How to Deal with Debt Collection in Switzerland

It can happen to anyone: You overlook a bill which needs to be paid or pay a bill late, and suddenly you receive a summons from the debt collection office. Find out what concrete steps to take when face with debt collection suits in Switzerland with this moneyland.ch guide.

What is a debt collection suit?

A debt collection suit is a process by which creditors can claim repayment of debts with the help of the government. If the person who owes the debt does not pay up, their property may be seized. If they are employed, an attachment will usually be placed on their salary if they are unable to repay the debt. In that case, part of their income will be seized towards paying off their debts.

How do I know when a debt collection suit has been opened against me?

When a purported creditor opens a debt collection case against you, you receive a summons from your municipal debt collection office. This is delivered by a postal employee or a government official. The summons explains who is suing you, and what the basis for the debt claim is.

Important: A late-payment reminder or demand from a private debt collection company is not the same thing as a debt collection suit. Private companies can only file debt collection suits through government debt collection offices.

A summons must be “served” in person. It is not delivered in a closed envelope or left in your mailbox, but has to be physically handed over to you. The contents of a summons are strictly private, and the postal worker or government employee who delivers it must treat all information confidentially.

Alternatively, an invitation to collect a summons of debt collection may be placed in your mailbox. This could happen if, for example, the debt collection office tries unsuccessfully to deliver the summons to you in person.

What should I do if a debt collection case is opened against me?

The steps to take when you are served a summons for debt collection in Switzerland depends on whether the claim is valid or not. The debt collection office simply serves the notice that a claim has been filed against you. It does not check the validity of the claim before serving the notice. It can happen that you receive a summons for a debt which has already been repaid, because your creditor filed the suit before you made the payment.

Here you can find out what to do both if you owe the money and when the claim is not justified:

• If you do not actually owe the money

You have to file an objection to the payment summons within 10 days from the time it is served. This puts the debt collection process on hold. You can file the objection immediately with the official or postal employee who serves the summons. Alternatively, you can do it at the debt collection office. You can deliver your objection either verbally or in writing. Objecting in written form is recommended because the document can serve as evidence of your objection. You are not normally required to give any reasons for why you are disputing the debt claim.

The self-proclaimed creditor only has to provide any evidence to back their debt claim if you file an objection. The legal process is then normally opened with a request for arbitration or the pressing of charges at a justice of the peace. A judge in the location where the debt is being collected then gives you the opportunity to state your case either verbally or in writing before deciding on the request. A provisional ruling may be issued in some cases. You have 20 days to open a defense case. If you do not, the ruling becomes final.

The debt collection process can only continue if the creditor is able to get a final ruling in their favor. Rulings by Swiss government offices (a tax office, for example) carry the same weight as court rulings. That means many public offices have the authority to make final rulings without a court decision – unless you are able to prove that the debt has been paid, put on hold, or expired in the meantime.   

If you believe that the debt collection claim is not founded, do not take any action which could indicate that you recognize the debt. Do not withdraw your objection to the suit or make any debt repayments, and never sign any document which admits to the debt (agreements to pay the debt off over time, for example). Doing anything which indicates that you admit to the debt makes it easier for the purported creditor to overrule your objection and move on to debt collection procedures. It can also prevent you from having the negative entry removed from the debt collection register.  

• If you do owe the money

Pay back the money you owe within 20 days. It is possible to repay your debt indirectly through the debt collection office, but this creates additional costs, so paying your creditor directly is generally a more sensible move. Always either get a receipt or transfer the money through your bank so that you have proof of payment. If you do not either pay the full amount you owe within 20 days or submit an objection, your creditor can apply to have your assets seized.

If you are not able to pay your debt right away, you should get help from a debt counselling office as soon as possible. Contacting your creditor directly to see if they are willing to negotiate an installment plan can also be advantageous.

Note that even if a debt claim is founded and you do owe the money, you can still put the debt collection process on hold for a time by submitting an objection. In the best case, this can buy you some time because your creditor has to provide proof that you owe the money. The downside of disputing a claim is that disputes generate extra costs which you as the guilty party will ultimately have to cover – unless your creditor is unable to find proof of your debt for some reason.

Do debt claims appear in my debt collection register credit history?

Any time a debt collection case is filed against you, the claim is entered into the debt collection register – regardless of whether or not you actually owe the money. These entries normally remain on your credit history for five years. If it is determined that the claim is not justified and you do not owe the money, you may be able to have the entry removed.

How can I delete entries from my debt collection register credit history?

Negative entries can be dealt with in two ways. The first is deleting them from the debt collection register, which happens in these cases:

• Five years have transpired since the debt collection suit occurred. In this case, the entry is automatically deleted from your credit history. This happens whether or not the debt claim was justified.
• The creditor has the entry removed. You can ask the creditor to withdraw the entry. Unfortunately, some creditors demand financial compensation for the effort required – which is particularly irritating in the case of false debt claims. Creditors do not have to help you: they can simply ignore your request and leave the entry in place if they choose to.
• A court instructs the debt collection office to remove the entry. If you are the victim of an unsubstantiated debt claim, you can open a defense case to have the claim annulled. Fighting against charges in court costs money and can be time-consuming as well.

