Debtor Not Paying: What to Do

1. First, secure your evidence

Before you write a single word to the debtor, go through what you actually have on the debt. Weak documentation is the most common reason a claim ends up taking far longer to recover than it needs to. I recommend gathering:

• ✓the agreement or order the debt arose from (even one concluded orally, if a confirming email exists)
• ✓the invoice with the due date and variable symbol clearly stated
• ✓a handover protocol, delivery note, or other proof that you performed (goods delivered, work carried out)
• ✓all communication with the debtor: emails, texts, WhatsApp messages, even an informal ”I’ll pay next week”

You will need these documents both for the pre-action letter and later as evidence in court. The sooner you organize them, the faster the whole process will move.

For business claims, I also recommend checking straight away whether the invoice contains all the mandatory particulars (company ID, VAT ID, document number, an exact description of the performance) and whether it matches any framework agreement or order. For private loans between individuals, there is often nothing in writing at all; even so, a text message acknowledging the debt or confirmation of a bank transfer carries weight in court.

2. A reminder, or straight to a pre-action letter?

Sending your own informal reminder makes sense for small amounts, or when you expect it was simply an oversight. Once the debtor goes quiet or downplays the debt, I recommend moving to a pre-action letter from a lawyer. The difference is not just in tone, but in legal effect:

• ✓a letter on a lawyer’s letterhead signals that you mean business, many debtors pay right at this stage
• ✓under Section 142a of the Code of Civil Procedure, delivery of the letter at least 7 days before filing the lawsuit is a condition for being awarded reimbursement of litigation costs
• ✓without a proper letter, the court may deny you costs (the fee, the lawyer’s fee) even after you win the case

The letter must precisely identify the debt (invoice or agreement number, amount, due date) and set a reasonable deadline for payment, usually 7 to 14 days. Send it by registered mail or through a data box, so you have proof of delivery.

In practice, the cost of a lawyer’s letter is often recovered simply because the debtor pays without any further action being needed. Even if they do not pay, the letter opens the way to full reimbursement of costs in any subsequent lawsuit, so the investment in it pays off sooner or later.

3. Acknowledgment of debt and a payment schedule

If the debtor does not dispute the debt but simply cannot pay right now, a written acknowledgment of debt with a payment schedule is often a better route than going straight to a lawsuit. Acknowledgment of the debt has two practical effects:

• ✓a written acknowledgment raises a presumption under Section 2053 of the Czech Civil Code that the debt still exists to the acknowledged extent, which simplifies later proof, the debtor can no longer easily claim the debt never arose
• ✓acknowledgment of the debt extends the limitation period: under Section 639 of the Czech Civil Code, a new ten year period runs from the date of acknowledgment instead of the standard three years (no written form is required)

The payment schedule itself should include the exact amount and date of each instalment, the account number and variable symbol for payment, and a provision for what happens on default, usually the loss of the right to pay in instalments and the whole remaining amount falling due at once. Without such a provision, a single missed instalment would force you to pursue recovery of just that one amount, instead of being able to claim the whole remaining debt.

4. Lawsuit and the electronic payment order

If the debtor neither responds to the letter nor acknowledges the debt, court is the remaining option. For undisputed claims (you have the invoice, the agreement, no complaint), the fastest route is an application for a payment order under Section 172 of the Code of Civil Procedure, ideally an electronic payment order under Section 174a of the Code of Civil Procedure (EPR):

• ✓the court decides without holding a hearing, based on the lawsuit and the attached documents; the law does not set a deadline, in practice it takes weeks to about a month for undisputed matters
• ✓the debtor has 15 days to file an objection; if they do not object, the order becomes final and is an enforcement title
• ✓court fee: 5% of the principal for a lawsuit (a flat CZK 1,000 for amounts up to CZK 20,000), a lower 4% rate for an electronic payment order
• ✓if you win the case, the court will generally award you reimbursement of the litigation costs at the debtor’s expense

If the debtor files an objection, the matter continues as standard court proceedings, which, depending on complexity, take roughly 6 to 18 months. For disputed claims (the debtor complains, disputes the scope of performance), it is therefore advisable to consider a standard lawsuit with full argumentation from the outset.

