Recovering debt through the attachment of bank accounts in the EU

It is now simpler to recover debts through the attachment of cross-border bank accounts. In cross-border proceedings of civil and commercial nature, debtors’ bank accounts in another European Union country can now be seized.

On January 18, 2017, Regulation 655/2014 of the European Parliament and of the Council of May 15 2014 came into force, establishing the procedure for the attachment of bank accounts in order to simplify cross-border recovery of debts in civil and commercial matters (except in Denmark and in the United Kingdom).

This Regulation intends to simplify the seizure of debtors’ bank accounts in another EU country in a faster and more effective way. The attachment ensures that the debtor has assets to pay the creditor.

A creditor who has a genuine fear of not being paid by the debtor can thus request for an injunction to allow the judicial attachment of the debtor’s assets.

The attachment of the bank account ensures swifter protection of your rights and interests which, considering the normal delay of judicial proceedings, could lead to irreparable damage, for example if the debtor removes or conceals assets in order to avoid fulfilling his/her obligations towards the creditor.

With the introduction of this legislation and the direct seizure of the debtors’ bank accounts, it is possible to protect the financial interests of the creditor more effectively. However, in order to prevent the wrongful application of the Regulation, giving rise to unfair situations towards the alleged debtor, it is necessary to comply with certain requirements.

The request for attachment can only be made when legal proceedings between the creditor and debtor already exist, even before the issuing of a judicial decision or after it, if it results in getting the debtor to pay up.

However, some situations are excluded from the Regulation and it is not possible to make an application for attachment of bank accounts when there are property rights arising from marriage, wills and successions, claims on debtors against whom insolvency proceedings or winding-up proceedings have been initiated, social security and arbitration.

The general conditions for approving the attachment of a bank account are: (1) there is evidence of debt; 2) there is an urgent need for an injunction because there is a real risk of debt recovery being affected; and 3) there must exist proportionality – between the measure of attachment to be adopted (which will have an effect on the life of the debtor, since he/she is not notified of the request for attachment nor heard in court before it is ruled) and the risks involved that could affect the creditor.

The deadline for the court to decide on a request for attachment is the end of the 10th working day after the creditor has submitted his/her request, thus ensuring proceedings are conducted in a speedier way.

The attachment order is implemented in accordance with the procedures of execution existing in the Member State of enforcement.

In summary, the attachment of bank accounts within the EU is a simplified, secure, fast and transparent mechanism, where all acts performed in the procedure are recorded electronically for control by the competent authorities.

By Dr Eduardo Serra Jorge
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Dr Eduardo Serra Jorge is founding member, senior partner and CEO of lawyers firm Eduardo Serra Jorge & Maria José Garcia – Sociedade de Advogados, R.L., created in 1987.
In his column, he addresses legal issues affecting foreign residents in Portugal.
Faro office at Gaveto das Ruas Pedro Nunes e José de Matos, 5 R/C
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