Debt Collection Strategies

23.12.2024

• 1. Notary’s executive inscription
• 2. Writ proceedings 
• 3. Simplified written proceedings
• 4. Conciliation procedures 
• Contact our legal team to learn more

Debt collection strategies are a set of methods and approaches aimed at recovering unpaid funds from debtors. In the context of an unstable economic situation and an increase in the number of financial conflicts, it is important for many organizations and individual entrepreneurs to effectively manage the collection process. This is especially true for those who face payment delays or defaults.

This article will consider several collection strategies that require an individual approach, but any collection takes place on the basis of a contract, accordingly, special attention should be paid to the contract.

When concluding a Contract, it is necessary to have an idea of how its content will allow you to develop the most effective legal position in a potential court session, even if in the near future the resolution of any disputes with the counterparty is not expected. 

It is at the conclusion of the Treaty that those key conditions, the so-called "traps" that bring victory in court proceedings, are identified and placed.

It is necessary to pay attention to such things as: the rights and obligations of the parties, the responsibility of the parties under the Agreement, the procedure for resolving disputes, and the applicable law.

Next, to strategies.

1. Notary’s executive inscription

An executive inscription is a notary's order to recover from the debtor a certain amount of money due to the claimant or to reclaim other movable property. This document has the force of an executive document, on the basis of which the creditors' claims are subsequently forcibly satisfied.

The main conditions for making an executive inscription:

1. if the submitted documents confirm the indisputability of the debt or other liability of the debtor to the recoverer;
2. if no more than 3 years have passed from the date of the right to claim (application).

This collection strategy has an advantage over others due to the speed of implementation. After the execution of the executive inscription, the notary hands over or sends a copy of it to the debtor no later than the next business day, the latter has the opportunity to send an objection to the stated claim within 10 business days and if there are no objections from the debtor, the notary issues an executive inscription to the recoverer, or, at his request, sends it for execution within the framework of the enforcement procedure.

For example, collection agencies often resort to such a strategy, given the large volume of the same type of indisputable cases. 

The main weakness of this strategy is the ease of canceling the executive inscription. Since, as our practice shows, in order to cancel an executive inscription, it is enough to send a written objection, expressing disagreement with the amount or circumstances of recovery, which guarantees an almost one hundred percent probability of its cancellation. Moreover, if the creditor managed to recover something from the debtor under the executive inscription, which was subsequently canceled, the creditor automatically has unjust enrichment and he and the debtor literally change statuses.

2. Writ proceedings 

This strategy already requires applying to the court with an appropriate application for a court order.

A court order is a judicial act that is issued in electronic form at the request of the plaintiff for the recovery of money or the reclamation of movable property from the defendant on indisputable claims, as well as at the request of the plaintiff for the execution of agreements concluded in the course of pre-trial settlement of the dispute in cases established by law or provided for by the contract, without summoning the defendant and the plaintiff to hear their explanations and without a trial.

A court order is mainly used to recover under agreements concluded as part of a pre-trial settlement of a dispute. For example, for the purpose of pre-trial settlement of the dispute, an agreement was concluded between the creditor and the debtor on the settlement of the dispute through mediation, according to which the debtor was given a deferral of debt repayment. However, despite the deferral of the debt, the debtor did not fulfill his obligations to repay it. In this case, the creditor has every right to apply to the court for a court order.

In terms of the terms of implementation of the court order, it is slightly inferior to the executive endorsement, the Court issues the court order within 3 working days from the date of receipt, the Defendant is given 10 working days to file an objection. However, it should be noted that it is more difficult to cancel a court order than an executive inscription. The court will consider the objection and the evidence attached to it, and if the evidence does not correspond to the arguments, set out in the objection, the Court will return the objection with the appropriate determination.

3. Simplified written proceedings

The following cases are considered in simplified written proceedings: 

1. on claims for the recovery of money, if the amount of the claim does not exceed two thousand monthly calculation indices for legal entities, for individual entrepreneurs, citizens – one thousand monthly calculation indices;
2. regardless of the amount of the claim for claims based on the documents submitted by the plaintiff establishing the defendant's monetary obligations, and (or) on documents confirming the debt under the contract.

The peculiarity of the consideration of cases in the simplified written procedure is the period of consideration equal to 1 month from the date of receipt of the case by the Court. Also, a feature is the consideration of a civil case without summoning the parties. The parties who do not agree with the consideration of the case in simplified (written) proceedings have the right within 15 working days from the date of receipt of the notification, submit to the court a petition for consideration of the dispute according to the rules of action proceedings in accordance with the general procedure, and the defendant shall submit a response (objection) to the claim with the attachment of documents and evidence.

The advantage of this strategy is the saving of time and effort, since the Court independently considers the case and as a result makes a full-fledged judgment. In the event that the Defendant sends his objection to the consideration of the case in a simplified written procedure, the trial does not end, but the Court proceeds to consider the civil case according to the general rules of action proceedings. 

Ideally, this strategy will help the creditor to recover funds without much difficulty. For example, the creditor can file a claim taking into account the consideration in simplified written proceedings, wait for the end of the consideration of the claim, obtain a decision of the Court and recover money.

4. Conciliation procedures 

The current legislation of Kazakhstan provides for the following conciliation procedures:

1. Amicable agreement;
2. Agreement on the settlement of a dispute through mediation;
3. Agreement on the settlement of a dispute through a participatory procedure.

The parties are invited to resort to one of the procedures in the process of conciliation immediately after the receipt of the claim by the Court, as well as at all stages of the process.

The Court's eagerness to reconcile the parties is due to the Court's positioning as a body that brings the parties to the truth and reconciles them. 

It would seem, why are conciliation procedures on a par with collection strategies? But resorting to these procedures on favorable terms for yourself is a good debt collection strategy. 

The thing is that within the framework of the consideration of a civil case, any conciliation procedure must be approved by the Court. After the conclusion of an agreement on the settlement of the dispute within the framework of the conciliation procedure, the Parties send copies of the signed agreement to the Court. After that, the Court approves the signed agreement with the relevant ruling. From this moment, the court proceedings end, the state fee is returned and, most importantly, in case of non-fulfillment of the terms of the agreement by one party, the other party can apply to the Court for its enforcement. In this case, the applicant will immediately receive a writ of execution, skipping all the borderline stages of the trial. 

This is the value of this strategy. For example, the Creditor applies to the court with a claim to recover the amount of debt from the Debtor. In the court session, the Debtor, referring to the difficult financial situation, asks the Plaintiff to approve the debt repayment schedule by entering into an amicable agreement. The Plaintiff agrees, the parties enter into an amicable agreement and the Court approves it. As soon as the Debtor violates the terms of the debt repayment schedule approved by the settlement agreement, the Plaintiff immediately applies to the Court with a petition for the issuance of a writ of execution and then collects the entire amount of the debt from the Debtor, but already in a compulsory manner.

Author: Alibek Slan

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