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Betreibung – Debt Collection in Switzerland

I. Introduction

A. Debt recovery and debt collection in Switzerland – Legal Framework

Following Swiss law, the procedure for enforcing the monetary debt recovery falls under the jurisdiction of the Swiss Federal Act on Debt Enforcement and Bankruptcy (DEBA) – Bundesgesetz über Schuldbetreibung und Konkurs (SchKG) of April 11, 1889 (281.1).

For the enforcement of any other type of claim, Swiss regulations refer to title 10 of the Swiss Civil Procedure Code (CPC), established on December 19, 2008 (272).

The enforcement procedure is uniform throughout Switzerland, but the language used may vary depending on the Canton.

II. Unique Aspects of Debt Recovery in Swiss Law

The debt recovery process under Swiss law
The debt recovery process under Swiss law features a distinctive characteristic: the ability to initiate forced execution solely based on claims put forth by the purported creditor without the necessity of presenting supporting documentary evidence.

As a result, the claimant is not obliged to possess any particular form of legal instrument, such as a civil judgment, arbitration award, administrative decision, or acknowledgment of debt—whether signed by the debtor or arising from a notarised agreement—in order to start the debt collection process.

On the contrary, even when armed with inconvertible documentary evidence, creditors are compelled to navigate the initial phase of the debt recovery, as the only legally recognised instrument permitting the seizure of assets or the declaration of the debtors insolvency is an enforceable summons to pay, known as a "Zahlungsbefehl" No other document holds legal standing in this regard, except in unique and specific circumstances.

As a consequence, the debtor retains the ability to promptly halt the legal proceedings initiated by the original creditor by submitting an objection to the summons to pay, referred to as an " Opposition gegen den Zahlungsbefehl." In such cases, creditors must subsequently take steps to lift the objection or "Rechtsvorschlag aufheben" in order to proceed with the enforcement process.

III. Competent Organisations: Debt Collection Office and Debt Collection Agencies

A. Debt Collection Office - Betreibungsamt

Forced execution in Switzerland can be attributed to a state function, and in certain aspects, it resembles police activities.

The Swiss system for determining competence in forced execution matters is complex.

The responsibility to collect debts lies with specialised administrative authorities found in each Canton, namely, the Debt Collection Office (Betreibungsamt) and the Bankruptcy Office (Konkursamt). Appeals against decisions made by these authorities can be brought before the supervisory authority (Aufsichtsbehörde) as per Article 17 of the Swiss Federal Act on Debt Enforcement and Bankruptcy (DEBA).

There are instances where forced execution is not overseen by administrative authorities but falls under the jurisdiction of civil courts or a county court. In this regard, it's crucial to distinguish between three distinct situations:
  • Judicial Intervention

    In cases of significant importance and far-reaching consequences, a civil judge may step in to replace the administrative authorities. The judge renders decisions instead of judgments and acts as an enforcement body. This scenario commonly arises in matters like insolvency declarations, where the judge's jurisdiction is mandatory and not subject to alteration by the involved parties in accordance with Swiss national law.
  • Procedural Issues

    Swiss judges may be tasked with resolving procedural matters when one party raises an objection to the continuation of enforcement. Some judgments pertain solely to procedural enforcement law matters, such as the definitive lifting of an objection, while others touch on substantive enforcement law issues, like the provisional lifting of an objection. The judge's jurisdiction in these cases is also mandatory and established by Swiss national law unless overridden by international agreements, such as the Lugano Convention of September 30, 2007 (SR 0.275.12).
  • Proceedings on the Merits

    In certain situations, judges are called upon to adjudicate proceedings on the merits, which are unrelated to forced execution law but are part of ongoing procedures aimed at resolving substantive legal disputes. Until these matters are settled, enforcement cannot proceed due to the uncertainties they introduce. Common cases falling under this category include actions for recognising debt and discharging from debt as defined in Article 79 and Article 83 of the DEBA, respectively. In such instances, the judge's competence is determined by the contracting parties' intentions, such as a choice of court clause, as well as applicable international and national laws.

