Debtor insolvency   

If the creditor determines that the debtor is unable to pay, there are certain measures which can be taken:

[Image] Criminal charges
[Image] Attempts of enforcement at a later point in time  
[Image] Selling the debt claim to a collection agency
[Image] Checking a customer’s solvency before doing business

 
Criminal charges  
The following facts constitute an offence
  • Resistance against an executory officer (Germany: § 113 StGB) 
  • Interference with attachment and breaking of official seals (Germany: § 136 StGB) 
  • Fraud in treaty (Germany: § 263 StGB) 
  • Obstructing execution (Germany: § 288 StGB)

Note: If a creditor files a lawsuit and a criminal trial conviction results, the creditor’s chances of enforcement are drastically reduced. Usually, a fine is imposed on the debtor’s account so that there are additional outstanding debts. The debtor must pay this fine before other debts, otherwise  imprisonment due to default of payment can be enforced. If it is possible and reasonable, the creditor should initially refrain from filing a lawsuit and ask the debtor to avoid creating a situation in which a lawsuit must be filed.

If the debtor cannot be found, presumably to avoid detection by creditors, it is possible to determine the debtor’s residence and arrest him or her through the district attorney’s office and by filing a lawsuit. This allows an opportunity to develop enforcement measures against the debtor.

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Attempts of enforcement at a later point in time

If the debtor is unable to pay, the following consequences may arise:

·         Claims against a legal person (e.g. firms, firms subject to trade law): claims already executed against legal persons are normally worthless.

Claims against a natural person (people): If there is a chance that the property situation will improve, you must decide when to pursue the enforcement issue again in the future. A title is valid for 30 years, however, interest is not included.

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Selling the debt claim to a collection agency  
If a debt claim has been issued against the debtor but enforcement attempts remained unsuccessful, it is possible to sell the claim to a collection agency. Collection agencies are in the business of purchasing claims not brought to lawsuit. The prices are usually about 5 % of the value of these claims or less.

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Checking a customer’s solvency before doing business  

There are online data bases specifically available that list debtors who are insolvent or unwilling to pay. You can use these databases to check the payment behaviour of customers before doing business with them.

For example, Supercheck is a community for service providers on the internet. Members can inquire about specific information and add the names of insolvent customers or customers who are unwilling to pay.

[Image]  Solvency-Supercheck

All information is presented to the best of our knowledge. We assume no responsibility for its correctness.
 

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