Blog » DEBT COLLECTION IN HUNGARY -3 REASONS TO HIRE A LAW FIRM INSTEAD OF COLLECTION AGENCIES
DEBT COLLECTION IN HUNGARY -3 REASONS TO HIRE A LAW FIRM INSTEAD OF COLLECTION AGENCIES
24 July 2019
One of the annoying things in business is when your invoices are not paid by your business partners. After getting bored of their excuses, there comes a time when you have to put pressure on your debtor. At that point, you either entrust a law firm or turn to one of the many debt collection agencies offering “simple and cheap, yet efficient” solutions. Are the latter solutions really that effective? Is it worth entrusting a debt collection agency in Hungary? In our article, we bring up three reasons why hire rather a law firm in Hungary instead collection agencies.
1. Agencies cannot represent you in legal procedures
The main problem with such agencies is that they cannot represent you in legal procedures, thus their service has minimal added value.
Basically, they can do the same as you: sending a notice letter. If we consider Hungarian legal procedures, you will need a legal representative in all cases. In liquidations, or litigations with higher value legal representation is compulsory by law. In the rest of the cases, legal expertise and technical background is also needed, so in the end, the case will definitely land on a lawyer’s desk. With this in mind, let’s jump to the next point.
2.Why would you need an unnecessary middleman?
As said, it is very likely that a debt collection agency will hand over your case to a lawyer after an unsuccessful notice letter. If so, why would you insert a middleman who takes a cut from the fee without adding any value? Shouldn’t you rather invest the share of the agency in professional legal services?
Not to mention, that it is much more favourable for you if you can communicate with the same person throughout the procedure, who understands your case from the beginning.
3.Legal expertise throughout the process
If the recovery of the debt is important for you, why would you wait months until the agency hands over your case to a lawyer to start the legal work? In fact, your case should be assessed by a lawyer at the beginning, so you can make your decision based on the advice of a legal expert, not based on frivolous promises such as “our agency has 90% recovery rate”.
Finally, we would like to recall an instructive story from our experience: a person entrusted an agency to recover a debt. Although the agency managed to recover a part, but it came with a price: the agency concluded an agreement containing that “the creditor waives all future claims and considers the accounts settled”.
When the person later started litigation against the debtor on the same grounds, unluckily for him, his claim was dismissed because of the unfavourable agreement the collection agency concluded on his behalf. We don't think any law firm would waive your rights just to close the case as soon as possible.
In conclusion, you should carefully consider choosing an agency, because once legal work is needed, the case will be taken over by a lawyer anyway. If so, we think it is better investing the agency’s fee in professional services from the beginning and having your case handled by a legal expert during the entire process.
DOES THE LACK OF HANDOVER MAKE THE DISMISSAL UNLAWFUL IN HUNGARY?
Whether the lack of handover makes the dismissal unlawful based on the recent judgment of the Hungarian Supreme Court? What happens in case the employee fails to take over the dismissal? We address these issues in our article by analysing a recent judgment of Hungarian Supreme Court.Read more »
UNPAID CAPITAL CONTRIBUTION IN A HUNGARIAN LLC? HOW TO SOLVE THIS PROBLEM?
The „start-up capital” of the limited liability company is the initial capital which is the totality of the capital contributions provided by the shareholders. Since the shareholders may declare that the capital contribution shall only be provided after the establishment of the company in a later date, the painful situation might occur that the shareholder does not provide or only partly provides the capital contribution. Given that this may create unwanted consequences, the settlement of the capital-related problem is the common interest of the shareholders. In this article we summarize the possible methods to solve this issue.Read more »
COVID-19 BRIEFING – RESTRICTIONS ON NON-EUROPEAN FOREIGN INVESTMENTS IN HUNGARY
After the bill, passed in 2018 on restrictions of foreign investments, Hungary further limits the domestic investments of the foreigners because of the COVID-19. The new decree extends the scope of the investments to be notified and introduces fines, too. We explain the most important provisions of the decree in this article.Read more »