Working or operating a business in Sweden offers stability, however, there are cases in which things do not go as expected and the lack of money to pay various amounts of money in the form of bills or invoices can cause financial problems that end up in debt recovery procedures. Debt collection in Sweden is governed by the Debt Recovery Act which regulates the way in which outstanding amounts of money can be recovered.
When dealing with bad payer, no matter if this is a person or company, the support of a law firm can make the difference between success and failure for both the debtor and the creditor. By operating in a well-regulated environment, our Swedish lawyers can find a suitable solution that works for both parties.
Table of Contents
Types of debt collection procedures in Sweden
Debt collection in Sweden can be summed into two procedures that have different stages. These are:
- the amicable debt recovery procedure;
- summary debt collection procedures;
- court debt recovery proceedings.
The selection of the procedure usually depends on the creditor, however, it is common for creditors to use amicable ways of recovering outstanding amounts, especially in the case of first-time failure of complying with payments. Also, the chosen method depends on the amount of money to be recovered.
Our law firm in Sweden can provide detailed information on the Debt Recovery Act and its provisions.
General aspects regarding debt collection in Sweden
A debt collection process in Sweden is often effective because of an internal system well tuned and because of a debt collection bureau that will provide information on the debtor’s assets.
You can start the debt collection procedure in Sweden by sending the debtor a four days notice period in which it must be specified full information about the creditor’s identity, information about the debt, for example de amount, the interest rate, and the consequences of not paying the debt in the specified time, for example further costs and forwarding the case to the competent authorities.
Our lawyers are at the service of those intersted in setting up a company in Sweden.
The creditor may bring the case before a Bailiff who will issue a payment order when the debts are proven and when the debtor does not dispute the debt. The document issued by the bailiff is enforceable and equals a court judgment.
The debtor has the right to dispute this decision, situation in which the case is transferred to a trial procedure.
When the case is transferred into a regular lawsuit, the first phase consists in a pre-trial procedure in which both parties exchange letters and statements until the court considers having enough information to judge the case.
Both parties will be summoned in a court hearing where the judge will analyze the documentation and the statements and will schedule a date to issue the decision. Both debtor and creditor will be informed in written about the Court’s decision. When one of the parties does not honor the Court hearing the case can be judged by default.
If the Court decision is taken in the creditor’s favor, the document becomes enforceable and the creditor can access further measures in order to recover the debt. The most common and effective method for recovering the debt is by wage retention and the interest is calculated in accordance to base rate set by the Swedish National Bank and an additional 8% on a daily basis.
The basic cost is not high for the collection file, however to it other fees for the court procedure must be taken into account, calculated in accordance to the amount of money to be recovered. The total costs are hard to be estimated as for each step you are charged with a certain fee.
Usually the judge decides to charge the costs to the debtor, thus the costs can be recovered by adding them to the initial claim.
The expected time for a debt collection procedure is 12 month, but it may last longer, depending on the case and on the court’s availability
The amicable debt collection procedure in Sweden
In Sweden, creditors are usually companies (financial institutions, but also commercial enterprises) that have natural persons or other businesses as clients and from whom they no longer receive payments.
According to the Debt Recovery Law, creditors can take various measures to make the debtors pay, among which sending them several letters or emails demanding for the payment to be made. However, all correspondence must be accompanied by proof of the due amount (invoices or any other documents).
At first, creditors can try to recover them due amounts themselves, however, they can also use the services of debt collection agencies or law firms in Sweden.
Because of the law that provides for respecting specific rights, such as the General Data Protection Regulations (GDPR), using the services of a Swedish law firm is usually recommended, as protective measures that do not violate debtors’ rights are always taken.
Our lawyers, for example, can handle the entire procedure by following the steps below:
- try to contact the debtor by phone and inform them about the due amount to be paid;
- sending out up to 3 dunning letters informing the bad payer about the debt;
- if the debtor fails to pay, all proof of trying to contact them will be sent to the Enforcement Agency for a summary action;
- in case all these procedures fail, court proceedings will be commenced by our lawyers, at the request of the client.
Amicable debt collection in Sweden is often the choice of many companies as most debtors reach agreements that are mutually beneficial and enable them to pay their debt without legal consequences.
Our lawyers are at your service if you want to start a business in Sweden.
Summary debt collection in Sweden
If for some reason, the amicable procedure does not work, a creditor can file a request with the Swedish Enforcement Authority which is a state-owned agency that can handle dent recovery procedures.
Our lawyers in Sweden can start the procedures with this agency in order to help with a quick debt collection process. According to the law, after 12 days from the last dunning letter, which in this country is called Letter Before Action, a request with the Enforcement Authority can be filed against a fee.
