Blog » 3 KEY CHANGES IN HUNGARIAN DEBT COLLECTIONS FROM 2018
3 KEY CHANGES IN HUNGARIAN DEBT COLLECTIONS FROM 2018
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!
Mandatory 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
CAN YOUR DEBTOR ESCAPE LIQUIDATION BY SETTING OFF CLAIMS IN HUNGARY?
The initiation of a liquidation procedure is an effective debt collection method, since the debtor may only avoid being liquidated by paying the claim if the conditions specified in the Act on Bankruptcy Proceedings and Liquidation (Bankruptcy Act) are met. For this reason, in the case of liquidation, one of the most common defences of the debtor is the reference to offsetting. But can the debtor refer to offsetting without limitation during liquidation? In our short article we answer this question.Read more »
SZIGET FESTIVAL FINED RECORD HUF 30 MILLION FOR GDPR BREACHES – WHAT WENT WRONG?
A few days prior to the first anniversary of the entry into force of the GDPR the Hungarian Data Protection Authority imposed the biggest data protection fine in Hungary so far. The target was the biggest Hungarian festival organizer company thanks to whom the public may enjoy the SZIGET, the VOLT or the Balaton Sound Festival. The Data Protection Authority reviewed the check-in system of the festival and the data processing in relation with the check-in. In our short article we summarize the mistakes the Authority identified.Read more »
CONSTRUCTION TRUSTEESHIP IN HUNGARY - GETTING PAID IN CONSTRUCTION PROJECTS AS SUBCONTRACTOR
Construction trusteeship, as mandatory collateral management of major private construction projects in Hungary, strives for protecting subcontractors against non-paying general contractor, by allowing direct payments from employer under certain conditions. How does it work in practice and what are the limits of subcontractor protection? We address these issues in this article.Read more »