Enforcement procedures following collection of debt, including garnishment of bank accounts, can come very hard on the debtor. They can even be illegal, in some cases. We will discuss below possible problems that come up during debt collection, along with their possible solutions according to Romanian law.
How much may be cut from our salary following forced execution/account garnishment? What can we do when we find out that these limits are not respected?
The enforcement agent may garnish a maximum of one-third of your net salary. The same rule applies to other regular income (e.g. pensions or monthly income from mandate contracts).
If you have multiple track records on your account (e.g. unpaid credit to several banks) or have a child maintenance pension set up, the executor may charge a higher amount, up to half of the salary. If you have garnishment from different enforcement agents, it is possible that they exceed the legal amount of the salary in total. In this case, you will have to request a merging of executions in court.
However, if the salary or pension is very low, the executor may retain only what exceeds half of the minimum net salary on the economy, which is approx. RON 1.100. Therefore, the executor can only garnish the sums that exceed RON 550 per month. Nothing can be garnished from a salary below RON 550.
If you observe that the enforcement agent has garnished your salary more than the legally accepted amount, you can challenge their actions in court, in 15 days. If you want a quicker solution, another option would be to directly contact the enforcement agent and ask him to limit the execution to the legal amount. If it was just a mistake and the executor is in good faith, it is possible to solve the problem without trial, so you without losing any extra time and money in this respect.
Can bank accounts containing children’s’ benefits and alimony be garnished?
Child benefit and alimony are special allowances and cannot be garnished for any type of debt. The same rule applies to sick child care benefit, maternity allowances, death grants, and state scholarships. Regardless of the person’s debt (e.g. credit delays, litigation, taxes), those incomes cannot be garnished.
Unfortunately, enforcement agents do not always know or verify what are the origins of the sums in the garnished account. In practice, there may be situations when special allowances are also garnished, although this is not legal.
If you have earnings such as the above and they were garnished, you can challenge the procedure in 15 days in court in order to stop the garnishment and eventually recover the amounts. Another faster solution, but not always with best results, is to contact the enforcement agent who has mistakenly blocked the children’s benefit account and to explain the situation to him. He may wish to avoid litigation and therefore correct the error.
Who pays the forced execution expenses?
Expenditure on execution is broadly divided into two categories:
- the cost of opening forced execution
- the final fee of the enforcement agent
The costs of initiating forced execution are initially borne by the creditor. It is the creditor who requires the enforcement agent to verify the accounts, that is, the assets held by the debtor. The enforcement agent cannot start these steps without paying any initial sums.
In some cases, the debtor has no money or goods to execute at all. This risk is borne by the creditor, who must pay the enforcement agent anyway in order to open forced execution. Fees vary from the enforcement agent to the enforcement agent but are generally not so large as to discourage the creditor from starting the procedure and at least check whether they are likely to recover their debt from the debtor directly or not.
In the event that the debtor has money and goods to be executed, the creditor will cover the debtor’s advanced expenses with execution. The enforcement agent will also retain the final fee from the debtor’s assets.
Therefore, as a rule, enforcement costs are borne by the debtor. But the creditor will always have to cover the costs of opening forced execution, which he will not be able to recover if the debtor has no money or goods to execute.
The enforcement agent’s fee is very high. What can we do to reduce the amount?
The enforcement agent’s fee is part of the execution costs and has minimum and maximum limits set by the law of the enforcement agents. So, the law basically protects debtors against excessively high enforcement agents’ fees.
The enforcement agent’s fee may vary from one execution to another depending on numerous criteria, such as the complexity of the file, the total amount, the number of operations performed. For example, the fee will be different for the execution of 500 lei, which is quickly covered by a withdrawal from the debtor’s account, against the tracking of the amount of 10,000 Euros over the parcel of several years, by forcing and selling a real estate at auction.
If the debtor finds that the enforcement agent’s fee is excessive, he will have to appeal to the court of execution (that is to say, the court of the debtor’s domicile or headquarters) within 15 days of the extraordinary rendition of the court order. Through the appeal, the debtor will have to show specifically why the fee is too high, referring to criteria like the above. Further on, the court will assess, on a case-by-case basis, whether the fee set is excessive and will reduce it accordingly.