Debt collection/enforcement In Switzerland

1. a demand for payment with the possibility for the debtor to block the collection by filing an objection (so-called "legal proposal")

2. and the garnishment process itself.

The enforcement itself, called debt collection in Switzerland, is governed by the provisions of the Federal Debt Collection and Bankruptcy Act (SchKG).

In order to initiate a debt collection at the debtor's domicile or place of business, it is necessary to submit the claims stated in the title, converted into Swiss francs, together with the corresponding form "Betreibungsbegehren". It should be noted that in Switzerland there is no interest on arrears linked to the basic interest rate; the debt collection officials in Switzerland do not calculate this German title; creativity is required here in order not to waive interest claims.

The debtor is then immediately served with a so-called payment order, to which he can react in different ways. Either the debtor pays, or he files an objection (legal proposal) to defend himself against the claim, or he does not react at all. After a legal proposal, the debt collection cannot be continued for the time being; the disputed claim must be reviewed by the court (see below on the legal opening procedure).

If the debtor does not respond, the next step is to file a request for continuation in order to have the debt collected by the debt collection office. The SchKG provides two different procedures for this, depending on whether the debtor is a natural person (then seizure) or whether it is a company / natural person entered in the commercial register (then bankruptcy collection).

In the "debt collection for garnishment", the debt collection office, after determining the debtor's income and expenses, executes the garnishment of the initially calculated quota every month for one year, unless the claim has been collected in a shorter period of time. At the end of the garnishment year, a so-called certificate of loss is issued for any outstanding debt, which certifies the remaining debt, but stops the accrual of interest. From the certificate of loss, a new request for continuation can be made immediately within 6 months.

In the "debt collection for bankruptcy", the debtor company is given a final payment deadline of 20 days (bankruptcy threat) before the creditor is given the opportunity to apply to the competent court for the opening of bankruptcy proceedings against the company. In these proceedings, the creditor has to make a deposit, the amount of which is determined by the court, usually around CHF 2,000. Unused funds are returned to the creditor. After the approval of the bankruptcy, the bankruptcy office is from then on responsible for the execution.

If the exequatur is granted, the German decision is considered as documentary evidence of the legitimacy of the claim. The debtor can now essentially only object to payment, deferral or lapse of time, otherwise the court will cancel the legal proposal and the official debt collection procedure (Swiss Enforcement) can continue.

According to the SchKG, the debtor may not be charged the additional legal fees associated with the collection (enforcement in Switzerland). This is not the case under German law. Here, the costs of enforcement can be claimed from the defaulting debtor, if necessary as part of a claim for damages. These different legal situations allow some leeway in persuading the debtor to also pay the attorney's fees for the debt collection.

One way to check a debtor's creditworthiness is to request an extract from the debt collection register. This list shows the debtor's payment history and liabilities.