Debt Collection in Sweden
Well organised debt management is always preferable and a creditor should communicate to the debtor the importance of the agreed payment terms and the consequences of non-payment.
To enable a debt to be collected it must be determined by a third party, which means that there must be a decision saying there is a debt. This decision can be made by the enforcement service through a so-called payment order or by a district court through a judgment.
Before contacting the above mentioned organisations, debt collection in Sweden should always be initiated through a reminder letter to the debtor followed by a Letter Before Action.
The below information sets out the procedure a creditor should follow for debt collection in Sweden.
2. Pre-action procedure
2.1 Reminder letter When a debtor fails to pay the debt by its due date, the creditor should immediately send a payment reminder letter to the debtor requesting payment giving only a short deadline for the payment. The reminder letter can be sent on the day after the debt has fallen due.
The creditor should notify the debtor that if payment is not received by the end of the said deadline the matter will be escalated and legal proceedings may be initiated.
2.2 Letter Before Action
A Letter Before Action includes a warning of possible legal action being taken and shall be sent to the debtor before legal proceedings are commenced. The Letter Before Action should be sent within 7-10 days after the deadline for payment as set out in the reminder letter.
3. Swedish Enforcement Administration
If the debtor does not settle the debt within 12 days of the Letter Before Action an application of injunction of payment may be made to the Swedish Enforcement Administration (hereafter referred to as “SEA”). The fee for issuing the application is SEK300. In Sweden such an application will be officially recorded, showing the debtor has an overdue payment which might have a negative impact on his credit ability.
The debtor is obliged to reply to the order issued by the SEA. If the claim for payment is not disputed, the SEA will issue an order for payment and determine whether the debtor holds any assets on which execution can be levied. Compared to many other countries, the procedure in Sweden is fairly straightforward.
If the debt is not paid or disputed then the SEA will issue an enforceable payment order. The execution fee for the order is SEK600.
4. Court process
If the debtor opposes an order for payment, the creditor can file a request for the case to be heard by the court. The court fee is SEK450 no matter how big or small the actual debt is.
The Swedish civil court hearings are led by one or three judges and the proceeding is divided into a preparatory proceeding and the main hearing. A judgment is sometimes given shortly after the main hearing however more often it is sent to the parties a couple of weeks following the hearing.
5. Interim measures
A creditor may wish to obtain some sort of security over the debtor’s assets before issuing proceedings. The possibility to apply to the court for a so-called “kvarstad” is available before proceedings have been issued. However, proceedings must be issued within a month from the decision date. Another option is to apply for an injunction to pay via the SEA to avoid the decision expiring. A “kvarstad” decision can also be made later in the proceedings.
If time is of essence then an interim decision about “kvarstad” can be decided by the court without hearing the debtor.
The conditions for obtaining “kvarstad” are that the creditor must have a due claim and be able to show that there are strong grounds for assuming that the debtor will dissipate assets and thereby avoid enforcement proceedings against those assets. Furthermore, it is common that the claimant gives the court some security for the damage which the debtor might suffer due to being subject to “kvarstad”.
Creditors often consider threatening a debtor with a petition for bankruptcy/winding up. To obtain an order for bankruptcy/winding up the creditor must apart from making a payment of SEK500 to court, make an application to the court setting out:
a) the details of the parties;
b) why the debtor should be made bankrupt/wound up and
c) the details about the debt.
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