05 February 2018

From 2018 the small claim collection rules are changing in Hungary, and foreign creditors must comply with residency conditions so that they can start payment warrant procedure. At the same time, businesses do not have to waste time before starting litigation. Read our summary to know more on this topic!

3 KEY CHANGES IN HUNGARIAN DEBT COLLECTIONS FROM 2018Mandatory Payment Warrant Procedure up to HUF 3 Million

From 2018 the Payment Warrant Procedure (PWP) becomes mandatory for monetary claims not exceeding HUF 3 Million. So in case your claim is less than HUF 3 Million, you have to start your case in front of the notary public, and request the payment warrant.

The PWP is not compulsory, but it is still an option for claims between HUF 3 Million and 30 Million HUF. In these cases you can choose between starting your case in front of the notary public, or in front of the competent court.

If your claim is above 30 Million, the payment warrant procedure is not an option anymore, so you can go directly to court.

Residency condition for Payment Warrant Procedure

From 2018, not only the debtor, but also the creditor must have its registered seat (commercial representation or financial branch office) in Hungary, in order to be eligible for starting payment warrant procedure.

When it comes to private individuals, the address or habitual residence of both the creditor and debtor must be in Hungary.

In case you are a foreign business, without any kind of commercial representation in Hungary, you can not opt for the Payment Warrant Procedure, so you must either start litigation, or you can try the European payment order procedure.

No more mandatory conciliation before litigation

Earlier, businesses had to try to conciliate among themselves, in order to find an out-of-court settlement. So before starting litigation in front of court, plaintiffs had to send a notice letter to debtors attempting conciliation and settlement.

From 2018, there is no more need to send a legal notice letter to your debtor before suing him in front of court, and if you think that attempting an out-of-court settlement is just the waste of time, you do not have to do this.

Summary of debt collection procedures in Hungary from 2018

If your Hungarian business partner owes you money, your options as creditor are summarized in the table below