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DO YOU NEED TO SEND A NOTICE LETTER TO YOUR DEBTOR IN HUNGARY?
09 November 2023
When recovering debts in Hungary, the creditors almost always send a final notice letter to the debtor. Is sending a letter of formal notice obligatory in all cases or only recommended? In the following, we review the most important basics.
1. Notice of claim contractual clauses
Firstly, it should be noted that it is not only the procedural provisions that must be taken into account, but also whether the contract, order, etc. on which the claim is based required the sending of a letter of formal notice.
If you fail to send the mandatory notice, it is possible that your action initiated will be dismissed.
In addition, if the contract sets a deadline or a specific form or language for the demand letter, you should also make sure that you draft the letter and send it to your debtor accordingly.
2. Hungarian Liquidation procedure – notice letter is compulsory
In the liquidation procedure, sending a notice letter before initiating the procedure is compulsory under the Hungarian Liquidation Act.
Furthermore, the Act also lays down the mandatory elements of the letter. Your notice letter should contain at least the legal title, the amount, and the due date of the claim and you shall set a final payment deadline.
It is noted that since January 2022, the Court makes a preliminary assessment of whether the notice letter contained the mandatory elements, consequently, it is crucial to draft it properly.
Of course, it also matters how the notice letter is sent to the debtor. It shall be noted that the notice letter shall be sent via post with the service of return receipt.
3. Hungarian Litigation, order for payment procedure – notice letter is recommended
Although a prior notice letter is not mandatory in Hungarian civil litigation or in order for payment procedure, we recommend it for at least two reasons.
First, according to the Civil Procedure Code, if the plaintiff brings an unnecessary action, i.e., the Defendant admits the claim without any defence and has not given a reason for bringing the action, the costs incurred must be paid by the plaintiff.
Second, sending a notice letter can also help in the subsequent litigation, because the defendant's response may reveal the defendant's possible defences before the litigation.
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