Bankruptcy without debt collection
Debt collection proceedings can be tedious and time-consuming. You can expedite the process if your business client has stopped making payments and you can prove it. By Michael Krampf, lic.iur., attorney, lawyer, and editor at the Beobachter Advisory Center.
If a business customer fails to pay your invoice, you’ll eventually have to take collection action if you want to recover your money. Such collection proceedings can be tedious and time-consuming, especially if you have to prove your claim in court. Or if the debtor tries to evade their financial responsibility by any means, legal or illegal. However, under certain circumstances, you can expedite the collection process: If your business customer has stopped making payments, you can file a petition directly with the bankruptcy judge to initiate bankruptcy proceedings.
The judge will declare bankruptcy if you can prove that your customer has ceased making payments. Mere allegations are not sufficient. You must submit documentation that clearly demonstrates the cessation of payments. In practice, acceptable evidence includes, for example, a multi-page extract from the debt collection register or a letter in which the debtor himself admits to being unable to pay or asks his creditors to defer their claims or waive a portion of them.
The court with jurisdiction over the proceedings is the court in the debtor's place of business. The judge will summon you and the debtor to appear at the hearing.
Direct bankruptcy proceedings offer many advantages: You can bypass the debt collection process, thereby saving time, money, and stress. In addition, the summons from the bankruptcy judge to appear at the hearing may, under certain circumstances, prompt the debtor to contact you and pay the debt—or part of it—if you withdraw your petition for bankruptcy. This procedure may therefore serve as a means of pressure. And finally, there isn’t much that can go wrong for you. In the worst-case scenario, the bankruptcy judge will reject your petition because you cannot prove that the debtor has ceased making payments. In that case, you will have to cover the court costs, which amount to a maximum of 500 francs. You are still free to pursue your claim through the normal debt collection process.
Book Recommendation: How to Make Money
The *Beobachter* Guide explains debt collection and bankruptcy law in easy-to-understand language. The handbook shows companies how they can mitigate the risk of loss from the very first business contact and what steps they need to take, one by one, if a customer fails to pay their bills. It includes numerous templates for letters and lawsuits, as well as fee schedules, useful addresses, and links.
1st edition, 2006,
Beobachter-Buchverlag,
ISBN 978-3-85569-338-2,
328 pages, hardcover,
CHF 48.00
The judge will declare bankruptcy if you can prove that your customer has ceased making payments. Mere allegations are not sufficient. You must submit documentation that clearly demonstrates the cessation of payments. In practice, acceptable evidence includes, for example, a multi-page extract from the debt collection register or a letter in which the debtor himself admits to being unable to pay or asks his creditors to defer their claims or waive a portion of them.
The court with jurisdiction over the proceedings is the court in the debtor's place of business. The judge will summon you and the debtor to appear at the hearing.
Direct bankruptcy proceedings offer many advantages: You can bypass the debt collection process, thereby saving time, money, and stress. In addition, the summons from the bankruptcy judge to appear at the hearing may, under certain circumstances, prompt the debtor to contact you and pay the debt—or part of it—if you withdraw your petition for bankruptcy. This procedure may therefore serve as a means of pressure. And finally, there isn’t much that can go wrong for you. In the worst-case scenario, the bankruptcy judge will reject your petition because you cannot prove that the debtor has ceased making payments. In that case, you will have to cover the court costs, which amount to a maximum of 500 francs. You are still free to pursue your claim through the normal debt collection process.
Book Recommendation: How to Make Money
The *Beobachter* Guide explains debt collection and bankruptcy law in easy-to-understand language. The handbook shows companies how they can mitigate the risk of loss from the very first business contact and what steps they need to take, one by one, if a customer fails to pay their bills. It includes numerous templates for letters and lawsuits, as well as fee schedules, useful addresses, and links.
1st edition, 2006,
Beobachter-Buchverlag,
ISBN 978-3-85569-338-2,
328 pages, hardcover,
CHF 48.00
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The Beobachter's new service: competent legal advice for SMEs and their employees. 6 months for only Fr. 99.- (introductory price).
You can reach the legal experts Monday to Friday from 9 a.m. to 1 p.m. on 043 444 54 09. You also have full access to the advice platform Helponline.ch and an Beobachter magazine every 14 days. The price also includes a gift: the standard work for SMEs from Beobachter-Buchverlag,
"How to get your money", worth CHF 48.
Order the consulting subscription for SMEs at: www.werbewoche.ch or by phone: 0800 83 0800.
