What is compulsory enforcement?

This word scares a lot of people. But what is compulsory enforcement really? Compulsory enforcement refers to the process by which a creditor enforces his claim against a debtor by the means of the state. This situation may arise once a debtor has not met his obligation, even after the dunning has been issued and the creditor or service provider he appointed has obtained an enforceable title from the court. Then the creditor has various state resources at his disposal to enforce his claim.


What does compulsory enforcement mean for the debtor?

Generally, it is always advantageous for a debtor not to allow the situation to escalate to compulsory enforcement. The consequences can be very unpleasant. Ultimately, submission of an asset disclosure statement (formerly affidavit, colloquially "oath of disclosure") may result in an entry in the public record of debtors. This significantly impedes economic activities that require a certain credit rating. Should you find yourself in financial difficulties, it is better to start negotiations with the responsible collection agency immediately. Under no circumstances should you just let things slide. If you do not respond, the creditor often has no choice but to obtain a compulsory enforcement.


What is compulsory enforcement in theory?

Creditors and collection agencies first try to recover a receivable with out-of-court methods. If these efforts remain unsuccessful, they attempt to secure the receivable by way of a legal dunning procedure. The collection agency thus requests a default notice and enforcement order on behalf of the creditor. This is partly because an enforcement title is a legal requirement for a compulsory enforcement. This is a legal demand for payment. The title clarifies in binding form, whether and to what extent the debtor owes the creditor.

These enforceable titles include enforcement orders that a creditor obtains via a legal dunning procedure. Court judgements of any kind, decisions on assessments of costs, alimony resolutions, settlements or notarial deeds are also enforceable titles that may result in compulsory enforcement.


What is compulsory enforcement by the bailiff?

For compulsory enforcement, the creditor can use state enforcement agencies, such as a bailiff. A bailiff is an independent body within the administration of justice. He is assigned to a district court, but has his own office. With a valid title, such as an enforcement order, the bailiff can proceed to compulsory enforcement if the debtor does not avert it by paying the due receivable. At that, we can initiate enforcement against the movable assets of the debtor. If the debtor owns valuables such as jewellery or antiques, the bailiff attaches his sticker - infamously known as "cuckoo" in German - to these goods. These are subject to compulsory auction and the proceeds are put towards the creditor's receivable. In this process, objects which safeguard the financial existence of the debtor may not be distrained, for example clothes or objects that he needs to practise his profession.


What is compulsory enforcement of monetary receivables?

In the event of a "distraint order", no valuables are auctioned. In most cases it involves the debtor's salary. The enforcement court then distrains the debtor's claim against his employer. This obliges the employer to pay the distrainable part of the debtor's salary not to the debtor, but to the creditor, until the receivable has been paid.