You attach copies of all the documents from the first section to the lawsuit: the agreement, the invoice, proof of performance, and a copy of the delivered pre-action letter. If the matter reaches a hearing, I will represent you in court and keep you informed of developments. For simple, undisputed claims, a hearing usually will not be necessary at all.

5. Limitation: when it is too late

The general limitation period under Section 629 of the Czech Civil Code is three years from the moment you could first have exercised the right, typically the day after the due date. Once the period expires, the debt does not cease to exist, but the debtor can raise a limitation defense in court, and you would not be able to enforce the claim.

The period can be extended, and repeatedly so: acknowledgment of debt under Section 639 of the Czech Civil Code sets a new, ten year period running from the date of acknowledgment (no written form is required), and a written acknowledgment additionally raises a presumption under Section 2053 of the Czech Civil Code that the debt still exists. A final judgment or payment order has its own ten year limitation period for enforcement. It therefore pays to act promptly, ideally within the first year after the due date, before the individual periods start working against you.

Limitation is also not examined by the court on its own initiative, the debtor must expressly raise it in the proceedings. If they do not, the court will award the claim even after the three year period has expired. I would not rely on that, however: many debtors nowadays get advice and raise the limitation defense as soon as a lawyer, or even a basic internet search, points them to it.

6. Enforcement, or is it better to write it off?

A final payment order or judgment, or a notarial deed with consent to enforceability, is an enforcement title. You file the application through an enforcement officer, who, depending on the debtor’s financial situation, chooses the method of recovery: wage deductions, attachment of a bank account claim, or the sale of real estate or movable assets.

The creditor generally does not pay an advance when filing the enforcement application. If enforcement turns out to be persistently unsuccessful, the enforcement officer will ask you either to pay a smaller advance to continue it (typically a few hundred crowns), or to agree to discontinue it for lack of assets. Wage deductions tend to be the most reliable, since they run automatically for as long as the debtor’s employment lasts. Freezing a bank account is fast, but debtors often know about the impending enforcement in advance and manage to empty the account. Selling real estate or movable assets takes the longest, but tends to be the most effective for debtors who own property.

Not every claim is worth pursuing this far, though. I recommend considering writing off the debt (or keeping only a passive record of it) if:

• ✓the debtor is in insolvency or bankruptcy and your claim is unsecured, the only solution is filing it in the insolvency proceedings in time
• ✓the enforcement officer has already issued a finding of no assets, and the debtor’s situation has not changed since
• ✓the cost of further recovery would clearly exceed the amount realistically recoverable

Writing off a claim does not extinguish it, you simply stop actively pursuing it. If the debtor’s financial situation improves over time (new assets, an inheritance, employment), enforcement can be proposed again, as long as the limitation period has not expired.

7. How to avoid debts next time

Recovering a debt always costs time and energy, even though the debtor ultimately bears the costs. It is therefore worth investing in prevention:

• ✓for new business partners and larger amounts, ask for a deposit, at least a partial one
• ✓before entering into an agreement, check the partner in the public register and the insolvency register; for individuals, a basic reference check also helps
• ✓include default interest and a reasonable contractual penalty in the agreement, it encourages timely payment
• ✓for recurring business relationships, consider going straight for an acknowledgment of debt with a notarial deed, it will save you months of court proceedings if the partner stops paying

Prevention will never rule out the risk entirely, but it significantly reduces the number of situations where you have to pursue an unpaid invoice or loan through the courts. And if it does come to that, you will have the documentation in place from the start, which will make recovery faster and cheaper.

Frequently asked questions: debtor not paying

Who will handle your case

Ing. Mgr. Tomáš Beneš

Attorney registered with the Czech Bar Association, based in Prague.

Law degree from Charles University. I focus on business law, real estate and employment disputes. I handle every case personally, no assistants.

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