B. Debt Collection Agency

A debt collection agency is a private, third-party company or organisation hired by creditors to collect outstanding debts on their behalf. Debt collection agencies specialise in debt recovery and may use various methods, such as sending collection letters, making phone calls, and negotiating repayment plans with debtors.
Debt collectors are individuals or employees of debt collection agencies who are hired or tasked with the responsibility of collecting outstanding debts on behalf of creditors. Debt collectors in Switzerland perform various functions aimed at recovering outstanding debt on behalf of creditors while adhering to Swiss legal regulations and ethical practices.
The primary role of a debt collector is to recover overdue or delinquent debts from debtors. This involves contacting debtors, communicating the debt status, and working to secure payment. Debt collectors review and verify the validity of debts. A debt collector confirms the accuracy of the debt details, including the amount owed, debtor information, and the legitimacy of the debt documentation.
A debt collection agency operates as a business and typically charges fees or commissions based on the amount of debt collected. A debt collection agency is a subject to regulations and laws governing debt collection practices to ensure fair and ethical treatment of debtors. Debt collection agencies in Switzerland play a crucial role in assisting creditors with the recovery of debts.

IV. The Process of Debt Recovery

The standard procedure for initiating a process of debt recovery begins with the preliminary phase, known as the " Vorbereitungsverfahren." This phase falls between the debt collection request (Betreibungsgesuch) as defined in Article 67 of the Swiss Federal Act on Debt Enforcement and Bankruptcy (DEBA) and the request for continuation (Gesuch um Fortsetzung der Betreibung) under Article 88 of the DEBA.

This phase operates under two fundamental principles, with enforcement actions being carried out exclusively by the Debt Collection Office (Betreibungsamt). The original creditor doesn't have the authority to execute or serve notices during this phase:

The Burden of Initiative Progress in the procedure does not happen automatically; it requires proactive steps from the creditor at each stage. Initially, this involves a declaration of intent directed to the Debt Collection Office.

The Burden of Reaction The debtor can halt the procedure by lodging an objection (opposition). This objection, also a declaration of intent, places the creditor's responsibility to substantiate the claim's validity before a state judge or an arbitration court. If the debtor takes no action, the procedure proceeds automatically.
Before delving into the detailed stages of this procedure, it's crucial to consider three important elements:
  • 1
    Firstly, the process of collecting debts typically commences at the place of domicile or registered office of the debtor. This location is referred to as the "place of enforcement" (Betreibungsort) under Article 46 of the DEBA. It's essential to distinguish this from the "place of jurisdiction" (Gerichtsstand), which determines the judge's competence for material judicial decisions. Therefore, careful attention must be paid to determine where and what actions need to be taken.
  • 2
    Secondly, for creditors with a domicile or seat abroad, it's imperative to select a domicile at the office of a professional representative with offices in Switzerland. Failure to do so results in the processes being deemed notified to the headquarters of the Debt Collection Office (Betreibungsamt), potentially affecting time limitations. Every step in the procedure must adhere to specific time limits, or the procedure will be invalidated.
  • 3
    Finally, the creditor initiating the process is responsible for covering the costs associated with it. The fees for the procedure are defined by the Fees Ordinance of the Swiss Federal Act on Debt Enforcement and Bankruptcy (FODEBA).

A. Debt Collection Costs

Betreibung - Debt Collection in Switzerland
Regarding proceedings to dismiss a debtor's objection (Verfahren zur Beseitigung des Rechtsvorschlags), the fees to be advanced range between CHF 50 and CHF 300 for claims valued between CHF 1,000 to CHF 10,000; CHF 60 and CHF 500 for claims valued between CHF 10,001 to CHF 100,000; CHF 70 and CHF 1,000 for claims valued between CHF 100,001 to CHF 10,000,000; and CHF 120 and CHF 2,000 for claims exceeding this value (as per Article 48 of FODEBA) as presented in the table below.
The creditor's advanced fees for enforcing the debt are added to the debt itself and will be reimbursed upon the collecting of funds.

B. The Procedure of Debt Collection

The debt collection procedure begins with the submission of a debt collection request, known as "Betreibungsbegehren" (usually in the form of a document provided by the creditor) to the Debt Collection Office located at the place of enforcement, as per Article 46ss of the Swiss Federal Act on Debt Enforcement and Bankruptcy (DEBA).

This debt collection request must contain specific information, including the name and address of the debtor, the debt's value, the reason for the debt, and any accrued interest. The debt's value must be expressed in Swiss Francs, even if it was originally in a foreign currency.

The Debt Collection Office does not assess the validity of the debt claimed by the original creditor; this authority lies with the state judge or an arbitration court.
Submitting a debt collection request has two key effects:
  • -1-

    Debt Recording

    It compels the Debt Collection Office (Betreibungsamt) to record the debt in the Debt Collection Register (Betreibungsregister), as stipulated in Article 8 of the Swiss Federal Act on Debt Enforcement and Bankruptcy (DEBA).
  • -2-

    Time Bar Interruption

    In this scenario, the time limit for the debt's statute of limitations is interrupted, following Article 135 of the Swiss Code of Obligations (CO) dated March 30, 1911 (CO).
It does not constitute an unlawful attack on the personal rights of the debtor, as it is legally justified and serves the creditor's legitimate interests. Abuse of law by the creditor typically applies in cases where the goal is to harm the reputation of the debtor with an obviously groundless debt.

