Debt Collection under Contracts
Debt collection under contracts is one of the most common legal procedures in commercial and civil law. In the course of active business activity, situations often arise where one party fails to fulfill its contractual obligations, necessitating the forced recovery of the debt.
Key Types of Contracts That Lead to Debt
The most common types of contracts involved in disputes include:
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Supply contract – delayed or unpaid goods;
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Contract work agreement – unpaid work or work that fails to meet agreed standards;
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Lease agreement – failure to pay rent;
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Loan/credit agreement – overdue repayment of funds;
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Service agreement – unpaid services or labor.
Pre-Trial Debt Settlement
The first step in debt collection is pre-trial settlement, which includes:
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Sending a claim to the debtor describing the amount and grounds of the debt;
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Setting a deadline for voluntary repayment;
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Conducting negotiations or mediation.
Pre-trial settlement often helps to avoid lengthy court proceedings and preserve business relationships.
Judicial Debt Collection
If pre-trial settlement fails, the case is brought before a court. The main stages include:
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Preparation of a lawsuit in accordance with the requirements of the Commercial Procedure Code of Ukraine (Art. 162 CPC).
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Evidence base – contracts, work completion certificates, delivery notes, correspondence, bank statements.
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Judicial review and court decision.
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Obtaining a writ of execution and submitting it to the State Enforcement Service or private enforcer (under the Law of Ukraine “On Enforcement Proceedings”).
Important Aspects of the Legal Process
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Securing evidence at an early stage;
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Observing the statute of limitations (general term — 3 years according to Art. 257 of the Civil Code of Ukraine);
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Possibility of recovering penalties: late fees, inflation losses, 3% annual interest (Part 2, Art. 625 of the Civil Code of Ukraine).
Enforcement of Court Decisions
After obtaining a favorable court decision, the debtor must comply voluntarily. Otherwise, enforcement proceedings are initiated:
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Seizure of the debtor’s property;
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Forced withdrawal of funds from accounts;
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Property sale via auction.
How to Avoid Debt: Tips
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Draft contracts with clear terms and conditions;
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Include penalties for missed deadlines;
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Verify the counterparty before cooperation;
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Use legal support for agreements (read more about our legal support services).
Contact the Experts
GlobalBud Ukraine has extensive experience in debt collection and legal support of commercial activity. Our lawyers provide comprehensive legal assistance: from pre-trial settlement to representation in court and enforcement stage.
