Debt Collection

Areas of Practice

Debt Recovery and Debt Collection in Cyprus

We provide debt recovery and bad debt recovery solutions to our clients for the recovery of their money and assets. Our experienced team of professionals can assist with the recovery of the debt due, the interest as well as damages and expenses incurred.

How someone approaches debt collection in Cyprus is extremely important. We know that when collecting your debts, time is of the essence. We also know that considerable resources may be wasted by the creditor to follow up on otherwise irrecoverable debts due and at times, the creditor’s only choice is to treat the debts as “bad”.

We also understand that the Coronavirus may have created a back log of debts, some of which are genuine cases of inability to pay, whilst some other cases relate to strategic behaviour by the Debtors not to pay their debts. Our debt collection procedure aims exactly at combating strategic responses of debtors in not paying what they owe whilst in cases where the debtor is genuinely unable to pay, we offer a flexible approach based on the wishes of the client.

Our aim is to provide a speedy and cost effective debt collection service to our clients. Our team of lawyers in Cyprus follow all the conventional collection procedures and will recommend the most suitable collection strategy, having regard to the client’s best interests.

Procedure for Debt Collection in Cyprus

In Cyprus, debt collection in relation to commercial transactions provides the creditor with automatic entitlements. This is based on Directive 2011/7/EU on combating late payment in commercial transactions which provides for the following:

  • Enterprises have to pay all invoices within 60 days, unless agreed otherwise.
  • The creditor is allowed interest for the late payment of invoices
  • The creditor is allowed a minimum of €40 as compensation for recovery costs.
  • There is a late payment interest rate of 8% above the European Central Bank’s reference rate.

When the creditor is dealing with a lot of debtors, we use a specialist software designed to keep track of the Cyprus debt collection process. If the creditor so wishes, our specialist software can be connected with the database of the creditor so that the creditor is at all times informed about the process and at what stage (of the stages mentioned below) the debt collecting process is at.

In accordance with case law, any amounts paid to the lawyers as part of the debt collection in Cyprus (provided they are reasonable) can be recovered as damages from the debtor in addition to any of the amounts due.

1. How we approach debt collection in Cyprus

We approach debt collection professionally and assist the clients in all phases of the debt recovery procedure. Our success rate is very high as we have up to this date initiated the process against more than 2000 debtors.

We obtain the go ahead from the Client before proceeding on any basis of settlement. The Client will advise us beforehand on the proposed time-frames of settlement of the sums due as well as whether they will accept any discounts on the amounts owed, whether they will also request interest or debt collection fees.

This allows us to follow a flexible and client centered approach as part of our debt collecting strategy.

2. We use our best endeavours to locate the debtors.

There are several procedures to locate the debtors.

In case the debtor is a company our Cyprus debt collection procedure includes running a search with the database of the Registrar of Companies in order to locate the registered office address of the company, the names and personal addresses of the Directors in order for us to be able to establish contact. In case the debtor is a natural person we will require the client to provide us with any information that they have on the whereabouts of the debtor in order to help us with the debt collection process. In Cyprus, lawyers can collect all information relating to debtors and the starting point is the client.

Furthermore we may use credit information agencies and the internet for our debt collection. In Cyprus as well as in all EU member states the General Data Protection Regulation may forbid the use of information which the debtor has not given consent. However, given that lawyers have a legitimate reason to know, all information of the debtor, and especially all information which is publicly available (for example if they are obtained the Registrar of Companies in Cyprus) can be used by the lawyers.

3. Our Cyprus debt collection process includes initial soft communication the debtor

This method is used to establish contact with the debtor. We find the approach of softly communicating with a debtor first to be very effective for debt collection in Cyprus. There are a lot of instances where debtors, as soon as they understand that their case has been assigned to debt collectors in Cyprus, especially if these are lawyers, will consider that the matter must be settled. This is because of the ensuing legal proceedings which may take place which act as a disincentive for them to stall the debt collection process more.

