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  • Writer's pictureBarbora Karetová

Cash Collection in the Czech Republic: Basic Overview

Updated: Sep 24, 2023

Understanding the legal procedures and options available under Czech law is essential for a successful outcome of any debt collection. This article provides an overview of the key aspects of cash collection for expats in the Czech Republic.


Formal Legal Letter

Initiating the cash collection process typically begins with a formal legal letter to the debtor. This letter should outline the debt's details, including the amount, due date, and consequences of non-payment.


Initiation of Court Proceedings

Should the debtor fail to respond or settle the debt after the formal letter, legal action may be necessary. This typically involves filing a lawsuit with a Czech court.


Jurisdiction

If the debtor's seat or domicile is in the Czech Republic, in most cases the local Czech court will have jurisdiction over the case.


Court fees

When a lawsuit is filed, a payment of court fee will be requested by the court. The fees are based on the claim's value and usually amount to 5 % of the amount sued. These fees are typically borne by the plaintiff (the party initiating the legal action) but can be recovered from the debtor if the court rules in favor of the plaintiff. In some instances, fee waivers or reductions may be granted to individuals with limited financial means.


Standard Court Proceeding

The defendant, or debtor, is served with a copy of the claim and given a specific timeframe to respond. The court will then schedule hearings where both parties present their arguments and evidence. The court will issue a judgment based on the merits of the case. If the debtor is found liable, the court will order the debtor to pay the debt along with court fees and legal fees.


Alternatives to Standard Court Proceeding


Payment Order

For straightforward cases, a payment order can be requested from the court. If the debtor does not contest the order within 15 days, it becomes enforceable.


Electronic Payment Order

For claims up to 1 000 000 CZK you can submit an electronic payment order, reducing the need for physical presence in court. Similarly to Payment Order, if the debtor does not contest the order within 15 days, it becomes enforceable


European Payment Order

European payment order is relevant in cross-border cases within the European Union. It simplifies the process of obtaining an enforceable payment order in different EU member states.


Settlement Agreement

At any stage of the legal process, parties can opt for a settlement agreement to resolve the matter amicably. This may involve negotiating a payment plan or reduced amount, and once agreed upon, it can be legally binding. It is advisable to have a legal professional draft the settlement terms to ensure their legality and enforceability.


Conclusion

In conclusion, cash collection in the Czech Republic involves a structured legal process with several options to explore before resorting to standard court proceedings. Consulting with legal experts experienced in Czech law can provide invaluable guidance throughout this process, ensuring a smoother path to resolving debt-related issues.


Need More Information?

For more information please contact us via e-mail info@expatlaw.cz

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