Debt Collection in France

Practical Guide

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Is there a minimum amount to start a legal action?

In France, there is no minimum amount required to start a judicial process. However, for a claim below €5,000 creditors usually prefer an amicable approach as French legislation allows it. Moreover, there are specific amicable collection actions handled by debt collection lawyers, debt collection agencies, bailiffs, or other professionals who own companies dealing with such activities.

Will the amount due condition the type of procedure?

1) Recovery by a bailiff for a claim below €5,000

A simplified procedure for the recovery of small claims can be implemented by a bailiff at the request of the creditor for the payment of a claim originating from a contract (ex: lease contract, sale contract) or resulting from ''an obligation of a statutory nature” (ex: compulsory contributions). This procedure is not free of costs for the creditor.

It is possible to initiate a debt recovery procedure, in the event the debt results:

  • either from a contract (a purchase from a merchant or a bank loan, for example) or an obligation (unpaid invoice, credit, bank overdraft, rent, etc.). In both cases, the amount of the debt is entered on the contract or the document setting the obligation.
  • either from a bill of exchange, a promissory note, or the acceptance of a transfer of professional debt.

The creditor can submit his or her claim via the small claims processing online platform.

2) Simplified judicial proceedings, the “injonction de payer,” or an order for payment, is used when the creditor is certain the debt cannot be challenged or is difficult to argue

  • It is free of fees for receivables of a civil nature up to €10,000, as in this case, the creditor can fill in a form provided by the Court (tribunal judiciaire).
  • In case the claim is superior to €10,000, a request must be made to the Court. This request must be drafted by a lawyer.
  • If the claim is of a commercial nature, whatever the amount, one must address the claim to the Commercial Court. The creditor must pay court fees of €35 within 15 days of the presentation of the request. In cases requiring the invention of a lawyer, the lawyer’s fees are added.

In summation, it is a simplified judicial proceeding, usable when the debt originates from a contract. The competent Court depends on the nature of the claim.

The claim must contain the following information:

  • For natural persons: surname, first names, profession, domicile, nationality, date, and place of birth of the applicant
  • Name and domicile of the person against whom the request is made, or, in the case of a legal person, name and registered office
  • Amount of the sum claimed with the statement of the various elements of the claim and the basis thereof
  • It must be accompanied by all the supporting documents proving the merits of the request (order forms, contracts, unpaid invoices, letters of formal notice, etc.).

If one of the indications is missing, the request will be rejected.

The creditor must send their request to the registry of the competent Court, before the end of the applicable limitation period.

The request can be delivered to the registry of the jurisdiction by the creditor himself, a lawyer, or a bailiff.

Issuance of a payment order

The procedure is not adversarial: the Judge will render a decision solely on the basis of the elements provided by the creditor, without hearing the arguments of the debtor.

If the Judge considers the claim justified, they will render an "order for payment" for the amount withheld. If, on the contrary, the Judge rejects the request, the creditor has no recourse, but they can initiate traditional legal proceedings.

It is up to the creditor to send the order for payment to the debtor by bailiff, at their own expense, using a certified copy of the request and the order. The order is canceled if the transmission is not made within 6 months.

Contesting order

The debtor has 1 month from the serving of the injunction order by the creditor to contest it by opposing it before the Court.

The Court then summons the parties. After trying to reconcile them, a judgment is rendered.

This judgment may be challenged before the Court of appeals, by the creditor or the debtor, if the amount of the claim is greater than €5,000. If the amount does not exceed €5,000, challenges must be directed to the Court of Cassation. If the debtor does not contest the order to pay at the end of the 1-month period, the creditor may ask the court office to affix the enforceable form to the order. This then has the value of a judgment.

To enforce the order, the creditor must apply to a bailiff.

3) Traditional judicial proceedings

a. where the debt is “obvious”

b. where the debt is contested with serious arguments

a. Urgent proceedings - Interim Payments (Référé provision)

The Judge may grant, by way of référé, a special procedure which allows one party to refer the case to a single judge, thus asking him to make a provisional order. The other party must be informed and may appear before the Judge. The procedure is much faster since it usually concerns urgent cases. However, this is possible only when the existence of the obligation cannot be seriously disputed.

The single Judge acts as the Judge of obviousness, and if that is not the case, the Judge will say there is no need to refer.

The interim order can cover the entire amount likely to be requested from the principal. If therefore, the interim order remains a provisional decision made at the request of a party, the interim order ordering the payment of a provision frequently leads to the completion of the trial.

b. Classical proceedings before the Commercial or Civil Courts.

Once the decision is rendered, the bailiff is responsible for conducting the enforcement operations and is in charge of resolving the difficulties that would arise.

Is it mandatory to send a warning letter before taking legal action to collect a debt?

1) Under French law, sending a warning letter is mandatory, especially if the creditor wishes to bring an action at a later stage.

The provisions of the French Civil Code even specify its form and effects: the debtor shall be ordered to pay, either by a summons, or by an act carrying sufficient questioning, or, if the contract so provides, by the sole payability of the obligation.

2) The formal notice can be sent either by the creditor or by a lawyer. It is, however, advisable to contact a lawyer, as a warning letter drafted by a lawyer is often more effective. When drafted by a lawyer, it takes the form of an official formal notice containing reference to the provisions of the Civil Code, and written evidence justifying the claim is then attached to the letter.

3) The warning letter is a prerequisite, and has the following functions:

  • it allows for the compensation for the damage caused by the delay in the performance of the obligation, to establish the debtor at fault and, as such, liable by default of default interest.
  • it constitutes the starting point of the procedural delay.

