Enforcement order as the basis of compulsory enforcement in the legal dunning procedure

An enforcement order is the second and crucial step in the course of a legal dunning procedure. As an enforcement instrument (§ 794 para. 1 no. 4 Code of Civil Procedure), it has far-reaching implications for creditors and debtors and remains in effect for thirty years. For debtors, it is advisable to avoid an enforcement order with a payment arrangement with the creditor.


 

The path to an enforcement order

Typically creditors are only interested in an enforcement order if they see no other way to impel the debtor to settle existing receivables. An enforcement order is associated with a high administrative burden and the advance payment of court fees, often with legal fees as well. Therefore this step is necessary, but not pleasant. Before it becomes necessary to apply for an enforcement order, creditors will usually dun the outstanding receivable. At a minimum the last dunning should contain a fixed term of payment and the threat of a legal dunning procedure. Along with the payment deadline, a creditor must give the debtor a notice of default. For creditors, this means that the debtor may be charged enforcement costs and default interest. If the debtor does not respond to the last dunning, a legal default notice will be issued. On one hand, the default notice has the important function of initiating the legal dunning procedure. On the other hand, it suspends the statute of limitations of the receivable at the moment of notification (§ 204 para. 1 no. 3 ZPO).

 


Default notice as preliminary step towards enforcement order


The central debt collection courts are responsible for default notice applications. They facilitate the application via an automated procedure. Thus, the default notice can quickly and easily be requested online. The fee for the default notice is due with the application. Only after payment of the fee will the debt collection court issue the default notice. To accelerate the process, creditors should authorise the court cashier to a direct debit. After delivery of the default notice to the debtor, the debtor has two weeks' time to object to the notice. The objection period against the default notice is neither a limitation period nor a statutory deadline and only ends with the application for the enforcement order. The application for issuance of an enforcement order shall be admissible two weeks at the earliest and no later than six months after the delivery of the default notice. Hence, the objection period may be shortened with a timely application for an enforcement order. Evidence of the existing receivable and any payment already made forms an important basis for the previously submitted application for a default notice . Otherwise, an objection to the default notice may be successful and result in the creditor bearing the procedural costs.

 


Apply for an enforcement order


To be able to apply for an enforcement order, an application form is required. The debt collection court sends this along with the confirmation of delivery of the default notice. The application for issuance of an enforcement order must indicate if and to what amount payment was made after the default notice was issued. The application is also to be directed to the relevant central debt collection court for the creditor's residence or company location. The application form may also indicate how the enforcement order should be delivered. Upon request, the court will deliver the enforcement order directly to the debtor (service ordered by the court) or send it to the applicant (via process server). The applicant may undertake the delivery himself or can appoint a bailiff to do so. The jurisdiction of the central debt collection court ends with the transmission of the enforcement order. All further enforcement measures, such as execution of judgment, are carried out by the district court with jurisdiction over the debtor's residence.

 


Enforcement order - impact and consequences


An enforcement order is equivalent to a provisionally enforceable, legal judgement by default. This means that enforcement is possible immediately with delivery of the enforcement order, even though it is not final yet. The enforcement order will only be valid as an enforceable distraint if the debtor does not raise an objection within two weeks of delivery of the enforcement order. Upon delivery, the bailiff will undertake a first attempt of distraint. The enforcement order is an important document that must be presented in the original for every enforcement measure. If the enforcement attempts are unsuccessful, the bailiff may be instructed to obtain information regarding the debtor's financial assets (formerly affidavit). In this way, creditors gain an overview of the distrainable assets and income levels of the debtor. If the debtor objects to the enforcement order, the legal review is carried out by the relevant dispute or trial court. If the dispute proceedings lead to the conclusion that the receivable is not justifiable, the applicants must restitute the assets that have already been enforced.