When a judgment has taken legal effect, that means the outcome of the case has been made, and the involved parties are required to fulfill the obligations stated in the judgment. However, there may be cases where the debtor deliberately fails to perform the obligation in the judgment. When faced with such situations, what can the creditor do to protect their rights? Below are detailed steps and measures that the creditor can take to address this situation.
1. The creditor requests judgment enforcement
a. Legal provisions regarding the timeframe for filing for enforcement
• After having a legally effective judgment, decision, or ruling from a court or arbitration has, if the debtor does not voluntarily perform their obligations, the creditor may request the enforcement authority to use its powers to implement measures to enforce the judgment/decision/award.
• The first and most important step is for the creditor to file a request with the civil enforcement agency to enforce the judgment/decision/award. The timeframe to request civil enforcement is 5 years from the date the judgment/decision/award becomes effective or from the time the obligation is due. If the creditor fails to submit a request to the competent enforcement authority within this timeframe, they lose the right to request enforcement. However, if the creditor can provide legitimate reasons for being unable to request enforcement within the prescribed time, exceptions may be considered.
b. Documents required for enforcement request
The enforcement request typically includes the following documents:
• A legally effective judgment/decision/award from the court or arbitration and any other relevant documents. Note: the creditor must submit the original documents.
• The original enforcement request.
• Documents verifying the identity of the parties involved (e.g., enterprise registration certificate, citizen identification card, passport, documents proving the assets of the debtor, etc.).
The requesting party or their authorized representative can file the request directly or send it by post. If the request is made verbally in person, the civil enforcement agency must prepare a record.
Preparing a full set of necessary document will ensure the enforcement proceeds quickly and accurately, minimizing procedural complications.
2. Verifying the Debtor’s assets
• After submitting the enforcement request, verifying the debtor’s assets is crucial. This is the process by which the enforcement authority examines the debtor’s assets to determine their ability to pay. Asset verification helps the creditor establish a basis to request the seizure or freezing of these assets to protect their rights. The enforcement authority may verify the debtor’s assets through various channels, such as:
– Verifying the debtor’s bank accounts.
– Checking registered assets, such as real estate or moveable property.
– Identifying sources of income from the debtor’s employment or business activities.
• Verifying assets not only protects the creditor’s rights but also provides the enforcement authority with a basis for applying appropriate coercive measures.
3. Applying coercive enforcement measures
Coercive enforcement measures are an important tool in the legal system, ensuring that court decisions are implemented fairly and effectively. Specifically:
• Deduction of money on accounts: Recovering and processing money or valuable papers owned by the debtor, including funds in bank accounts.
• Garnishing income: Deducting a portion of the debtor’s monthly income to fulfill the obligation.
• Distraint and handling of assets: Seizing, valuing, and liquidating the debtor’s assets, even if those assets are in the possession of others.
• Exploitation of assets: Requiring the debtor to exploit assets to fulfill the obligations stipulated by the judgment.
• Force transferring: Requiring the debtor to transfer property, rights, or documents as stipulated by the court judgment.
• Force the performance or non-performance of certain jobs by judgment debtors: Requiring the debtor to perform or refrain from performing certain actions as ordered by the judgment.
• Applying supplementary measures:
– Temporary freeze the asset: If there is evidence that the debtor intends to dispose of assets to evade their obligation, the creditor may request the application of a temporary asset freeze. This helps protect the creditor’s rights while awaiting formal coercive measures.
– Exit suspension: The enforcement authority may apply a exit suspension ban against the debtor or the legal representative of a legal entity with enforcement obligations. This prevents the debtor from evading their obligation by fleeing or moving assets abroad.
Using appropriate measures will ensure that the debtor is compelled to comply with the judgment swiftly and effectively.
4. Negotiation and settlement
• In many cases, rather than waiting for prolonged coercive enforcement processes, the creditor may consider negotiating with the debtor. A settlement between the parties can quickly resolve the issue and reach a consensus on the repayment method. Possible settlement options include:
– Repaying the debt in installments.
– Agreeing on extending the repayment deadline.
– Proposing alternative payment methods if the debtor is unable to pay in cash.
• Negotiation reduces tension and costs associated with enforcement proceedings. Additionally, voluntary agreements between the parties tend to be executed more quickly and flexibly than coercive measures.
5. Seeking legal assistance
• The role of a lawyer in the enforcement process: If the enforcement process encounters many difficulties or complications, seeking legal assistance is crucial. Lawyers can advise, examine, and determine the most appropriate legal measures to ensure smooth and effective enforcement.
• Legal representation in court: Lawyers can represent the creditor in court or in meetings with the enforcement authority, thereby protecting their legal rights. Additionally, lawyers help ensure that all legal procedures are followed according to the law, avoiding potential risks.
When a judgment has a legal effect but the debtor fails to pay, the creditor has many options and solutions to protect their rights. From requesting enforcement, verifying assets, applying coercive measures, negotiating, or seeking legal assistance, each step must be carried out thoroughly and lawfully. Understanding the legal provisions and working effectively with the enforcement authority and lawyers will help the creditor recover the debt swiftly and efficiently.
This article, “What to do when a Judgment is legally binding but the debtor does not pay?” is brought to you by TNTP. We hope it is helpful to our readers.
Respectfully,