It is in the creditor’s interest to give notice to his debtor as soon as possible, as the creditor can only acquire certain rights from the notice. Under the provisions of the French Civil Code, the formal notice marks the starting point for default interest (except if a specific provision is included in the agreement between the parties).

Indeed, for obligations limited to the payment of a sum of money, the damages due in compensation for the damage caused by the delay in payment are equal to the legal rate. The rule presupposes a formal notice officially acknowledging the delay in this execution, on the condition that the due date of the debt bearing interest is definitively established. As long as the debtor is not put in default, he is not considered to be in default.

4) The practice is that a certain deadline is included in the warning letter (often 8 or 15 days) in order to allow the debtor to pay the due amount, or to respond with their explanations, and, if the letter is drafted by a lawyer, it must include an invitation for the debtor, if they wish, to forward such letter to their counsel.

What are the best practices for creditors to increase the possibility of recovering the debt?

In general, any evidence that documents business relationships can be useful: correspondences, messages, witnesses, third-party documents, and any other possible evidence that can prove the relationship between the parties.

We recommend properly documenting the relationship with the assistance of an attorney at each step, taking as many of the following documents and precautions as possible

  1. Collect all signed contracts containing the obligations of the parties.
  2. Organize any orders for goods or services with detailed written documents.
  3. Try to ensure the solvency of the debtor or agree on guarantees such as first demand bank guarantees.
  4. Agree in writing of any further modification of the obligations.
  5. Leave written evidence of any objection of the debtor for the goods delivered or services provided.
  6. Always try to find out and keep documents that can be used to locate the debtor’s assets subject to future seizure if necessary (such as bank accounts, movable properties, offices open to the public, etc.)

How can a foreign creditor start a procedure for international debt collection in France?

France recently passed a justice reform that came into force on January 1, 2020, which made some important changes regarding the presence of a lawyer in the judicial proceedings.

From now on, for the procedures brought before the commercial or civil Court, it is mandatory to have a lawyer in all litigations relating to a request which exceeds the amount of €10,000, including for urgent interim proceedings. There are, however, legal exceptions for certain litigations and, in matters falling under the exclusive jurisdiction of the civil Court, the parties are required to have a lawyer, whatever the amount of the claim.

There is no need for any power of attorney or any other document when parties are represented by a lawyer. This is only requested if the party is represented by any other person, for example, before the commercial Court for litigations below €10,000, the party may be represented by the person of their choice. Even if a power of attorney is required, it may be drafted by the parties.

No fees are to be paid to the French Court in order to bring an action. The only costs will be for the bailiff, who must deliver the summons to the other party, and lawyer’s fees if the party is required to have one.

Starting from January 1, 2020, the Judge may reject a claim if it is not preceded, at the choice of the parties, by an attempt at conciliation led by a justice conciliator, by an attempt at mediation, or by an attempted participatory procedure, when it tends to pay a sum not exceeding €5,000 or when it relates to specific litigations.

Which documents are necessary for the debt collection in France?

The main element to check before choosing to recover the debt before a court should be the proof of the debt.

French judges prefer written evidence, and any further documentation that the creditor can present will be useful.

Very attentive analysis of such evidence shall be made by a lawyer before starting a proceeding since, without the needed proof, there will be almost no chance for the claim to succeed.

What happens after the first demand for payment?

If a court procedure has not still been initiated, and only a warning letter has been sent, the debtor's actions will have consequences depending on the answer they may provide, if any (for instance, if they refuse or contest the relationship or the amount, or if they include counterclaims, or if they simply do not answer).

If a recovery court process has been initiated, the debtor's acceptance and payment may imply their obligation to also pay the fees spent by the creditor (mainly, lawyer fees or any fees which were needed in order to collect proof). The creditor will usually estimate such fees and will request reimbursement in their claim.

If the debtor opposes, then the trial will continue in its different phases.

However, at any time during the proceedings, it is possible for the debtor to pay, and usually, a settlement agreement is signed. If not, in case a decision is rendered, the bailiff will be able to seize the debtor’s assets.

Can interim measures be taken?

In general terms, the best opportunity for the creditor to start any legal claim is to find out, with the help of al lawyer, as much as possible on the solvency of the debtor.

In addition, there are several precautionary measures that can be taken to ensure the effectiveness of a judgment.

Very generally, in order to start these precautionary measures, it will be necessary for the creditor to justify:

  • a claim appearing to have a serious ground; the Judge will have to verify that the claim appears to be valid and is not based on a legally unfounded allegation;
  • circumstances likely to threaten the recovery of the debt; the existence of this threat can encompass diverse situations, from a plurality of creditors to a repeated and prolonged absence of the debtor at their home, or any notion that hints at the existence of a real threat to recovery.

On the other side, the party asking for a precautionary measure will be required to offer a guaranty large enough to back possible damages that may be caused to the debtor.

That said, the precautionary measures procedure should be considered very carefully in order to have all the steps and legal requirements fulfilled. Otherwise, the creditor risks being condemned to pay the costs of this phase of the procedure.

If, for any reason, the recovery was not possible, is there any other action that the creditor could take to write off such debt in their accountancy?

In the event of insolvency of the debtor or impossibility of collection, it is possible to write off such debt in their accountancy. Official documents concerning the insolvency (which are of public access) or the decision rendered by the Judge would be enough for the accountant.

The creditor should pay attention to the declaration of claims, which is the first step to be taken by a creditor of an insolvent company in order to preserve their rights in the insolvency proceedings, and it must be drafted with care shortly after the opening of the insolvency proceedings. Indeed, the declaration of claims entitles the creditor to participate in the allocation of funds.

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