The Ministry quite meticulously approached the topic of limitation of debts. The new regulations are to be used primarily by debtors. Another objective of the amendment is also to curtail the recovery of outstanding liabilities by debt collection companies.
What is the limitation period?
In practice, limitation of debts means nothing else but the possibility of evading the satisfaction of the creditor’s claim against the debtor after the expiry of the time limit set by law. The statute of limitations is a kind of golden mean between the inaction of the entitled person, who is obliged to assert his rights, and the interest of the indebted, who after a long time may not be able to prove his case.
If we consider the dictionary definition, it is one of the most popular institutions in the legal system. The form of the so-called antiquity, that is, the weakening or acquisition of rights due to the passage of time and the omission of the entitled person.
The limitation period applies primarily to civil law property claims. In this context, by virtue of law, this group does not include negative or debt claims.
In particular, real estate or movable property included in the national register of lost cultural objects. In addition to the catalog of claims, which may be time-barred, there are also non-pecuniary claims. The institution also does not apply to claims related to the protection of personal rights.
The main assumption of the amendment introduced in July 2018 is to shorten the basic limitation period for claims. Previously, it was 10 years, since the introduction of new regulations into legal circulation – 6 years. What about business claims or so-called periodic benefits, such as rent payments or rent?
Currently, the deadline is 3 years and in this respect the rules will not change. Information on this subject can be found in art. 118 of the Civil Code (Journal of Laws of 1964 No. 16, item 93, as amended).
Care for your own rights
According to the new law, the limitation period ends on the last day of the calendar year in which the period expires. The Ministry of Justice explains that the reason for such radical changes was the increasing ignorance of the statute of limitations. It is about both the behavior of the debtor and the creditor or debt collection companies that were involved in the debt recovery process. The amended provisions are to mobilize both parties to regulate legal issues.
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Operation of courts
According to the current legal order, in order to evade the obligation to settle the debt, the debtor must file a prescription of limitation in court proceedings. The creditor may then prove that the period has not expired or that the limitation period has been interrupted at some point.
The amended regulations are to completely change this situation. The debtor does not have to file a complaint. The legislator introduces a total ban on pursuing time-barred claims. So the situation reversed slightly. It is the creditor who must prove that the claim is not time-barred. The court, in turn, is obliged to examine this matter ex officio.
If in the course of the evidentiary analysis, it finds that the time has expired, they will dismiss the action. In this case, the debtor will not have to take any action or raise an objection of limitation.
Benefits for debtors
This is to curb the ethically dishonest actions of creditors and debt collection companies. Taking advantage of the lack of legal knowledge or the simple ignorance of indebted persons became more and more common. Creditors have repeatedly counted on the debtor not to raise the statute of limitations before the court. Not everyone was aware of the existence of this type of institution.
Despite the prohibition to demand that the statute of limitations be satisfied, the legislator introduces a legal gate in the regulations that in exceptional cases the court may not take into account the expiry of the limitation period. It is to take into account so-called equity principles. The circumstances that caused the holder not to assert his claims are also relevant.
Changes in bailiff enforcement
An important change concerns the seizure of the debtor’s funds in a bank account. Currently, it is assumed that banking institutions undertake to transfer the amount to the bailiff as soon as they receive such a request. The debtor has therefore no means of defense. The new regulations regulate that seized funds will go to the debt collection account at the earliest after 7 days. This will enable the debtor to bring an action, the purpose of which is to revoke the writ of execution.
Amendments to the Act on limitation of debts – important information
In conclusion, it is worth briefly once again citing the factors of legal changes and their consequences for both debtors and creditors. Earlier, the statute of limitations for claims had an advantage in favor of lenders who, based on their experience in the area of financial services and their knowledge, were able to exploit the inaccuracies of existing regulations. Few borrowers knew about the existence of an institution, called limitation of claims. If the debtor did not consult his situation with a lawyer or did not try to obtain the necessary information on his own, then debt collection companies, being aware of the lack of client preparation, unscrupulous demanded repayment. The intensification of this practice and the willingness to fight against unethical practices of debt collectors led the authorities to work on the new act on limitation of debts.
Benefits for debtors
The amendment to the statute of limitations on debt included a correction that focused on the rights of the borrower to defend against the fraudulent actions of debt collectors. The debtor does not have to pursue his rights and arguments in court.
Limitation of claims The amendment introduced a ban on carrying out activities aimed at enforcing repayment of obligations that have expired. Under the influence of the amendment, the role was reversed and the creditor must prove that the presumed limitation period has been interrupted. Actions that interrupt this process include, but are not limited to, debt recognition by the debtor or any court action.
Impact on the operation of debt collection companies
The amended Act on limitation of debt proved to be a threat to debt collection companies. After the first information about work in the area of the amendment was released, a wave of actions brought to court by creditors followed. The lack of a specific date for introducing the changes resulted in intensified litigation in the debt collection industry.
Awareness of the number of potential losses incurred as a result of activities in the area of limitation, the amendment has intensified the practices associated with the use of unconscious debtors. Debt collectors’ concerns were right. Looking at the 2017 debt collection ranking, one can cite at least one that the revolution has brought from the forefront to the brink of bankruptcy.