Debt obligations are a fairly common practice in modern life, when funds are borrowed between acquaintances, friends or business partners. In such situations, the receipt often becomes the main document confirming the transfer of money and the obligation to return it. However, unfortunately, not all debtors fulfill their promises on time, and the debt may remain unpaid. This puts the lender in front of a difficult choice: how to protect your rights and get back the due amount?
Lawyers of the “Repeshko and Partners” Bar Association commented on the legislation and advised how to correctly use the receipt for debt collection, what documents need to be collected and what legal procedures should be followed in order to reach a fair decision and get your money back.
Western countries, which we constantly try to emulate, have an extensive system of bank lending at low interest rates and for a long period of time. Among the citizens of these countries, it is not only taboo, but generally unacceptable to ask for a loan from a neighbor, relative or acquaintance. In addition to the banking system, these countries have many pawnshops where you can quickly get much-needed funds.
Our native country is a completely different matter. A bank or a pawn shop is the last place people will go to find money (not including a mortgage on an apartment). But, as they say, “you don’t take someone else’s for a long time, but you give yours forever.” But you don’t want to give yours forever! Therefore, first of all, what we want to point out, and what should be the golden rule – you need to borrow exactly as much money as you are ready to give to this person. Not more. If there is still a desire to play in the “lend to a neighbor” casino, we would like to draw your attention to several basic rules, the observance of which will not guarantee you a 100 percent refund, but will make it at least possible.
Contract or receipt
For loan agreement one party (lender) transfers to the other party (borrower) money or other things determined by generic features, and the borrower undertakes to return to the lender the same amount of money (loan amount) or the same number of things of the same kind and the same quality The loan agreement is concluded in writing, if its amount is at least ten times greater than the amount of the tax-free minimum income of citizens established by law (as of 2024 – UAH 170), and in cases where the lender is a legal entity, regardless of the amount. The loan agreement is concluded from the moment of transfer of money or other things determined by generic features.
Usually, citizens lend each other a receipt (and this is still a good option if they write at least one). But the receipt is not a loan agreement in the legal sense of the meaning of the agreement. However, judicial practice follows the path that if there is a receipt confirming the transfer of funds, then the debt can be collected. So, if you do decide to lend money to a neighbor, be sure to insist that he write a receipt in his own hand. Someone may object – my neighbor Dmytro is like a relative to me, he will resent writing a receipt. In this case, explain to the neighbor that you do not want to offend him, you trust him, but you do not trust his heirs. In a situation where, God forbid, something happens to Dmitry in the absence of a receipt, you will never be able to prove the fact of the transfer of funds into debt. However, sometimes even neighbors who were almost relatives cease to be so when you start asking for debt repayment.
How to write a receipt
We recommend specifying the following when drawing up a receipt:
- Full name and RNOC of the borrower and the lender, their address of registration and actual residence in case they are not the same;
- loan amount in numbers and words and currency (hryvnia, US dollars, Mongolian tugriks, etc.);
- clearly state who received the funds and when they are obliged to return it – a specific date. Regarding the date of return – if the return period is not specified in the receipt, then you must first make a written request, which should be sent by registered letter with a description and a return message. In it, it is necessary to establish a clear date for the return of the funds, and in the event that the funds were not returned by the specified date, go to court. Such a written request can be made at any time. The debtor must fulfill such an obligation within seven days from the day of presentation of the demand, if the obligation of immediate fulfillment does not arise from the contract or acts of civil legislation (Article 530 of the Civil Code of Ukraine);
- the address to which the funds must be returned (a very relevant point nowadays, when half of the country does not live at the place of registration);
- the amount of the fee for using the loan (optional);
- it is desirable to establish penalties for late repayment of funds (fine as a percentage of the debt amount, interest for each day of delay);
- it is desirable to certify the receipt by two witnesses (very desirable). In this case, their full name and RNOCPP, addresses of registration and actual residence in case of their absence and autographs are indicated;
- date and place of collection, signature of the borrower.
Such receipts are not certified by a notary public, but it will be sufficient for the court. But when the amount of the debt is quite significant, we still recommend contacting a notary and drawing up a notarized loan agreement, although you will have to pay the notary for it. But still, when it comes to borrowing a significant amount of money, think in advance from what you will collect it from, if the borrower does not have the means to return the debt to you. The fact that the neighbor Dmytro drives a Porsche Cayenne and lives in a two-story house does not mean anything. The house can be registered to the mother-in-law, and the Porsche Cayenne to the brother. It may happen that Dmytro himself has no property registered, and he does not officially work anywhere. So, the five thousand US dollars lent to him, if he does not return it voluntarily, consider it a gift.
The statute of limitations
The main thing to remember is that the statute of limitations is three years. It is during this period that you can apply to the court if the borrower has not returned the funds. At the same time, you should know:
- for receipts in which the debt repayment date is set for a three-year period, it begins its countdown precisely from the debt repayment date;
- for receipts in which the debt repayment date is not established, the three-year period begins after the expiration of the seven-day period from the day of the claim.
