DEBT COLLECTION IN FRANCE: LAW FIRM OR DEBT COLLECTION AGENCY?
Pursuing debt collection proceedings in France typically requires the involvement of a specialized third party actor.
The first step to recovering your debts is therefore to make the decision between hiring a debt collection agency and a lawyer specialized in debt recovery claims. In France, your first question should be whether you are comfortable turning to the Courts. French debt collection laws have a strict policy of attempting amicable settlement of disputes before looking into legal action.
Both debt collection agencies and law firms take on the role of third party actors in debt collection claims.
A debt collection agency focuses exclusively on recovering your payments from you defaulting debtors. However, they are not specialized in the country’s legal process. In this way, an agency will turn to a specialized lawyer at key points in the procedure. This creates a pyramid between you, your agency and the attorney hired.
A law firm specialized in debt collection proceedings is familiar with the complexities of the French legal system and is able to offer you a variety of solutions. Hiring a law firm gets rid of the middle man and establishes a professional and emotionless mode of contact with your debtor. In France, your collection attorney will be brought to reach out directly to your debtor in an initial attempt to recover your payments amicably.
French debt collection is highly regulated as it involves interested third party actors in complex legal proceedings. These laws are meant to balance out the protective measures against abusive collectors and the necessity for the financial security of foreign creditors.
These laws regulating debt collection in France should allow foreign creditors to rest easy in regards to their investments abroad. Hiring a collection attorney is an important first step in your debt collection process first and foremost as a show of strength. A lawyer’s involvement in your case is often a catalyst for overdue debtors with an increased level of pressure applied by the attorney.
A foreign creditor in France should strongly consider hiring a French lawyer capable of
understanding the ins and outs of the country’s legal system. This will reduce the chances of misunderstanding between your attorney, the defaulting debtor and the courts and increase your chance at a cost-efficient recovery of payments. A French lawyer’s familiarity with the industry and its legal traditions will allow for a successful background for a quick and easy recovery of your debtor’s unpaid dues in France.
In the unfortunate event that your French debtor is late in paying you back, your law firm of choice has a tool-box of efficient legal mechanisms to recover these debts.
As mentioned above, amicable settlement of dispute should be the first card played by your lawyer. In France, the formal demand letter (« la lettre de mise en demeure ») represents the point at which your debtor has legally defaulted in their payments. The date at which the letter is received by your debtor will serve as the Court’s reference for judgement (in the event that your case is brought to trial).
Following these attempts at contact between your lawyer and your debtor, the next step should be to file for an Interim Injonction Order. This extrajudicial measure will freeze your debtors concerned assets, without previous warning, in an attempt to limit the possibilities for insolvency proceedings or a reorganization of finances. This procedure essentially creates a security around the debtor’s existing assets and sets a 30 days term for the onset of the creditor’s legal proceedings.
If all else fails, your lawyer will recommend you take strictly legal action and involve the Courts.
There are three ways you can do this depending on the nature of your claims.
The first measure, the Order for Payment Proceeding is both cost and time efficient. Your lawyer will file a request for the Courts to issue an immediate order for payment in a simplified judicial procedure. The inevitable catch is that it is only available in the rare occasion that your claim remains uncontested by your debtor in its existence and amount.
The second, Summary Proceedings, involves an expedited judgement from the judge. Requesting summary proceedings allows the Courts to bypass typically lengthy hearing and grant you an expedited decision. This measure is applicable under the circumstances that your claim fulfills all three of the following conditions: The issue must be an expression of urgency and be either (2)
absent a valid challenge or (3) justifiable through the existence of a dispute.
Lastly, if your claim is likely to be challenged by your debtor and absent any qualifications of urgency, your lawyer will open Ordinary Civil Proceedings. These cases are typically reserved to claims with inherently complex merits as they require a lengthier judgement period from the Courts.
The judges are brought to rule both on all aspects of your case.
For further information on debt collection in France see our Practical Guide on Debt Collection Proceedings These different measures are available to both french and foreign creditors alike, but it is important to keep the country’s strict statutes of limitations in mind. Under French debt collection laws, the statutes of limitations for pursuing legal action against a defaulting debtor is limited to 5 years for commercial entities and 2 years for consumers. Once these delays have passed, the debtor can no longer be held liable for these unpaid dues.
For further information on the question, see our Q &A on statutes of limitations and debt collection in France.