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Debt Collection in Malta

Debt Collection in Malta

The procedure for debt collection in Malta can be performed outside the court or in court by filing actions for debt recovery. The first step when trying to collect a debt in Malta out of court is to send a dunning letter and then the judicial letter. When the debt recovery ends up to trial, the judicial letter must also be filed with the other documents.

Below, we explain the procedures related to debt recovery in an amicable manner and in court. No matter your case, you can rely on our litigation attorneys in Malta for assistance in debt collection procedures. In order to avoid litigation in Malta, you can ask our Maltese lawyers for legal advice. 

The main steps in debt collection in Malta

Once the creditor has established that the debtor can no longer or does not want to pay a debt, the recovery procedure can begin. The creditor is usually advised to first reach a settlement with the debtor in order to avoid the lengthy procedures involving court litigation.

The main steps when starting the debt collection procedure in Malta imply:

  1. contacting specialized agencies or lawyers who can initiate a dialogue with the debtor;
  2. receiving all the details related to the debt (invoices, payment orders, email exchanges, etc.);
  3. contacting the debtor with a proposal of returning the outstanding amount of money;
  4. upon the failure of replying, the creditor can request for the case to be presented to a judge.

It is important to note that while the creditor can request the services of debt collection agencies, these agencies must respect specific procedures when contacting the debtor in the attempt of recovering a debt amicably. This is why it is recommended to first discuss the case with a law firm in Malta which can also offer legal support in the procedure.

The extrajudicial debt recovery procedure in Malta

The amicable or extrajudicial procedure is the simplest and fastest way of recovering any outstanding amount of money from a Maltese debtor. The procedure is completed outside the court of law and implies contacting and reaching an agreement with the debtor in order for the debt to extinguished. At the beginning, the creditor can try and reach such an agreement with the debtor and if the latter fails to reply, the assistance of a lawyer can be requested.

The Maltese law firm will take the case and will ask for all the evidence related to the debt in order to contact the debtor. The contact can be made by phone, email or post and must inform the bad payer about the outstanding amount of money and the possibility of paying the debt through an arrangement which satisfies the request of the creditor and the possibilities of the debtor.

If the extrajudicial debt recovery procedure fails, the creditor has the right to ask for the case to be moved to a Maltese court. Debt collection cases in this country are usually tried by the Court of Magistrates in Malta or Gozo.

Our Maltese lawyers can guide creditor who want to file lawsuits against debtors. We can also ensure legal advice through the entire debt recovery procedure.

Debt recovery through judicial letter in Malta

If the debt is decisive and cleared, the plaintiff is allowed to choose the debt recovery process through judicial letters that will be used as executive titles. The Maltese laws on debt recovery enable actions through a judicial letter for the following situations:

  • A judicial letter filed according to Article 166A in the Code of Organization that enables a creditor to make claims for amounts not exceeding 5,000 Lm (approximately 23,300 euros). The debtor has 30 days to oppose the letter and, in case he doesn’t, the judicial letter will be used as an executive title. Once the creditor can use the judicial letter as an executive title, he or she can get all required warrants and recover the debt.
  •  A judicial letter filed according Chapter 12, section 253, for unlimited outstanding debts and if the creditor can present bills of exchange or promissory payment notes for the whole amount. In case the debtor does not oppose the execution of the documents stating the outstanding amount within 20 days, the creditor can use the judicial letter as executive title.

No judicial procedure is necessary if the contract for debt collection is made in front of notary public, but if a judicial letter is presented as an executive title, the judicial procedure will be enabled.

In Malta, debt recovery through judicial letters has become more popular due to time and money saving procedures. The new system has also diminished the number of debt collection cases taken to court.

The order for payment in debt collection in Malta

The order for payment procedure is a procedure used at an EU level and is applicable when the debtor does not oppose the claim of the creditor. It is also worth noting that the order for payment is available for various types of claims, among which debts are the most common in Malta. It is not compulsory for the debt to refer to the financial losses of the creditor.

When seeking to recover a debt through this procedure, it is imperative for the debtor to be present in Malta. Also, the value of the claim cannot exceed 25,000 euros. If the debt exceeds this amount of money, court proceedings become mandatory. When filing the judicial letter for the order of payment, the letter must be signed by a Maltese lawyer.

Our attorneys in Malta can assist through debt collection procedures involving the order for payment.

Debt recovery in Maltese courts

If the debtor fails to reply or opposes the order for payment, the creditor will have no other alternative than to file a lawsuit. In order to obtain an enforceable decision which demands the debtor to pay the outstanding amount of money, the creditor must file a judicial letter which has not been contested by the debtor. The judicial letter must also qualify as an executive title and must be registered with the Courts Registrar.

Once the court establishes the debt must be paid, an enforceable order in this sense will be issued. If the amount to be recovered varies and it isn’t liquidated, the debt collection case must be presented in front of a normal court. The courts that handle B2B claims on debt recovery in Malta are:

  •  the First Hall, which is a civil court and judges claims exceeding amount of approximately 11,650 euros;
  •  the Court of Magistrates wich rule over debt collection exceeding amounts ranging between 3,500 euros and 11,650 euros;
  •  the Small Claims Tribunal that will rule over cases in which the debt does not exceed 3,500 euros.

According to Chapter 12, article 167 of the Code of Organization, a decisive and liquidated debt can be recovered without any evidence, unless the debtor presents solid reasons that could challenge the claim.

The general statute of limitation for commercial debt collection in Malta is 5 years, but according to Chapter 16, article 2147 of the Laws of Malta, there are types of debts with specific statute of limitations.

With a vast experience in debt collection matters, our Maltese law firm can guide individuals and companies seeking to recover outstanding amounts of money.

Would you like to buy a house in Malta? We recommend that you contact our lawyers and discover the legal services offered in this regard. Thus, the documents of the chosen property can be verified by our specialists, so that we can assure you that there are no disputes involved or hidden problems. We can also draw up the sale-purchase contract that is signed in front of the public notary. And if you cannot travel to Malta for these procedures, you can be represented with a power of attorney.

What to consider in a debt collection procedure in Malta?

Debt collection proceedings in Malta can be short when the recovery of the debt is amicable. However, if such procedure does not work, it is good to know that:

  •  the order for payment can be issued only if the debt does not exceed 25,000 euros;
  •  for amounts of money exceeding 25,000 euros, a lawsuit must be filed by the creditor;
  •  the debtor can file an opposition against the order for payment within 30 days after being summoned;
  •  when an executive title has been issued, the debtor can file an opposition within 20 days from receiving it.

If you need legal assistance in case of company liquidation or you want to start a business, our law firm in Malta will offer you all the necessary support, so do not hesitate to contact us.