Soft communication will include an initial call to the debtor in order to assess his willingness to settle the case. Please note that we follow instructions from our clients prior to settling any case.

4. Negotiating with the Debtor is part of our strategy for Debt Collection in Cyprus

 A part of our team of lawyers in Cyprus are accredited mediators who experience in mediation proceedings, we have the know-how of what it takes to be a negotiator. We use these skills to enhance our Cyprus debt collection procedure and provide the optimum outcome for the client.

In case all efforts to conclude the debt collection in Cyprus through negotiation do not bring the results we will then proceed with the next step which is to send a letter of demand on behalf of our clients.

5. A letter of demand will be sent on behalf of our clients.

As already stated, in case our debt collection process through soft communication and negotiation fails, we will proceed with sending a letter of demand to the debtor. This is still part of our out of court approach in bringing the procedure of debt collection in Cyprus to a close.

The letter sent to the Debtor is prepared by our team of lawyers in Cyprus who require the debtor to pay within (usually) 10 days. The letter is either served to the debtor through a court officer or sent by fax, post or email. This letter includes a paragraph that in case the debtor does not respond within the deadline then legal proceedings will be initiated by our team of Cyprus lawyers.

In our experience, by this point, a number of debtors will likely proceed with payment of the amounts due. However, if the debtor does not comply with the time frames mentioned in the letter of demand, our team of lawyers in Cyprus will proceed with recovering the debt via the legal route – i.e. the filing of a lawsuit in the courts of Cyprus.

6. Filing a lawsuit against the Debtor - Steps

Filing a lawsuit against the debtor is the final step in our Cyprus debt collection procedure prior to initiating execution of the judgement for the amounts due. A lawsuit will be prepared by our team of lawyers in Cyprus who will then request the client to review it. The Statement of Claim will include all amounts due as well as the costs paid by the client for the debt collection procedure.

  • Filing of the Lawsuit

    The lawsuit is filed in the relevant Registrar of a Cyprus District Court.

  • Serving the Lawsuit

    The lawsuit is then served on the debtor.

  • Filing an Appearance

    The debtor has 10 days to file an appearance. There are many cases during this part of the debt collection process in Cyprus that the debtor will not file an appearance. In such a case we can apply for a judgement for failure of the debtor to file an appearance. Usually judgement is issued within 2-3 months from the date that the lawsuit is filed.

  • Filing a Defence

    In case the debtor files an appearance, then he will also have to file a defence to the claim.

  • Hearing

    After several other procedural steps, a date is set for a hearing where both parties present their case through their witnesses.

  • Issuance of Judgement

    A judgement is issued by the court.

That is the final step in the debt collection process and it can be used for up to 10 years after a judgement has been issued. The court enforcement procedures which our team of Cyprus lawyers will carry out on behalf of the creditor are:

  • Garnishee proceedings

    These proceedings aim at finding out whether there is money in a bank account (or whether there are amounts due to the debtor by third parties) and requesting that those amount are paid directly to the Creditor to extinguish the debt.

  • Writ of Movables/Immovables

    This step relates to the attachment of the judgement to movables or immovable property and requesting their sale.

  • Bankruptcy

    These aim at causing the debtor to become bankrupt. This step has considerable negative effects on the debtor including the prohibition to own checks or become director in companies.

  • Application to examine the financial situation of the Debtor

    Applying to the court and requesting the examination of the debtor’s financial situation and requiring the debtor to pay to the creditor an installment every month.

Key People

Evripides Hadjinestoros Partner
Evripides is a partner at D. Hadjinestoros & Co LLC. After completing the LLB Law degree at Queen Mary University in London in 2009, he then completed a post-graduate diploma in Company Law LLM, at University College in London. He graduated with Distinction. In 2016, Evripides published the book «The Law on the Sale of Goods and Consumer Protection in Cyprus», which was published by Nomiki Vivliothiki. He has taught and is currently teaching extensively on commercial at the European University Cyprus.
Anastasios Anastasiou Lawyer
Anastasios specialises in corporate law matters, insurance law and debt collection.