The Authority will record the debt which will have a negative impact on the debtor’s credit score and will no longer enable him/her or the company to access loans or other types of financing options. If this method also fails, court proceedings will be next.
Our lawyers are at your service if you want to chase a bad payer in court. We can offer tailored advice in debt collection in Sweden.
We are also at your service with virtual office services in Sweden.
Enforcement of a Court Decision in Sweden
In Sweden the enforcement is regulated by the Debt Enforcement Code (utsökningsbalken) and defines the action carried out by a competent authority in respect to a decision issued by the court or other document agreed by the law. From the enforcement actions, the seizure of assets and sequestration represent special measures, under the label of precautionary measures (säkerhetsåtgärder).
In Sweden, the following represent enforcement orders:
- court decision or ruling;
- settlement that is ratified by the court and mediation agreement which has been declared enforceable by the court;
- approved fine order;
- documents issued by administrative authority which, under special regulations, may be enforced ;
- certain acts that according to special regulation may be the basis for enforcement;
- European order for payment which has been declared enforceable by the Enforcement Authority.
In the presence of an enforceable document, the creditor does not need other action to put in force the document’s provisions.
The bailiff is the entitled authority to apply the law on the basis of an enforcement document. The bailiff works under the rulings established by the law, with the main purpose of carrying out the procedure until the claim is fulfilled, but he does not work in one party’s favour or service.
The bailiff’s main responsibilities consist in gathering information about the debtor, drawing up a list with the debtor’s assets, arrange the assets in a priority list and taking further actions for recovering the debt.
When a creditor posses a document which do not represent the basis for enforcement, he may ask the enforcement before the Enforcement Office in Sweden, which analyses the case and, if eligible, transfers the document into an enforceable one.
For this action the state imposes a fee of 1,000 SEK and in some certain conditions the person that requires the document must pay a basic fee of 500 SEK.
Once the enforcement document is served, the debtor may no longer dispose of his assets until the end of the procedure.
The bailiff asks the debtor about his personal assets, including movable, immovable goods and money, as well as goods joint with third parties.
When a bank institutions stands as a third party, the bailiff sends an official notification with the debtor’s situation. From that moment on, the bank blocks the debtor’s account and any payment honoured from his account is considered invalid.
Any action taken by the debtor against the bailiff’s instruction may be charged with a fine or considered criminal offence, for example not giving the proper and complete information or selling the goods while the enforcement is still in force. The bailiff can and will apply all the measures provided by the law in order to recover the debt, firstly by attachment procedure, instalment payments from the debtor’s wage and finally by selling the debtor’s assets.
Seizure of Assets in Sweden
The procedure of seizure of assets in Sweden is considered a precautionary measure, carried out by a bailiff, through the actions provided by the law. Firstly, the debtor can no longer take advantage of his goods until the procedure is closed and the entire claim is paid. Failure to comply with the indications given by the bailiff is considered penalty in Sweden and it is punished with a fine and in serious situations with imprisonment.
All the debtor’s assets can make the subject of seizure, including movable and immovable goods, monies, real estate, shares or other similar goods. As a general rule, the assets must have a money value, must be in the debtor’s property and must be transferable.
However, the Swiss law provides certain categories of goods that can not be seized, for example:
- clothing, footwear and other goods of personal use;
- household, furniture, minimum equipment needed to maintain a modest life-style;
- tools and equipment needed by the debtor in conducting his regular work;
- items closely related to the debtor’s personality, for example medals, correspondence, trophies.
The law also provides special cases when an asset can not make the subject to the seizure procedure, for example damages received. When the debtor receives such compensations, the bailiff may not seize this sum when the compensation aims the recovery of the debtor.
What to consider about debt collection in Sweden?
If you need guidance on debt recovery in Sweden, our law firm can assist with court proceedings with one of the courts that fall under the organization of the Swedish government.
Here is a timeframe for debt collection in Sweden:
- the procedure can begin after registering the failure of payment;
- a creditor can send up to 3 dunning letters;
- the Letter Before Action can be sent 7 to 10 days before filing the petition with the Enforcement Authority;
- if the debtor fails to pay within 12 days from the Letter Before Action, the Enforcement Agency will start the collection process.
For assistance in debt collection, please contact our Swedish law firm. In addition to debt collection, our lawyers can also offer you legal assistance in other matters. For instance, if you incorporate a company but are unable to understand the Swedish accounting requirements, the services of our CPA in Sweden are at your disposal. In addition to handling taxes and records, accountants help customers with their businesses by identifying problems that limit profitability and development. Furthermore, retirement planning, business evaluations, and computer system consulting are among the offered services.