Debt collection and recovery (vindication) in Poland

The modern economic reality is inevitably tied to the necessity of enforcing debt collection. In this process, debt collection plays a crucial role, aiming to recover outstanding debts from debtors. Given the global nature of today’s economy, foreign counterparts often need to participate in the debt collection process in Poland, both as creditors and debtors. While the Polish procedure in this regard is not fundamentally different from those in other European countries, it is essential to familiarize oneself with it.

In the Polish legal framework, there are two fundamental types of debt collection processes, which correspond to its stages:

• pre-litigation (amicable) debt collection;
• judicial debt collection (with enforcement proceedings sometimes considered a separate type/stage).

The duration of the debt collection in Poland can vary significantly, lasting from several months to even several years. Factors influencing its course include the debtor’s solvency and willingness to settle outstanding debts. This, in turn, affects the stage at which the proceedings will conclude, with non-judicial steps generally proceeding more swiftly.

Various entities may be helpful when seeking recovery. Debt collection agencies are the first group offering services in this regard. Their typical activities involve attempting an amicable debt collection from debtors through negotiations, setting new repayment terms beneficial to both parties or sending payment demands along with warnings about the possibility of reporting the overdue debt to various debt registers, such as the Business Information Bureau (BIG) InfoMonitor S.A. or the National Debt Register BIG S.A. However, the competencies of most such agencies generally end at this stage. More comprehensive services in debt recovery can be provided by law firms, which, in addition to the aforementioned activities, also represent creditors in court and enforcement proceedings.

Debtor – How to locate a debtor and obtain information about them in Poland

A crucial step in debt collection is gathering information about the debtor. In this regard, the most critical information includes the current address to which payment demands and, later, legal documents can be directed. It is also essential to obtain information about the debtor’s financial status. If it is questionable, it is advisable, before initiating legal action, to consider applying for claim security. In the worst-case scenario, the debtor may have outstanding debts to state authorities, in which case the chances of recovering individual debts are limited and often not worth pursuing through the judicial debt collection stage.

Judicial Debt Collection in Poland

When none of the above-mentioned amicable debt recovery methods prove successful, the creditor has the right to file a lawsuit in court. Such actions are referred to as judicial debt collection.

Judicial Proceedings

When initiating a lawsuit, it’s essential to consider the rules governing court jurisdiction. The most relevant aspects in this regard are:

• subject-matter jurisdiction (Article 17, item 4 of the Civil Procedure Code – k.p.c.): Regional courts have jurisdiction over disputes with a value of up to 100,000 PLN; district courts adjudicate cases with higher values.
• territorial jurisdiction (Article 27, § 1 of the Civil Procedure Code): The lawsuit is brought before the first-instance court in the defendant’s region (or where the defendant’s registered office is located in the case of companies).
• contractual jurisdiction (Article 46, § 1 of the Civil Procedure Code): Parties can exclude the application of Article 27, § 1 of the Civil Procedure Code through an agreement included in their contract.

Furthermore, depending on the nature of the entities involved, the lawsuit is filed with either the civil division (for individuals) or the commercial division (for all types of companies and individuals conducting business activities). For several years, there has also been an Electronic Writ-Of-Payment Proceedings (Elektroniczne Postępowanie Upominawcze or EPU) system, which allows for filing a lawsuit through a website. Regardless of the mentioned jurisdiction or entity characteristics, all EPU cases are handled by the Lublin-Zachód District Court in Lublin, VI Civil Division.

Cases aimed at recovering debts are most commonly heard under one of the following procedures:

Prescriptive Proceedings (postępowanie nakazowe)

The evidence presented in this procedure must not raise any doubts. A payment order in the prescriptive proceedings will only be issued if the facts supporting the claimed debt are proven by the documents attached to the lawsuit. These documents can include:

• an official document;
• an invoice accepted by the debtor;
• a payment demand sent to the debtor along with a written acknowledgment of the debt by the debtor;
• a promissory note or properly completed check, the authenticity and content of which do not raise doubts;
• a contract, evidence of reciprocal non-monetary performance, evidence of the debtor’s receipt of an invoice or an account if the creditor is pursuing payment of a monetary performance.

