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Article:

The Covid-19 Crisis Act also introduces changes to debt recovery

20 March 2020

On March 20, the parliament of the Republic of Latvia adopted a special law on the prevention and management of state threats and their consequences in connection with the spread of Covid-19 (hereinafter – the Crisis act), which introduces a number of temporary measures to mitigate the potential economic consequences of a stabilization.

On March 20, the parliament of the Republic of Latvia adopted a special law on the prevention and management of state threats and their consequences in connection with the spread of Covid-19 (hereinafter – the Crisis act), which introduces a number of temporary measures to mitigate the potential economic consequences of a stabilization.

One of the ways in which the legislator seeks to protect businesses and individuals affected by the crisis is by preventing immediate debt recovery processes.

The Crisis Act introduces a new procedure in the hitherto customary debt recovery procedure and in subsequent litigation, obliging the creditor or debt service provider, upon commencement of debt recovery, to notify the debtor in writing of the existence of the debt and to request voluntary payment of the delayed payment. The notice shall state the possibility of raising a reasoned written objection to the existence, amount and payment term of the debt and set a time limit for the lodging of an objection which shall not be less than 60 days from the date of receipt of the notice.

The second paragraph of Article 129 of the Civil Procedure Law provides for the obligation to add to the claim evidence of compliance with the previous out-of-court review procedure, if such is required by law. In the absence of such evidence, the judge shall decide, in accordance with Article 132, Paragraph one, Clause 7 of the Code of Civil Procedure, to refuse to adjudicate.

The legislator also foresees certain deadlines after which the right to engage in debt recovery takes effect, for example:

  • enforcement of the notarial deed is possible only within 60 days after the due date of the obligation,
  • an application for uncontested enforcement of an obligation can only be filed with the court after 60 days have been served on the debtor;
  • the decision on the use of the commercial lien can be taken only after the 60-day delay has expired,
  • the time limit for voluntary execution of up to 60 days, instead of the usual 10 days, may be set by the judge in preparation of a recovery order.

This publication has been carefully prepared, however it is written in general terms and should be considered as general informative material. The team of BDO Law will follow the development of the current situation and publish up-to-date information as soon as any changes will come into effect. Please contact BDO Law to discuss your particular situation!