– July 5, 2023

The course of debt collection proceedings

In Switzerland, there are basically three types of debt collection – debt collection for seizure, pledge realisation or bankruptcy. This article will roughly illustrate the procedure.

The debt collection procedure begins in the same way in all three cases: first, the creditor must submit a debt collection request against the debtor to the competent debt collection office. The latter is for natural persons at their place of residence, for legal persons entered in the commercial register at their registered office and for those not entered in the commercial register at the head office of their administration.

The debtor is subsequently served with an order for payment. He now has three options:

1. he can pay the outstanding debt, which leads to the discontinuation of the debt collection proceedings.

2. he can do nothing at all and the creditor can file a request for continuation of the debt collection proceedings with the debt collection office after the expiry of 20 days, but within one year.

3. he can file a legal objection, which must be removed by the creditor. The court then decides whether provisional or definitive judicial opening is granted or whether the debt collection must be discontinued, depending on the judicial opening title within the meaning of Art. 80 para. 1 and 2 SchKG (definitive judicial opening title) or Art. 82 para. 1 SchKG (provisional judicial opening title).

If there is no corresponding legal opening title, the claim can also be asserted by means of an action for recognition in civil proceedings and the legal proposal can thereby be eliminated. If the legal opening has been granted or the action for recognition has been approved and the debtor does not raise any objections or does not contest the decision, the matter continues with the request for continuation to the competent debt collection office. If the creditor fails to remove the legal proposal, the debt collection will not be continued even if a legal proposal has been made.

After the debt collection office has received the request for continuation, it decides which type of debt collection will be executed. It is only at this point, i.e. during the execution of the debt collection, that the difference between the three types of debt collection is made.

In principle, in cases where the debtor is entered in the commercial register in a capacity according to Art. 39 Para. 1 Nos. 1-14 SchKG, ordinary bankruptcy is pursued (Art. 159-176 SchKG). There is also the possibility of bill enforcement according to Art. 177-189 SchKG, but this is very rarely used in Switzerland. The exceptions to bankruptcy debt collection are set out in Art. 43, points 1-3.

If there is a claim secured by a pledge, the debt collection is continued, also against the debtor subject to bankruptcy proceedings, according to Art. 41 para. 1 SchKG by realising the pledge according to Art. 151-158 SchKG (e.g. real estate or condominium unit).

In all other cases, the debt collection is continued by way of attachment pursuant to Art. 42 para. 1 SchKG in accordance with Arts. 89-150 SchKG.

If you have any questions debt and bankruptcy law, our lawyers will be happy to advise you.