The Debt Collection Office notifies the debtor with a summons to pay, requiring them to settle the indicated sum within 20 days.

The timeframe for serving the summons to pay varies by Canton but is usually one or two months.

Typically, procedures on the merits progress in parallel with the initial stages of debt recovery, allowing the creditor to proceed without waiting for a judgment confirming the debt's existence after receiving notice of the summons to pay.

The debtors usually have three options: a debtor pays the full amount with interest within the given time frame (leading to suspension and removal of the procedure upon the creditor's request), takes no action (allowing the creditor to request continuation after a 20-day waiting period), or files an objection notice within ten days of notification.

Filing an objection notice doesn't imply debt acceptance. The creditor must obtain a court order affirming the debtor's debt, known as "Rechtsvorschlag erheben." Failure by the creditor to initiate proceedings to dismiss the objection of the debtor within one year of the summons to pay being served results in the lapse of enforcement, as per Article 88 of the DEBA.

When the creditor has rejected the debtor's objection, the debt collection procedure can only proceed if the creditor submits a request for continuation.

V. Unlawful Debt Recovery and Debt Collection Register Extracts

As previously mentioned, Swiss law governing forced execution is distinctive in that it allows anyone to enforce a debt without the need for official authority or prior court verification of the debt's validity.

In rare instances, individuals may submit malicious, trivial, or blatantly abusive debt enforcement requests with the sole intention of recording a non-existent debt in the Debt Collection Register. This publicises the fictitious debt and seriously damages the debtor's financial reputation.

Furthermore, even when a summons to pay becomes invalid due to the expiration of the relevant time period, the enforcement record remains in the Debt Collection Register in Switzerland for five years. The same applies when a summons to pay has been resolved and marked as "paid," unless the creditor revokes the enforcement.

Abusive enforcement actions can lead to criminal complaints for coercion under Article 181 of the Swiss Criminal Code.

As part of the December 16, 2016 amendment to Article 8a of the Swiss Federal Act on Debt Enforcement and Bankruptcy (DEBA), the legislator introduced a new mechanism allowing victims of unjustified enforcement actions to prevent them from being publicly listed in Debt Collection Register Extracts.

Creditors have the right to obtain an extract or Betreibungsauszug from the Debt Collection Register (Betreibungsregister). This document provides a detailed overview of a debtor's outstanding debts, ongoing debt collection proceedings, and any defaults. Creditors use this information to make informed decisions about whether to extend credit or enter into financial agreements with debtors.

A debt collection agency may report delinquent debts to credit reporting agencies, which can impact the debtor's credit score and credit history. This serves as an additional incentive for debtors to settle their outstanding debts.

A. Contact Information for Debt Collection Offices in Switzerland

Here are contact details for some of the Debt Collection Offices in major Swiss cities:

VI. Conclusion

To sum it up, the debt recovery process under Swiss law is governed by specific regulations, primarily the Swiss Federal Act on Debt Enforcement and Bankruptcy (DEBA) and the Swiss Civil Procedure Code (CPC) for non-monetary claims.
Competent authorities in Switzerland for debt collection include the Debt Collection Office (Betreibungsamt) and the Bankruptcy Office (Konkursamt), while civil courts may intervene in specific situations. Creditors may hire a debt collection agency - a private, third-party company or organisation that collects outstanding debts on the behalf of creditors.
The debt collection process comprises several phases, beginning with a debt collection request and progressing through various steps, with specific time limits to adhere to.
Swiss law addresses the issue of abusive or unjustified debt recovery, which can harm a debtor's financial reputation. There are mechanisms in place to prevent victims of such actions from being publicly listed in Debt Collection Register Extracts.
In Switzerland, creditors have the option to obtain an extract from the Debt Collection Register (Betreibungsregister) to assess a debtor's outstanding debts and proceedings, aiding them in making informed financial decisions.
Overall, Swiss debt recovery operates under a well-defined legal framework, ensuring fairness and transparency while balancing the rights and responsibilities of both creditors and debtors.

VII. Debt Collection in Switzerland: Frequently Asked Questions (FAQs)

This is a key legal framework in Switzerland that governs debt recovery and bankruptcy procedures.