A claim is a right to performance from another party: usually payment, sometimes delivery or an act. It becomes enforceable when it falls due, and from that moment the creditor can demand performance and, if it does not follow, set the debtor in default and claim statutory interest and collection costs.
Two periods govern the life of a claim. Most contractual claims for payment are subject to a limitation period of five years running from the day after the claim became due, and the period can be interrupted by a written demand that unambiguously reserves the right to performance. A claim that has lapsed is not extinguished but becomes unenforceable, which for practical purposes is the same thing.
What is a claim, and how do you recover it?
A claim is simply a demand someone has on another, i.e., a person or company.
A claim often consists of a money claim, but it can also be a claim for a give or make a claim from undue payment or a claim for damages. A creditor is a person or company that is owed a ‘performance’ by another. This follows from an agreement. Outstanding performance is often also referred to as a ‘debt.’ Thus, the creditor can still claim a debt, hence the term creditor. The party to deliver the performance to the creditor is called the ‘debtor.’ If the performance consists of paying a sum, the party who has yet to pay a sum is called a ‘debtor.’ Parties demanding performance in money are also called ‘creditors.’ Unfortunately, the problem with a claim is that it is not always fulfilled even though this has been agreed upon or the law has provided for it. Consequently, litigation and collection actions are ongoing in respect of claims. But what exactly is a claim?
Arising claim
A claim often arises from an agreement in which you agree to do something in return for which the other party provides consideration. Once you have fulfilled your agreement and notified the other person that you demand the consideration, a right of action arises. In addition, a claim may occur, for example, if you accidentally transfer to the wrong bank account. You will then have made an ‘undue payment’ and can reclaim the transferred amount of money from the bank account holder. Similarly, if you have suffered losses due to another person’s actions (or omissions), you can claim compensation for those losses from the other person. This compensation obligation may arise from a breach of contract, statutory provisions, or tort.
Recoverability of claim
You must make it known to the other person that they owe you something or must provide you with something in return. Only after you have completed this known will the claim be due. It is best to do this in writing.
What can you do if the debtor fails to satisfy your claim and (in the case of a monetary claim) does not pay, for example? You must then collect the claim, but how does that work?
Out-of-court debt collection
For claims, you can use a debt collection agency. This is often done for relatively simple claims. For higher claims, only a collection lawyer is competent. However, even for simple and smaller claims, it may be wise to engage a debt collection lawyer, as debt collection lawyers are usually better at providing tailor-made solutions. Also, a collection lawyer can often better assess and refute the debtor’s defenses. Moreover, a collection agency is not authorized to enforce that the debtor pays legally, and a collection lawyer is. If the debtor does not comply with the summons letters from a collection agency or collection lawyer and extrajudicial collection has not worked, you can start a judicial collection process.
Judicial debt collection
To force a debtor to pay, you need a judgment. To obtain a judgment, you need to start legal proceedings. These legal proceedings compulsorily start with a writ of summons. If it concerns monetary claims of € 25,000, – or less, you can go to the subdistrict court. At the cantonal court, a lawyer is not obligatory, but hiring one can certainly be wise. For example, a summons must be drafted very meticulously. If the summons does not meet the law’s formal requirements, you may be declared inadmissible by the court, and you will not be able to obtain a judgment. It is, therefore, essential that the summons is drafted correctly. A summons should then be officially served (issued) by a bailiff.
If you have obtained a judgment awarding your claims, you should send that judgment to the bailiff, who can use it to force the debtor to pay. Thus, goods belonging to the debtor can be seized.
Statute of limitations
It is essential to collect your claim quickly. This is because claims are time-barred after some time. When a claim is time-barred depends on the type of claim. As a general rule, a limitation period of 20 years applies. Still, there are also claims that are time-barred after five years (for a detailed explanation of the limitation period, see our other blog, ‘When does a claim expire’) and, in the case of consumer purchases, after two years. The following claims are time-barred after five years:
- To fulfill an agreement to give or do (e.g., a money loan)
- To periodic payment (e.g., payment of rent or wages)
- From undue payment (e.g., because you accidentally make a transfer to the wrong bank account)
- To the payment of damages or agreed penalty
Each time the period threatens to expire and the limitation period expires, the creditor can attach a new period to it by the so-called interruption. Interruption is done by notifying the debtor before the end of the limitation period that the claim still exists, for example, using a registered payment reminder, payment demand, or a summons. Essentially, the creditor must be able to prove that the period has been interrupted if the debtor invokes the defense of prescription. If he has no proof, and the debtor thus invokes the limitation period, he can no longer enforce the claim.
So it is essential to determine which category your type of claim belongs to and what the corresponding limitation period is. Once the limitation period has expired, you can no longer force your debtor to satisfy the claim.
Please get in touch with our lawyers for more information on monetary debt collection or invoking the statute of limitations. We will be happy to assist you!