If the fines were not specified in the receipt, the lender can expect to be charged:
- inflationary if the currency of the loan was the hryvnia;
- 3% per annum of the amount of the debt for the entire period of delay;
- a fee for the use of the loan in the amount of the NBU accounting rate, if the receipt does not specify the interest for the use of the loan and does not indicate that the loan is interest-free (until the established repayment period).
Receipt currency
Another relevant issue is the currency of the receipt. It should be noted that over the past decades, judicial practice has repeatedly changed in this regard – from a categorical “can’t” to “yes, it is possible” in relation to foreign currency.
According to parts one and two of Article 1046 of the Civil Code of Ukraine, under a loan agreement, one party (the lender) transfers to the other party (the borrower) money or other things determined by generic characteristics, and the borrower undertakes to return the same amount of money to the lender (the amount loans) or the same number of things of the same kind and of the same quality. The loan agreement is concluded from the moment of transfer of money or other things determined by generic features.
The interpretation of the Civil Code of Ukraine allows us to state that the legislator does not prohibit debt collection under a loan agreement in foreign currency. Moreover, the civil law imposes an obligation on the borrower to return what he received on the basis of the loan agreement. This is confirmed by the use of the following wording: “obliges to return to the lender the same amount of money (loan amount) or the same number of things of the same kind and of the same quality.”
To whom to repay the debt
It is also a mandatory point that the borrower needs to remember. If funds were taken from Ivan Sydorenko, then they need to be returned only to Ivan Sydorenko, unless another person to whom the funds can be transferred is specified in the receipt or loan agreement. You can transfer funds to someone else only in one case – when this person has a notarized power of attorney from Ivan Sydorenko to represent his interests. Then you need to get a photocopy of the power of attorney and a receipt for receipt of funds from such a person. In the event that the matter goes to court and the borrower says that Ivan in a telephone conversation asked to transfer the funds to his son-in-law Peter, as Ivan himself does not confirm the fact in court that he received the money through Peter, then he will have to repay the debt twice. And the probability is very high, taking into account the analysis of court cases of this category.
Which court to apply to and how to file an application
Regarding the appeal to the court regarding debt collection. The case will be subject to the jurisdiction of the court in whose territory the debtor is registered.
The court fee for this category of cases is 1% of the amount of the claim, but for 2024 it is not less than UAH 1,211.20 and not more than UAH 15,140.00.
The first thing to do when filing a claim for debt collection is to immediately submit a petition to the court to secure the claim. To do this, it is necessary to find out in advance through the state register of immovable property or the service center of the Ministry of Internal Affairs about the availability of immovable property or vehicles registered in the name of the debtor. This is almost the only chance to return the funds. An arrest imposed on the debtor’s property at the beginning of the court proceedings is a guarantee that when the decision to recover the amount of the debt comes into force, the executor will have something to collect funds from in the absence of such on the debtor’s bank cards and official permanent place of work.
The application for securing the claim is submitted in writing, signed by the applicant and must contain:
1) name of the court to which the application is submitted;
2) full name (for legal entities) or first name (surname, first name and patronymic) (for individuals) of the applicant, his place of residence (for legal entities) or place of residence or stay (for individuals), postal index, identification code of a legal entity in the Unified State Register of Enterprises and Organizations of Ukraine, registration number of the taxpayer’s registration card (for individuals) if available or passport number and series (for individuals – citizens of Ukraine), contact numbers, address e-mail (if available), information about the presence or absence of an electronic account;
3) the subject of the claim and justification of the need to secure the claim;
4) a measure to secure the claim to be applied, with justification of its necessity;
5) the price of the claim for which the applicant requests to secure;
6) the applicant’s proposals regarding counter-security;
7) other information required to secure the claim.
Also, a court fee is paid for an application to secure a claim, which as of 2024 is UAH 605.60.
Foreclosure on housing is carried out if the debtor does not have sufficient funds or movable property. At the same time, the foreclosure is first applied to a land plot separate from the house, other premises belonging to the debtor.
As a last resort, the collection is applied to the residential building or apartment in which the debtor actually lives. The law establishes that if the amount subject to recovery under executive proceedings does not exceed 20 times the minimum wage (currently UAH 160,000), recovery of the debtor’s single dwelling and the land plot on which such dwelling is located shall not be carried out.
Another important term that you need to remember, because receiving a positive decision to collect the amount of debt from the debtor does not in any way guarantee the return of the debt itself. Based on the court’s decision, the debt collector receives a writ of execution, which can be presented for enforcement within three years. The specified term is set for the implementation of the decision from the day after it enters into force.
A debt collector who missed the deadline for presenting an executive document for execution has the right to apply for an extension of such deadline to the court that considered the case as a court of first instance. At the same time, the court must prove and provide adequate evidence that the deadline was missed precisely for good reasons, and not because it was “forgotten”. In this case, it is necessary to prove the reasons for the absence by providing the court with relevant supporting documents (a medical certificate about being in a coma, an order for a business trip to the Arctic station “Akademik Vernadskyi”, etc.).
But once again we emphasize the most important thing – you need to borrow exactly as much money as you are ready to give to this person. This should be your main rule, because it is possible that later you will spend more money, nerves and time in court and you will not get anything except a positive decision of the court on debt collection. However, it is also possible to hang it on the wall in a frame – maybe it will warm someone’s soul.