Important: Objecting to a debt collection summons does not stop the case from being added to your credit history in the debt collection register.

The second way to remove the entry from your debt collection register statement is by requesting that the case not be shared with third parties. The entry is not actually deleted from the register, but it does not appear on your credit record. In practice, this is basically equivalent to having it deleted from the register. You can request to have the entry hidden when a creditor does not take any steps to counter your objection. That could be the case, for example, when self-proclaimed creditors use false debt claims to blackmail you.

You can apply to have an entry hidden at the debt collection office after at least three months have transpired since the summons was served. You normally have to make the request within one year. A 40-franc fee applies, which must be paid when you make the application.

These conditions must be met before you can apply to have an entry hidden:

• You have objected to the debt collection summons and have not withdrawn the objection.
• The creditor has not yet either taken steps to counter your objection, or submitted a request to move forward with the debt collection process.
• You have not acknowledged the debt (by making a repayment, for example).

After you apply, the creditor must prove that the procedure for opening a legal case have been initiated. If they do not, the entry will be hidden and will no longer appear on your credit statements.

Do creditors have to send late-payment reminders?

No. Creditors are not obligated to send you payment reminders before filing debt collection suits. If you fail to pay a bill on time, the creditor can open a case at the debt collection office immediately if they choose to.

What do debt collection suits cost?

Debt collection suits generate costs which the person who owes the debt has to cover – if the claim is found to be correct. The creditor has to front the costs of starting the debt collection case, but these costs are added to the amount you owe.

The exact costs vary depending on how large the debt is, and which actions are taken over the course of the debt collection suit. The debt collection office can add other charges to cover extraordinary costs – such as difficulties in serving a summons, or asset seizures which require more than one hour to complete.

The legally-defined fees for the serving of summons (issuing, duplicating, registering and delivery) and seizures (execution and the issuing of the distraint warrant):

Additional costs which can be passed on to you as the debtor may include delivery fees, costs for police involvement, fees charged by required experts, and bank charges.

If you file an objection and your creditor is able to have it overruled – in an arbitration process, for example – then you have to cover the legal fees. Here too, the creditor advances the costs, but you as the debtor have to cover them in the end.

On the other hand, if you successfully refute the debt claim, then the debunked creditor has to cover the costs. You do not have to repay the loan or cover the costs of the suit, in this case.

What if only part of the debt claim is correct?

If you do owe some money, but not the full amount which your creditor is suing for, you can submit a partial objection within ten days of receiving the summons. You should pay the amount which you actually owe within 20 days from the time the summons is served. If the creditor wants to claim the difference, they must open a legal case. If they do not, then you do not have to make any additional payments.

Debt collection companies sometimes charge additional fees on top of interest and administrative costs to compensate for damages caused by a late payment – even though no provable damages have been incurred. That normally is not acceptable – unless you willingly accepted a contractual agreement in which you agree to pay these reparations. Because of this, making a partial objection in which you only admit to the exact amount you actually owe can be beneficial.

If the incorrect debt claim results in higher running expenses, you only have to pay the expenses which apply to the correct portion of the claim. Example: A creditor opens a debt collection suit for 1100 Swiss francs. The cost of the summons is 73.30 francs (60-franc fee plus 13.30 francs for delivery). You submit a partial objection against a 200-franc portion of the claim to cover supposed damages for which there is no evidence. That reduces the amount you have to pay to less than 1000 francs. You pay 900 francs plus 53.30 francs of debt collection costs (40-franc fee plus 13.30 francs for delivery). Unless the creditor is able to have the partial objection overruled, they must cover the remaining 20 francs of costs themselves.

Can I refuse to accept a debt collection summons?

No. You cannot refuse to accept a summons which is being served to you. If you do, the summons can be forcibly served with the help of the police. If that too fails, the summons will be published in the Swiss Official Gazette of Commerce (SOGC) and in the official cantonal gazette. This open publication replaces the requirement to serve you the summons in person.

If you want to dispute a debt collection claim, you must do so by making an official objection.

Does legal insurance protect me from debt collection suits?

That depends on the kind of legal insurance and on the insurance company. Some insurers exclude legal disputes which are strictly about debt collection claims from insurance coverage. Other insurers cover some aspects, such as having entries removed from the debt collection register.

If your legal insurance includes complimentary consultation, then you can use this to get advice if you receive a debt collection summons. The legal consultants can give you advice on the best steps to take in your specific situation.

More on this topic:
Tips for getting out of debt
Personal bankruptcy in Switzerland explained
Which assets can and cannot be seized by debt collectors in Switzerland?
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