Extrajudicial recovery of debt
Professional debt collectors stress that out-of-court debt recovery is not only faster, but also cheaper. If you want to recover money amicably, and at the same time do not risk losing cash, the statute of limitations on the debt or lack of goodwill of the debtor, make a settlement with the debtor!
As defined: An out-of-court settlement is an agreement between the parties to a specific legal relationship in which the parties make concessions to each other in order to remove uncertainty about claims arising from that relationship or to ensure their performance, or to remove a dispute that exists or may arise (Article 917 of the Civil Code). The goal is to resolve the dispute without initiating legal proceedings.
If you set up a convenient repayment schedule with the debtor, which he will follow, he will repay the debt faster than would be the result of a court order for payment. This will save you time and money. A settlement is only possible if both parties have goodwill. However, if, despite the signed settlement agreement, the debtor does not comply with the agreed repayment terms, such a document will be treated by the court as an acknowledgment of debt, and this will make it much easier to obtain a final order for payment.
The settlement agreement may additionally include an acknowledgment of debt clause.
How to draft a settlement agreement with a debtor?
The civil law settlement should include the following elements:
- determining the place and date of the settlement – may be relevant to the obligations of the parties under the content of the settlement itself;
- designation of the parties to the contract and, if applicable, the persons who represent them;
- identification of the legal relationship to which the settlement relates;
- indicating the amount of the claim and the documents that support it;
- the manner of performance of the obligation (repayment of the debt): e.g., a repayment schedule or specifying the date by which the obligation is to be fulfilled, and in specifying the form of repayment, e.g., by indicating the bank account to which payments are to be made;
- other concessions by the creditor, such as the creditor giving up the claim for interest;
- securing the debtor’s performance of the settlement – is not a prerequisite for settlement, but can be useful if the debtor fails to perform the terms of the settlement.
Security for the execution of the settlement agreement may be:
– establishment of a mortgage or a registered pledge in favor of the creditor up to the amount of the settlement;
– entering into an agreement with the debtor to transfer the collateral of a specific item, or a blank promissory note:
- final provisions, such as the choice of applicable law, the choice of court, how to amend the agreement, the number of copies, and possibly how to inform the creditor about the debtor’s execution of the settlement.
In addition, it is worth including in the settlement agreement a clause waiving the debtor’s objections to the creditor, as well as statements by the debtor that the goods or services delivered to him were in accordance with the contract. These will be helpful in the event that litigation ensues as a result of failure to execute the settlement. The clause that protects the debtor will be a statement that the settlement that is reached exhausts all the creditor’s claims that flow from a specific legal relationship.
The conclusion of a settlement interrupts the statute of limitations. On the other hand, the settlement can also apply to claims that are already time-barred, if the parties have a business relationship and remain in good faith. A free settlement template can be downloaded from various websites. The assistance of a lawyer will make it much easier to make accurate and effective records.
06.05.2026 