Once issued, the payment order serves as an enforcement title without the need for an enforcement clause. The defendant can raise objections to it within one month of receiving it, but this does not suspend the enforceability of the payment order. Due to the requirement for unquestionable evidence, this is not the most popular procedure.

Writ-Of-Payment Proceedings (postępowanie upominawcze)

A payment order in the writ-of-payment proceedings is issued if:

• the monetary claims being pursued are justified.
• the factual allegations do not raise any doubts.
• the satisfaction of the claim does not depend on reciprocal performance.

In contrast to a payment order issued in the prescriptive proceedings, a payment order issued in the writ-of-payment proceedings does not serve as a security title or an enforcement title. To achieve this, it needs to be provided with an enforcement clause. The defendant can raise objections to the payment order within two weeks of receiving it, and if objections are raised, the order loses its effect. The requirement for unquestionable evidence in this procedure is less rigorous compared to the previously mentioned procedure, making the recovery procedure more popular.

Electronic Writ-Of-Payment Proceedings (EPU)

Due to the absence of the need for personal appearance, this is the fastest procedure. Furthermore, all procedural actions in this mode are carried out through an IT system, and evidence should also be described precisely in the lawsuit’s content, as physical copies are not attached.

A payment order in EPU cannot be issued if:

• the claimant is pursuing a non-monetary claim.
• the delivery of the order to the defendant would occur outside the country’s borders.
• the claims being pursued became due earlier than within three years before the filing of the lawsuit.

A payment order in EPU is subject to the same regulations as a payment order issued in the writ-of-payment proceedings. The defendant can raise objections within two weeks of its delivery. If an objection is raised, the court terminates the proceedings. In such a case, the claimant still has the right to file a lawsuit for the same claim but in a different proceeding than the EPU. If this is done within three months of the decision to terminate, the legal consequences tied to the filing of a lawsuit occur on the date of filing the lawsuit in EPU. Upon request, the court will take into account the costs incurred by the parties in the electronic writ-of-payment proceedings when considering the case.

What should be included in the lawsuit?

In this regard, it is necessary to compile the required documentation, especially documents indicating the amount of the debt and the due date for payment, such as VAT invoices or contracts. If the claimed amount corresponds to a service rendered by the creditor, any kind of confirmation of service execution will also be needed, such as service reports or acceptance protocols.

In such a case, a lawsuit may be filed. Firstly, the type of proceedings in which the lawsuit will be lodged must be chosen. The types, their characteristics, and associated merits and drawbacks have been listed above. If standard proceedings are selected, it is necessary to determine the jurisdiction of the court to which all the necessary documents will be sent.

The content of the lawsuit must always include the following:

• the value of the dispute (WPS) – the outstanding amount resulting from the contractual relationship between the creditor and debtor (plaintiff and defendant), from which interest for delay can also be demanded. In disputes between entrepreneurs, the value of any compensation for the costs of debt recovery under Article 10 of the Act of March 8, 2013, on counteracting excessive delays in commercial transactions is often included.
• precisely defined creditor’s claim – in this case, it will be an order for payment that the debtor is obliged to pay the outstanding amount to the creditor.
• information about the due date – the payment deadline specified in the VAT invoice, contract, or payment request.
• justification for the claim – confirmation of the existence of a contractual relationship between the parties and fulfillment of the obligation by the creditor.
• information about attempting an amicable dispute resolution.

In addition, if the lawsuit is sent to a traditional court, the following should be included:

• attachments in the form of all evidence mentioned in the lawsuit, including proof of payment of the lawsuit fee – its amount depends on WPS, as shown in the table above.
• a copy of the lawsuit along with attachments, which the court will then deliver to the defendant.
• optionally: a request to examine witnesses.

