Debt Collection in the Czech Republic: the route depends on how the debtor responds

The limitation period is three years (§ 629 Civil Code) and runs from the day on which the right could be exercised for the first time (§ 619 Civil Code) – for an invoice, usually from the day after its due date. It does not run if the creditor asserts the right in court within the limitation period and duly pursues the proceedings (§ 648 Civil Code). If the debtor acknowledges the debt in writing, the right becomes time-barred only ten years after the acknowledgement (§ 639 Civil Code). Reminders and phone calls alone do not stop the limitation period. Only a lawsuit (§ 648), a written acknowledgement of debt (§ 639) or an agreement to negotiate out of court, during which the period does not run (§ 647 Civil Code), will prevent the claim from becoming time-barred.

A demand for performance must be sent at least 7 days before the lawsuit is filed; otherwise, even if you win, you may not be awarded reimbursement of the costs of the proceedings (§ 142a Civil Procedure Code). A demand letter from an attorney also gives the debtor a last chance to pay or reach a settlement before court costs are incurred.

Then it is no longer just debt collection but a dispute. We assess whether the objections are justified. If they are, or if you want to keep working with the customer, it is often quicker to negotiate a settlement than to litigate for years. You will find details on the Out-of-court dispute resolution page.

Out-of-court dispute resolution

Once insolvency proceedings have been opened against the debtor (what matters is publication in the Insolvency Register, not the later decision declaring the debtor insolvent), the claim can no longer be pursued by a lawsuit if it can be filed in the insolvency proceedings (§ 109 Insolvency Act). In its decision on insolvency, the insolvency court invites creditors to file their claims within 2 months (§ 136(2)(d)). A claim can be filed as soon as the proceedings are opened and no later than within this period; the court disregards late filings and the claim will not be satisfied in the insolvency proceedings (§ 110 and § 173). That is why we check the debtor in the Insolvency Register right at the start.

If the debtor is not a consumer, a payment is applied first to costs already determined, then to default interest, then to interest and finally to the principal. A different order applies only if the debtor specifies it when paying and you agree (§ 1932 Civil Code). A partial payment may also have the effect of acknowledging the rest of the debt, if this can be inferred from the circumstances (§ 2054(2) Civil Code).

It depends on the amount of the claim and whether the debtor has anything to pay from. With a lawsuit, you pay a court fee in advance of 5% of the amount claimed excluding interest (for amounts over CZK 20,000 up to CZK 40 million); for an electronic payment order it is 4% (over CZK 20,000). If the court does not issue the electronic payment order and hears the case instead, the fee is topped up to 5%. Up to CZK 20,000, the fee for a lawsuit is CZK 1,000; for an electronic payment order it is CZK 400 (up to CZK 10,000) or CZK 800. If you succeed, you claim these fees back from the debtor as part of the reimbursement of costs. If our check suggests that the debtor probably has nothing to pay from, we will tell you before you pay the fee.

We draft and send an attorney's demand for payment for a fixed fee of CZK 1,900 excl. VAT. Further steps are charged at an hourly rate (CZK 4,300/hour excl. VAT for businesses) or as a percentage of the value of the claim. In our offer, we propose which method suits your claim. The 10-minute initial consultation and the proposed course of action with a cost estimate for each stage are free and without obligation.