Dealing with Debt Collection in France

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debt collection in france

A Five Step Process to Recovering your Debts in France

French debt collection agencies are particularly prevalent due to the country’s strong economic dependence on Small Businesses and Medium enterprises. Recovering business-to-business debts (B2B) takes on considerable importance for debt collection attorneys across France.

Contracting out your debt collection affairs to a French third-party Agency will reinforce your chances at recovering your unpaid by limiting the potential for miscommunication. However, debt collection is a highly regulated field of law with specific measures having been taken to limit the potential for unprofessional debt collection services. 

Under French debt collection laws, proceedings must always begin with an initial attempt at amicable settlement. Litigation comes secondary and can only be initiated after sufficient efforts have been made to recover your debtor’s unpaid dues (i.e. formal demand letter, interim injunction order). To speed up this process you may choose to hire an experienced French law firm

Debt collection attorneys in France have a five-step process to establish their plan of action when looking to recover your debtor’s unpaid dues. Each new measure attempted calls on increased costs and additional time. 

Debt collection in France:  breaking down the different procedures and judicial measures made available to creditors in France.

Step 1: Your lawyer will send a formal demand letter to your debtor (‘la mise en demeure’)

***Expert tip: Always register your mail at the post office

 Your debt collection case begins from the moment your debtor receives this formal demand letter and is properly notified of your intent to take legal action. Your attorney will want to include the following: a formal demand of payment, a strict timeline as well as a written reminder of the amount due. Registering your mail is an essential step in France. This letter is a final reminder to your debtor and a necessary starting point in order to properly initiate legal proceedings. 

Step 2: Your lawyer will pursue an amicable, but emotionally detached, settlement between debtor and creditor 

Once your debtor has properly received your formal demand letter your lawyer will begin by contacting the opposition party. All necessary steps should be taken before entering litigation as legal action is costly in both money and time. The possibilities for amicable settlement of debt collection disputes in France involve most often mediated encounters between both parties and their chosen legal representatives. 

If, however the mediation fails your debt collection agency will attempt the following:

  • Propose to your debtor secondary remedies (typically through the Courts system). 
  • Invoke legal action
  • Involve a bailiff 
  • File for an interim injunction order from the Court

Step 3: Your lawyer will file for an Interim Injunction Order from the Courts

An interim injunction order is a provisional measure taken before entering trial. It represents a guarantee for the creditor (freezing order or ‘saisie conservatoire’) freezing your debtor’s assets and protecting the creditor from unwanted insolvency proceedings or re-organization while the trial and judgement await. An interim injunction order means the debtor is no longer able to access the assets implicated in the debt collection claim until the Court has issued a judgment. The creditor has 30 days, from the Order, to take legal action.   

Step 4: Your lawyer may choose to enter into judicial proceedings 

When methods of amicable settlement prove insufficient to your debt collection agenda your lawyers have all of three options to pursue legal action. 

**A fourth option is made available at the European level (EPO). 

It is to be noted however that debt collection laws in France are extensively regulated. The French Code of Civil Procedure (CPC) is the primary body of legislative text on the matter. It lays out the following three procedures for debt collection in front of the Courts. 

  • Order for Payment Proceedings (‘Injonction de Payer’)

An order for payment proceedings is the cheapest option available to you as a creditor looking to pursue legal action against your defaulting debtor. While the procedure is cost and time efficient it can only be used in cases of undisputed claims. The French collection lawyer will pursue a simplified judicial procedure that is likely to take less time in court. 

  • Summary Proceedings (‘Procedure de refere’) 

Very often, the claim you are requesting from your debtor is going to be challenged, either in existence or in its final sum. If this is the case, your debt collection attorney will typically turn to a second and request a summary proceeding. This is a popular method as its provides for an expedited judgment by the courts by bypassing the otherwise lengthy hearing. 

However, summary proceedings have three essential conditions for applicability: element of urgency, be either (2) without valid challenge or (3) justifiable through dispute. 

Courts may find the presence of relevant dispute on the claims sufficient reason to open civil proceeding (‘procedure au fond’

  • Ordinary Civil Proceedings (‘Procédure au fond’) 

Ordinary civil proceedings are typically opened in cases where merits are complex and absent any urgency. The judge rules on the procedural and legal aspects of the case. Ordinary civil proceedings are a more complex procedure and costlier measure than the above-mentioned alternatives. It is most useful in cases where the debtor contests the actual existence of the claim instead of its final sum or due date. 

It is important to pay attention to the statute of limitations in France. For debt collection claims they are limited to 5 years for a commercial entity and 2 years for consumers. 

  • European Order for Payment Proceedings (‘L’Ordonnance d’Injonction de Payer Européenne’)

In the case of an undisputed cross-border claim your lawyer may choose to invoke a European Order for Payment (EPO). This option is low-cost and has been made available to all European citizens, with the noted exception of Denmark. It stands as a cost-efficient alternative to the complications of litigation in cross-border debt collection claims and has been designed to function conjointly with the court systems of member states. 

The relevant court is seized and must issue within a 30 day delay an EPO, enforceable across member states. The order is enforceable unless the debtor has filed for an appeal within the dedicated time limits. 

Step 5: Get your money back

Under French debt collection laws and procedures, it is recommended to involve a bailiff who will be made responsible for seizing your debtor’s assets and enforcing the court’s judgement.

Cross jurisdiction and International Debt Collection is far more challenging for obvious reasons. But, with the right resources this challenge can be simplified.

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