Two-instance model of judicial proceedings in Poland

Polish legal proceedings are based on a two-instance model, which means that both parties in a dispute have the right to appeal a ruling or judgment issued by the first-instance court. In the case of rulings, a complaint must be filed within one week from the date of announcement or delivery, whereas for judgments, an appeal can be filed within an extended period of two weeks. The case is then reviewed by a second-instance court, which has the authority to take the following actions:

• dismiss the appeal, thereby upholding the validity of the ruling or judgment issued by the first-instance court;
• accept the appeal and, after a thorough examination, modify the ruling or judgment issued by the first-instance court;
• refer the case back for reconsideration by the first-instance court.

A judgment issued by the second-instance court is final and non-appealable, effectively concluding the legal proceedings. There are only specific circumstances in which the judgment of a second-instance court can be challenged by means of an extraordinary appeal measure, namely the filing of a cassation appeal with the Supreme Court. However, certain formal requirements must be met for a cassation complaint:

• in property rights cases, including debt recovery, the amount sought must be no less than 50,000 PLN.
• the deadline for filing a cassation appeal is two months from the date of the judgment.
• grounds for filing a cassation complaint are not errors in factual findings but violations of substantive law due to incorrect interpretation or misapplication of the law or violations of procedural rules, provided that such violations could have had a significant impact on the case’s outcome.
• a cassation appeal must be prepared by a professional representative, such as a legal advisor or attorney.
• the complaint should include: identification of the judgment being challenged, whether it is challenged in its entirety or partially; presentation of the grounds for cassation and their justification; a request for the annulment or annulment and modification of the judgment, specifying the scope of the requested annulment and modification. Additionally, two copies of the complaint must be provided for the records of the Supreme Court and the Attorney General.
• a cassation appeal is filed with the second-instance court that issued the challenged judgment, which then forwards it to the Supreme Court.

The Supreme Court decides on accepting or rejecting a cassation complaint in a non-public session. A cassation complaint will be accepted for consideration if:

• there is a significant legal issue in the case;
• there is a need to interpret legal provisions that raise serious doubts or lead to inconsistencies in court rulings;
• there is a procedural irregularity or invalidity;
• the cassation appeal is evidently justified

The Supreme Court reviews cassation appeal in a non-public session unless there is a significant legal issue in the case or the complaining party has requested a hearing. If a cassation appeal is accepted, the challenged judgment is annulled in whole or in part and remanded for reconsideration to the court that issued it, including judgments issued by the first-instance court. If the basis for violating substantive law is evidently justified, and the cassation complaint was not based on a procedural violation or if that basis is found to be unjustified, the Supreme Court may, at the request of the complaining party, annul the challenged judgment and decide on the merits of the case, effectively concluding the judicial proceedings.

Execution Conducted by a Court Bailiff

A judicial order for payment, decision, or judgment officially obligates the debtor to settle the specified amount, typically within two weeks from the date of issuance or delivery of the relevant document. In cases where the debtor fails to repay the debt, enforcement proceedings become necessary. Obtaining an enforceable title, usually in the form of a valid order for payment, decision, or judgment accompanied by an enforcement clause, is required. With this enforcement clause, a court bailiff can initiate various enforcement measures, primarily to recover the owed amounts from the debtor’s bank accounts, benefits, salaries, movable and immovable property, as well as their property rights.

The scope of activities carried out by a court bailiff is relatively extensive. Initially, they must identify the debtor’s assets and determine the best method for executing the enforcement. To achieve this, court bailiffs collaborate with various institutions, including:

• social Insurance Institution (Zakład Ubezpieczeń Społecznych or ZUS)
• central Vehicle and Driver Registration Database (Centralna Ewidencja Pojazdów i Kierowców or CEPiK)
• OGNIVO – a system created by the National Clearing House, which provides court bailiffs with information about the debtor’s bank accounts.

The next step involves enforcement measures taken by the court bailiff. To satisfy the creditor, the court bailiff can collect the owed amounts from various sources, including the debtor’s bank accounts, benefits, salaries, movable and immovable property, as well as their property rights.