Publications How to seize debtor’s property

Often people or financial institutions that lend money have the question of how to seize the debtor’s property. This problem becomes particularly relevant when the obligation to repay is breached and there is a risk that the debtor will transfer its apartment or house to relatives or sell all its property to third parties.

Under current law, there are several ways to limit the debtor’s ability to dispose of property

Firstly, it is possible to apply to the court for recovery of the debt. In such a case, if the creditor so requests, the court may prohibit the debtor from disposing of its property. A court decision on attachment must be registered in the immovable property rights register.

Second, if the debtor’s property has not been seized in court proceedings, the creditor has the opportunity to file an executive notice, which is issued in court after the judgement has been rendered, with the executive. A public or private entity, upon receipt of the relevant documents from the creditor, undertakes to search for the debtor’s property and to seize it.

It is important to remember that it is better to prevent trouble than to fight it afterwards. You are always entitled at the time of the loan to offer the debtor a mortgage on the real estate or a vehicle mortgage. In such a case, the property is seized by the notary at the time the contract is concluded.

In addition to the above, it should be remembered that if you have seized the property of the debtor but it is in a mortgage or mortgage with another person, your chances of repayment are nil. The reason for this is that the executioner will not be able to sell the property that is in the mortgage or the collateral of others.

How to prevent the debtor from travelling abroad

If the debtor has no property, he is not formally employed, the creditor and the executioner resort to extreme methods of influencing the debtor, among which is a restriction on travelling abroad. Under the law in force, it is only as a last resort that a debtor may be restricted from travelling abroad if it is proved that the court’s decision was not enforced intentionally. In other words, if it can be shown that the debtor has money, but that the debtor is obstructing the execution of the judgement in any way, the perpetrator will apply to the court and the court will decide on the restriction of travel abroad. Restrictions on travel abroad are imposed until the court decision is fully implemented.

It is important to note that the jurisprudence on the limitation of the debtor’s travel abroad is rather mixed. In any case, the perpetrator and the creditor must prove:

  • The debtor has no property of any kind;
  • The performance by the perpetrator of all actions necessary to collect the debt;
  • The debtor’s failure to comply with a court decision when there is a real possibility of repayment;
  • Availability of a foreign passport.

The following are some of the tips for a quick and effective recovery:

When borrowing money, insist on real estate mortgages or vehicle mortgages. The mortgage and pledge can be issued even if the money is transferred into the debt on a regular, notarized receipt.
Do not send the debtor a claim. This may encourage him to go to lawyers, who will advise him to dispose of the property immediately;
When you apply to the court, you immediately ask to be arrested. Remember that it is possible to ask the court to seize the property of the debtor even before filing a claim;
After a court decision is made, please contact the private actors, as they are more interested in the actual execution of the judgment. In enforcement proceedings, act aggressively, because only constant psychological pressure on the debtor will bring the desired result.

What to do if the debtor completely ignores the claims of the performer and the creditor


It is important to bear in mind that the Criminal Code of Ukraine provides for criminal liability for non-compliance with a court decision. In the event that the debtor had no property, there was merit in filing a complaint with the police and requesting that criminal proceedings be instituted. There is a high risk that criminal proceedings will be dismissed because the debtor’s actions do not constitute an offence. In such a situation, it is necessary to file a complaint against the investigator with the investigating judge of the district court, who will decide whether there are grounds for instituting criminal proceedings. Unfortunately, Ukrainian legislation does not provide for the debtor’s enforcement of its obligation to repay funds, such as community service or other types of work. The debtor should be carefully required to repay the debt, since the debtor could also file a police report alleging extortion or fraud. Of course, such claims by the debtor are unfounded, but given the realities of life, the police may inadvertently wonder where the lender’s loan money came from and whether the lender is authorized (if it is systematic). If you have difficulties in collecting your debt, you can always seek legal assistance from a lawyer.

 

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