Recovering Unpaid Invoices in Bulgaria

We regularly receive the following questions from clients.

• I have a contract. I supplied the goods or services. I have documents showing that the goods or services were received. I issued the invoices, but the counterparty is not paying. What should I do?
• I have no contract. I supplied the goods or services. I have documents showing that the goods or services were received. I issued the invoices. The client received them but is not paying. What should I do?

We divide the process of recovering unpaid invoices into several stages.

Stage I – Letter Before Action

At this stage, legal assistance is advisable but not essential, since clients may prepare and send a demand for voluntary payment of the unpaid invoices themselves if they wish. Our experience shows that in a large proportion of cases the matter is settled at this point.

We always advise clients to begin by inviting the defaulting party (the debtor) in writing to pay the debt voluntarily.

The Letter Must Contain

• the basis on which the debt arose (contract, invoices and so on);
• the amount of the debt;
• the period of delay;
• a deadline for payment or for signing an agreement to pay in instalments;
• a warning that, in the event of non-payment, the creditor will enforce its rights through the courts and all costs will be borne by the debtor.

We Pay Particular Attention to Obtaining Proof That the Letter Was Received by the Addressee and on What Date

There are several ways of serving the letter.

• Personal delivery – the recipient writes “received by hand” or “received personally”, the date, their name and signature on the sender's copy.
• Delivery by a licensed postal operator or courier with a return receipt.
• Email, bearing in mind the following.
• Without confirmation of receipt, this is acceptable where the recipient designated an email address for correspondence in the contract and it was expressly agreed that no confirmation is required.
• With confirmation of receipt, where you obtained the email address from public registers or the internet.
• Notarial notice – the traditional method, which has been used less and less in recent years, partly because some notaries refuse to serve notices on the ground that they have no process servers.
• The Secure Electronic Service System – the newer method. To use it, both you and the recipient must be registered in the system.

If you have still not been paid when the deadline in the letter expires, you can decide whether to proceed to Stage II.

Stage II – Order for Payment Proceedings

At this stage, you will need the assistance of a lawyer or an in-house legal adviser. We recommend checking whether the limitation period has expired. For periodic payments it is three years, and for all other claims, unless the law provides otherwise, it is five years (Art. 110 and 111 of the Obligations and Contracts Act). The aim is to anticipate and plan the possible further steps and costs for the client as the proceedings develop.

Order for payment proceedings are considerably cheaper and faster than ordinary claim proceedings. The state fee is 2% of the value of the claim, and the court issues an order for payment in about two months on average, depending on the court's workload and the panel. The court invites the debtor to pay the debt and the costs within one month of service of the order and/or to object (Art. 412 of the Civil Procedure Code). Some debtors pay at this stage.

If the debtor neither pays nor objects, the order becomes final and a writ of execution is issued. If the debtor objects or other statutory conditions are met, the court gives you one month to bring a claim and pay the balance of the state fees due.

Stage III – Claim Proceedings

At this stage, too, you will need a lawyer or an in-house legal adviser. The duration is difficult to predict. It depends on the complexity of the case, whether expert evidence is required, whether special representatives are appointed, the defendant's conduct and so on, as well as on the court's workload and the panel. Judgments at first instance and on appeal may be appealed. The claimant's costs are considerably higher than in order for payment proceedings.

Once it has been proven that the defendant owes you the amount claimed, the court issues a writ of execution on the basis of the final judgment. The writ entitles you to proceed to enforcement by opening enforcement proceedings before a private or state bailiff.

Stage IV – Enforcement Proceedings

Here, as in the first stage, we recommend using legal services, but you may also try to manage on your own. We are always ready to help if needed. Before enforcement proceedings are opened, we again advise clients to invite the debtor to pay, for the third time. At this stage, too, we see a degree of success.

If you have unpaid invoices and want to protect your claims, our dispute resolution and debt collection team offers full assistance, from the letter before action to enforcement proceedings.