps to secure the debtor’s assets to prevent them from avoiding payment by transferring or hiding their property. Bulgarian law provides mechanisms to:
- Freeze bank accounts and real estate to prevent fraudulent asset transfers.
- Recover unlawfully transferred or donated assets if proven that the debtor attempted to evade debt collection.
Once a final court decision is issued, enforcement proceedings can begin.
Enforcement of Court Judgments
Debt enforcement in Bulgaria is carried out by public bailiffs or private enforcement agents. These professionals have the authority to:
- Seize the debtor’s bank accounts.
- Garnish wages or other sources of income.
- Auction off real estate or other valuable assets.
The enforcement proceedings in Bulgaria are conducted by public bailiffs or private enforcement agents, but you need an attorney at law to represent you and support you in these procedures.
Debt Collection in Bulgaria for Foreign Creditors
If you have a valid and in force court judgment from a court based in another member state of the European Union against a company or a person, based in Bulgaria, then this judgment/decision can be enforced in Bulgaria and the debt can be collected without needing to go through a court proceeding in Bulgaria. However, in this case you would also need assistance from a local attorney at law.
Conclusion
Debt collection in Bulgaria is a structured legal process that offers both out-of-court and court-based solutions for recovering unpaid debts. While amicable resolution is always preferable, creditors must be prepared to take legal action if necessary. By following the correct procedures, securing debtor assets, and working with qualified legal professionals, creditors can significantly improve their chances of successful debt recovery.
If you require assistance with debt collection in Bulgaria, our experienced legal team can guide you through every step of the process, ensuring a swift and effective resolution to your case. Contact us!
You can reach us at:
tel.: +359895443792
email: ivanov@bi-lawfirm.com