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  1. Debtors
  2. Glossary

Find out what debt collection terms actually mean

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Account management fees

Are the costs incurred in managing an account. Under Czech law, these cannot be claimed against the debtor unless agreed with the debtor.

Acknowledgement of debt

The acknowledgement of debt confirms an existing debt. It presupposes that the parties are agreed on the contractual obligations and want to avoid a dispute in this respect.

Agreement on wage deduction

In principle, anyone who lends money to a can have the debtor sign an agreement on wage deduction. Banks may require borrowers to sign deduction agreements as security on consumer loans. If the creditor is not the employer of the debtor, the employer must issue a prior consent with conclusion of the agreement. If the debtor then fails to make the agreed repayments, the creditor can send the deduction agreement to the debtor´employer and request payment of the attachable amounts (the individual deduction cannot be higher than 50% of the debtor ´s wage). Unlike attachment of earnings, the creditor does not have to have legal title in the event of wage deduction. 

Appurtenances of the Principal claim

The appurtenances includes among others the interest on the principal claim. It may also include any contractual penalties or other payment concluded in an agreement under which the claim has arisen. 

Assignment

Assignment allows a Creditor to assign an outstanding receivable to another person. So the creditor transfers the outstanding receivable to EOS. From that point on, EOS, as the creditor, is responsible for collecting the debt.

A legally effective assignment presupposes a corresponding agreement between the assignor (assigning party) and the assignee, i.e new Creditor.

Attachment of bank accounts

Attachment of bank accounts is the seizure of the debtor’s bank account as part of enforcement measures. Attachment of debtor’s bank accounts is done via an attachment and transfer order application submitted by the creditor to the court responsible. The place where the debtor’s account is held (bank) is served in its capacity as the garnishee. Apart from the debtor’s current account other assets such as savings accounts and savings certificates may also be seized.

Attachment of earnings (from wages or salaries)

In the event of attachment of wages or salary, debtors are left with a monthly unseizable minimum. Attachment of earnings is one of the most frequently used means of enforcement. By means of attachment of earnings the creditor is able to gain quick access to the source of the debtor’s income. Attachment is conditional on the claim being legally titled.

Creditor

A creditor has claims against a debtor or several debtors. If, for example, you ordered clothes from a mail order company, then this mail order company is your creditor.

Debt purchase

Debt purchase is when the Creditor sells his claims including all rights and responsibilities to a collection company, for example. Debt purchase refers to non-performing (outstanding debts that have not been collected despite dunning and are not already titled) or debts that are already titled and non-sueable. This means that the original creditor no longer has to worry about collecting his debts and that we can work together with you to find suitable solutions tailored to your circumstances.

Debt settlement arrangement

A debt settlement arrangement is an extra-judicial proposal in which the debtor offers his/her creditors a debt settlement plan (plan of how the debts will be paid off).

Deferment

Deferment refers to the granting of a deferment of payment by the creditor.

Electronic payment order/ Payment order

If a payment request is not fulfilled by the debtor within the given period of time, a request for issuance of an electronic payment order / payment order can be made to the respective court. If all conditions for its issuance are met, the electronic payment order / payment order is issued by the respective court and sent the debtor. The debtor has 15 days to fulfil the obligation set out in the electronic payment order / payment order or to file a dissent against it. If not, the electronic payment order / payment order becomes legal and binding, i.e. becomes an enforcement title.

Enforcement measures

Activities to force payment of the debt with the help of the justice system.

Enforcement order

An enforcement order is a decision of the enforcement officer (issued after the enforcement court´s consent) sanctioning the respective assets.

Enforcement proceedings

Within the enforcement proceedings, the enforceable right of a creditor is applied and bindingly enforced against the respective debtor. Satisfaction of the creditor´s claim is realised by an enforcement officer (or court) from assets of the debtor.

Before the enforcement proceedings (and seizure of the assets based on the individual Enforcement orders) can proceed all requirements for enforcement must be met:

  1. An enforcement (legal) title against the respective debtor must be obtained.
  2. A request for initiation of the enforcement proceedings must have been made by the creditor Through the enforcement officer.
  3. Issuance of enforcement court´s consent with the enforcement proceedings.
Enforcement title

Final and binding court or arbitration decision or other title considered as enforcement title is legal basis for enforcement measures.

Insolvency proceedings

Insolvency proceedings are instigated if a business or private individual is unable to pay debts.

The purpose of the proceedings is for the court to distribute the remaining (material) assets equally among all creditors or to make arrangements to secure the company’s existence under the supervision of the court. Once insolvency proceedings have started it is no longer possible to take enforcement measures against the insolvent debtor. Moreover, the insolvency schedule is the title (debt instrument) that applies to the insolvent debtor on conclusion of the insolvency proceedings.

Insolvency schedule

As part of the insolvency proceedings, the insolvency administrator has to enter all claims registered by the creditors into a table, specifying the reason for the claim the sum involved and its attitude towards the claim (acknowledgement or rejection).

Instalment agreement

An instalment agreement is an agreement to pay off an obligation in instalments over a period of time. We can define these instalments so that they meet your individual circumstances and are realistic.

Management of claims and their collection

Management of means that EOS is not a creditor of the debts being under its management but provides with a services to the respective creditors consisting mainly in collection of such debts in the name and to the account of such creditors. The original creditors remain both legal and beneficial owners of the debts.

Non-performing receivables

Non-performing receivables are debts that have not been collected despite dunning and have not yet been legally titled.

Principal claim

The principal claim refers to the payment that the debtor owes a creditor as a result of an obligation (e.g. contract). The principal claim consists of the receipt value of the claim, any subsequent balance reported by the client and the credits (payments) to the account receivable.

Receivables breakdown

The receivables breakdown lists the individual elements of the entire amount due so that you can see how your debt is made up.

Request for payment

The request for payment is sent to the respective debtor before initation of the enforcement proceedings before the courts. The payment order must be equivalent to claim being subsequently sough in the court proceedings. The request for payment asks the debtor to pay the claim including all appurtenances within a certain period of time.

Security assignment

Transfer of a claim for security reasons only; the new creditor can exercise the right to the assigned claim (i.e. to sue or enforce it) only if its obligation secured by the fiduciary assignment has not been fulfilled.

Settlement

The settlement is an agreement through which the dispute or uncertainty between the parties is resolved by means of a compromise.

The financial situation

This is a set of documents outlining the debtor’s financial situation and the factors preventing them from meeting their obligations in adequate terms.

Proof of income – Payslip, pension slip, proof of welfare benefits or acknowledgement of these benefits.

Proof of expenditure – Rent, SIPO (direct debit of multiple payments)/utilities, debts and seizures (the debtor should not only submit details of contracts and arrangements but also documentary proof of these – postal orders, bank statements, etc.). Legible copies of the originals of all these documents are sent by the debtor for the period covering the previous three months. If the debtor submits the financial situation with the assumption of a temporary status (welfare benefits), we agree on instalments only for the period corresponding to the assumption. See documents where the documents will be scanned.

Titling

Only a legally titled claim has formal legal force. It confirms the creditor’s claim against the debtor. Depending on a law governing the respective claim a titled claim is legally inforceable for (i) 10 years if governed by Czech Civil Code or by Czech New Civil Code, or (ii) various periods of time depending on the speed of the proceedings leading to issuance of the enforcement title (however, in any case, not less than 3 months from issuance of the final and binding decision), if governed by Czech Commercial Code. The titling of a claim is achieved by means of litigation or arbitration procedure or entering into a direct enforcement notarial deed. 

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