Debt Collection / Posted 5 years ago
The procedure for debt collection in Malta can be performed outside the court or in court by filing actions for debt recovery.
In 2006, the Maltese Code of Organization and Civil Procedure was simplified in order to achieve debt recovery faster.
The first step when trying to collect a debt in Malta out of court is to send a dunning letter and then the judicial letter. When the debt recovery ends up to trial, the judicial letter must also be filed with the other documents.
In order to avoid litigation in Malta, you can ask our Maltese lawyers for legal advice.5
Debt recovery through judicial letter in Malta
If the debt is decisive and cleared, the plaintiff is allowed to choose the debt recovery process through judicial letters that will be used as executive titles. The Maltese laws on debt recovery enable actions through a judicial letter for the following situations:
– A judicial letter filed according to Article 166A in the Code of Organization that enables a creditor to make claims for amounts not exceeding 5,000 Lm (approximately 23,300 euros). The debtor has 30 days to oppose the letter and, in case he doesn’t, the judicial letter will be used as an executive title. Once the creditor can use the judicial letter as an executive title, he or she can get all required warrants and recover the debt.
– A judicial letter filed according Chapter 12, section 253, for unlimited outstanding debts and if the creditor can present bills of exchange or promissory payment notes for the whole amount. In case the debtor does not oppose the execution of the documents stating the outstanding amount within 20 days, the creditor can use the judicial letter as executive title.
No judicial procedure is necessary if the contract for debt collection is made in front of notary public, but if a judicial letter is presented as an executive title, the judicial procedure will be enabled.
In Malta, debt recovery through judicial letters has become more popular due to time and money saving procedures. The new system has also diminished the number of debt collection cases taken to court.
Debt recovery in Maltese courts
If the amount to be recovered varies and it isn’t liquidated, the debt collection case must be presented in front of a normal court. The courts that handle B2B claims on debt recovery in Malta are:
– the First Hall, which is a civil court and judges claims exceeding amount of approximately 11,650 euros;
– the Court of Magistrates wich rule over debt collection exceeding amounts ranging between 3,500 euros and 11,650 euros;
– the Small Claims Tribunal that will rule over cases in which the debt does not exceed 3,500 euros.
According to Chapter 12, article 167 of the Code of Organization, a decisive and liquidated debt can be recovered without any evidence, unless the debtor presents solid reasons that could challenge the claim.
The general statute of limitation for commercial debt collection in Malta is 5 years, but according to Chapter 16, article 2147 of the Laws of Malta, there are types of debts with specific statute of limitations.