Understanding Debt Collection in Poland – A Guide
Collecting a debt in Poland can seem like a daunting task. Language and cultural barriers, foreign laws and customs, all impose serious challenges to collecting debt. Here is some valuable information that may help you navigate the unique challenges faced in Polish collections.
Understanding the Polish Legal System
Polish law is founded on civil law and uses a codified system. Poland became a member of the EU in 2004, implementing regulations, including Regulation (EC) No. 1896(2006), which creates a European order for payment procedure, and Regulation (EC) No. 861/2007, which establishes a European small claims procedure.
There are separate legal procedures for various people and business types. There is the normal timeline in the Commercial Court (see below). Or, if the subject is worth less than 10,000 PLN, there may be an expedited process. Injunctions and seizures may be introduced to protect the rights of creditors.
Types of Companies
A solid understanding of the different kinds of companies is vital for effective debt collection in Poland. The most common company types are the following:
- Sole trader: no minimum capital requirement; owner has unlimited liability for the company’s debts. These are usually tradesmen and individuals offering a particular service.
- Civil law partnership: no minimum capital requirement; partners have unlimited liability for debts incurred.
- Limited partnership: requires no minimum capital; at least one partner has unlimited liability for debts, with limited partners enjoying limited liability.
- Private unlimited company with shareholders: requires minimum capital of 50,000 PLN; at least one partner has unlimited liability for debts incurred.
- General partnership: requires no minimum capital; partners have unlimited liability.
- Limited liability company: requires minimum capital of 5,000 PLN; partners are liable only for the total value of the company’s capital.
- Company with shareholders: requires minimum capital of 100,00 PLN divided into shares. The company is liable for the amount of capital held in those shares.
The statutory limitation period in Poland is among the shortest in the EU, with only two years for domestic commercial claims and 10 years for a judgement. Only judicial interruption of a limitation is possible.
The most common form of payment is bank transfer to the (foreign) creditor’s account or forwarding payment to the collection agency, which then wires the outstanding sum to the client. Other payment methods can be arranged. Separate accounts are set up for the repayment of debts.
Information on Debtors
In Poland, public registers of companies are easily accessible. Depending on the type of company, these registers will contain information on a given company’s solvency and assets.
Information on consumers and their assets is protected under Polish privacy laws.
Generally, creditors are not entitled to add collection or any other additional costs to the amount owed, except for B2B debt, in which case the following conditions apply:
- Costs €40 or under must be paid in a lump sum
- Costs over €40 must be verified by documentation supplied by the creditor. Collections agencies cannot add fees without documentation from the creditor.
B2C vs B2B Claims
B2C and B2B claims are clearly distinguished in Poland.
|No public Registers for Individuals
||Public Registers for Companies
|No information on Individuals’ assets
||Information on solvency and assets available only in a few types of companies – e.g limited companies with shareholders
|The latest regulations allow individual debtors to announce a banktruptcy without the necessity of covering their debts. This can be risky for private creditors or loan companies, for all types of unsecured debts.
||Limited responsibility of the board.
||Long-lasting court procedures, incl. bankruptcies / insolvencies
Because of the lack of public registers for individuals, it is important to acquire as much information as possible. There is no information available about the financial situation of individuals before legal proceedings have begun – but once started, info is readily available.
For companies, financial information is easily accessible from the start, although be aware, data on public websites is not always current.
Keep in mind, there are no formalized procedures on how to send reminders to debtors, and costs and fees are agreed on a case-by-case basis.
Local Experts in Collections
Collections in Poland can be complicated for small to medium sized businesses. When in doubt, remember that debt recovery is much simpler when you use a collection agency fluent in the laws and customs of the country where the debtor resides.
Cedar Financial offers on-the-ground representatives in Poland who understand the processes and debt collection practices that work to support full recovery of your funds. For more information on how we can help, contact us today.