Debt Collection in Switzerland
The debt enforcement system in Switzerland is unique. We would like to explain the most important facts and proceedings and help you understand the regulations. The debt collection report (“Betreibungsregisterauszug”) is a document often required by third parties to evaluate your financial status (application for a job or an apartment).
Step 1: Debt Enforcement as a Creditor
As a creditor (the person to whom money is owed) you are entitled to submit a request for debt enforcement proceedings to be opened (Art. 67 of the Swiss Debt Enforcement and Bankruptcy Law (SchKG) and for the debt to be recovered from the debtor (the person who owes the money). This request has to be submitted to the debt enforcement office (“Betreibungsamt”) in the place where the debtor lives or, in the case of a company, where the legal entity is based. The request is made using a form provided by the local authority. Upon submission of the form, you must provide your contact details as well as the debtor’s contact details, the amount of money owned in CHF and any relevant proof.
As a next step, after the creditor pays a fee to proceed (the creditor has to advance this cost, but it is added to the sum owed by the debtor), the enforcement office will issue an order to the debtor to pay the outstanding debt (Art. 69 SchKG). The enforcement office will enforce the claim without checking whether it is justified or not.
Step 2: Your Options as a Debtor
The payment order by the debt enforcement office is the final demand (last chance) to pay the amount stated. If you accept the amount due, you have to pay the amount to the enforcement office within 20 days from receipt of the payment order. You have the option to request to pay the debt in instalments and pay the debt within 12 months. Once the creditor has started the enforcement proceedings and has paid the initial costs for the proceedings, you will have an entry in your debt collection register. This entry will remain even after you pay the amount due.
If you do not accept the amount stated – for example because in your opinion you do not owe this amount – you have to officially object to the payment order within 10 days of receiving it (“Rechtsvorschlag erheben”, Art. 74 SchKG). You can do this directly when the payment order is delivered to you or later on, but it is imperative to do so within those 10 days, to the debt enforcement office that issued the payment order. You do not have to give a reason.
In conclusion, it is very easy for a creditor to start the enforcement proceedings, but it is also very easy for the debtor to stop it by objecting to the payment order. Even if you object to the payment order, the entry in your debt collection register will still remain.
Step 3: Proceedings After the Debtor Objects to the Payment Order
With the objection to the payment order, the proceedings are put on hold. The creditor has to apply to the relevant authority to overrule the objection of the debtor (Art. 79 ff. SchKG). The authority makes a decision based on the documentation submitted by the two parties.
If the objection is overruled and the proceedings restart, the creditor has one year from the original issue of the payment order to request the continuation of the debt enforcement proceedings (Art. 88 SchKG). The deadline is suspended during the court proceedings. The proceedings will end with the seizure and sale/auction of assets of the natural person to cover the amount or, in the case of a company, with bankruptcy.
“Deleting” an Entry in the Debt Collection Register
An entry in the debt collection register remains even after you pay the amount stated in the payment order or you object to it. Since this entry will appear on an extract, you have the following options to delete it (according to Art. 8a SchKG; in fact the entry will not be deleted but hidden for third parties):
- Declaration from the creditor: The creditor declares that he or she has withdrawn the debt enforcement claim.
- Wait five years: An extract of the register only shows entries from the last five years.
- Claim against creditor: The last option is to apply to the court which dealt with the case and prove that no debt existed or that it was unenforceable at the time the payment order was issued (for example if you already paid the debt).
New Debt Enforcement Revisions for 2019
On 1st January 2019 various revisions to the debt enforcement proceedings came into force. According to the new revisions, a debtor can apply to the debt enforcement office within three months of receipt of the payment order to request that the entry in the debt collection register no longer be visible to third parties. The debt enforcement office will then request proof from the creditor that action has been taken to progress the enforcement proceedings. If the creditor cannot provide such proof within 20 days, this register entry is no longer visible to third parties. This is also applicable if the claim of the creditor is justified but the creditor does not enforce the proceedings. However, even after the deadline of 20 days, the creditor has the right to continue debt enforcement proceedings against the debtor and the register entry will then be visible again.
-MLaw Armin Gilg, Attorney at Law at Studhalter & Pfister Rechtsanwälte AG