When a client or business partner fails to pay an invoice, it can be both frustrating and financially challenging. Fortunately, Dutch law provides several ways to recover outstanding debts. In this blog, we outline a clear step-by-step process to help you recover your unpaid invoice.
Step 1: Legal assessment of the case
Before taking any action, it’s crucial to assess whether the case can be handled under Dutch jurisdiction. Verify if the debtor is based in the Netherlands and check for any legal obstacles to enforcing the debt, such as clauses in the agreement that make foreign law applicable.
At the same time, assess the debtor’s financial status. A dissolved or empty B.V. often offers fewer possibilities for debt recovery than a sole proprietorship, where personal assets can be pursued if the court grants a judgment in your favor.
Step 2: Attempt to settle the matter amicably
Before proceeding with legal action, it’s always advisable to try to resolve the issue amicably. This means reaching out to the debtor to negotiate a payment plan or settlement without involving the court.
Clear, written communication can often prevent the matter from escalating. Many disputes can be resolved quickly through negotiation, saving both time and legal costs. If negotiations fail, you can then proceed with legal steps.
Step 3: Check whether the claim is above or below €25,000?
Depending on the value of the claim, there are different legal routes to follow:
Under €25,000: For claims below €25,000, you can file a summons with the subdistrict court ("kantonrechter") yourself. While this is legally possible without a lawyer, it is not recommended due to the risks involved and the complexity of the procedure. Alternatively, you can engage a lawyer, debt collection agency or bailiff to handle the process on your behalf.
Above €25,000: For claims exceeding €25,000, it is mandatory to hire a bar-registered lawyer to bring the case to court. A lawyer can provide legal guidance and ensure that your case is presented effectively, increasing the likelihood of a successful outcome.
Step 4: Court judgement
If the court rules in your favor and determines that the claim is valid, the debtor will be ordered to pay the outstanding amount. Once you have a judgment, you can enlist a bailiff to enforce it by seizing the debtor’s assets, such as bank accounts, vehicles, or other valuable property.
If the debtor is a B.V. (Limited Liability Company)., the bailiff can seize the company’s assets, whereas, in the case of a sole proprietorship, personal assets may also be subject to seizure.
Key Considerations
Enforcement Possibilities: It’s essential to investigate the debtor’s financial situation beforehand. A court judgment is only effective if there are assets to seize.
Cost-Benefit Analysis: Legal proceedings come with costs. Weigh the costs of hiring a lawyer, debt collection agency, or bailiff against the amount you are trying to recover.
Effective Communication: Always try to negotiate a settlement before resorting to legal action. Resolving the matter amicably can save significant time and expense.
Conclusion
Recovering an unpaid invoice can be complex, but following the right steps can significantly improve your chances of success. By conducting a legal assessment, attempting to negotiate, and taking legal action if necessary, you can establish a strong foundation for recovering your debt.
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