Debt collection for businesses in Kazakhstan

28.02.2022

Debt collection is the recovery of money a counterparty has not paid under a contract: for goods delivered, work performed, services rendered, under a loan or a termination agreement. KORGAN Law Firm collects debts for businesses in Kazakhstan at every stage: from a claim letter and negotiations to court and enforcement proceedings. The sooner you start, the better the chances of getting the money back: the debtor has less time to move assets, and you are less likely to miss deadlines.

What debt collection includes

• Review of the contract, acts, waybills, correspondence and payments: what amount, penalty and costs can be recovered and whether the limitation period has expired.
• A claim letter to the debtor and a reply to their objections.
• Negotiations with the debtor: a repayment schedule, a settlement or mediation agreement.
• A statement of claim and representation at every stage of the proceedings, including appeal and cassation.
• A motion to secure the claim — an arrest of the debtor’s property, so that the judgment can be enforced.
• Enforcement proceedings: work with a private bailiff until the money is fully recovered.

How debt collection works

1. Review of documents. We check what proves the debt, who is liable for what under the contract and which deadlines apply. The general limitation period is three years (Article 178 of the Civil Code). The court applies it only if the debtor raises it, but once the period has expired, this is a ground for dismissing the claim (Article 179).
2. Claim letter. If a pre-trial procedure is required by law or by the contract, the court will return a claim filed without it (Article 152 of the Civil Procedure Code), and if in that case the debtor left the claim letter unanswered, the court will charge the legal costs to the debtor regardless of the outcome (Article 109). Even when a claim letter is not mandatory, it often leads to payment without court.
3. Negotiations. If the debtor is ready to pay but not at once, we put the arrangement in writing: a schedule, a settlement or mediation agreement.
4. Court. We prepare a statement of claim with a calculation of the principal debt, penalty and legal costs, ask the court to arrest the defendant’s property where needed (Articles 155–156 of the Civil Procedure Code) and represent you at hearings. More on the page “Representation in court“.
5. Enforcement of the judgment. We obtain a writ of execution and hand it over to a bailiff. A writ can be presented for enforcement within three years (Article 11 of the Law “On Enforcement Proceedings and the Status of Bailiffs”).

Enforcement proceedings

A judgment in your favour does not yet mean the money has arrived. We handle enforcement proceedings also when the court case was conducted by someone else:

• monitoring the proceedings from the issue of the writ of execution to full enforcement;
• interaction with private bailiffs to collect the debt;
• appeals against actions and inaction of a bailiff to higher authorities and to court if the judgment is not enforced;
• appeals against unlawful actions of a bailiff in the sale of the debtor’s arrested property at auction;
• a settlement agreement with the creditor at the enforcement stage;
• a motion to the court for a deferral or instalment plan for the judgment, if you are the debtor.

How enforcement proceedings work is explained in the article “On enforcement proceedings in Kazakhstan“.

From our practice

A client signed a reservation agreement with a construction company for an apartment in a building under construction in Astana. The agreement was terminated, the developer undertook to return 13,000,000 tenge within 60 working days and did not. We prepared the materials for court, after which the developer offered a mediation agreement and paid the full amount voluntarily. More in the article “Successful Completion of a Debt Collection Case for a Construction Company Client“.

A long-standing client on collecting receivables: “When receivables get stuck, and some not entirely honest companies want to drag things out, we often turn to KORGAN, and they help us with pre-trial settlement and get debts paid — our legal security, so to speak. We have been working together for a long time.” The video is on the reviews page.

Cost

The cost of debt collection depends on the amount of the debt, the documents and the stage at which you come to us, and is agreed before work begins. For legal support clients, claim letters are included in the monthly package, and beyond the package a claim letter costs 40,500 tenge per document, representation in court — from 200,000 tenge per case (prices include VAT). If the court rules in your favour, it will recover the legal costs from the debtor (Article 109 of the Civil Procedure Code), and the costs of a representative — in the amount actually incurred, but not more than 10% of the amount awarded (Article 113).

Frequently asked questions

Where does debt collection start?

With a review of the contract, acts, waybills, correspondence and payments: what amount, penalty and costs can be recovered and whether the limitation period has expired. Then comes a claim letter to the debtor. If a pre-trial procedure is required by law or by the contract, the court will return a claim filed without it (Article 152 of the Civil Procedure Code). Even when a claim letter is not mandatory, it often leads to payment without court.

What is the limitation period for debt collection?

The general limitation period is three years (Article 178 of the Civil Code). The court applies it only if the debtor raises it, but once the period has expired, this is a ground for dismissing the claim (Article 179).

Can the debtor’s property be arrested before the judgment?

Yes, on a motion to secure the claim the court can arrest the defendant’s property so that the judgment can be enforced (Articles 155–156 of the Civil Procedure Code).

What if there is a judgment but the money has not arrived?

Obtain a writ of execution and hand it over to a bailiff: a writ can be presented for enforcement within three years (Article 11 of the Law “On Enforcement Proceedings and the Status of Bailiffs”). We handle enforcement proceedings and appeal against actions and inaction of a bailiff, also when the court case was conducted by someone else.

Who pays the legal costs?

If the court rules in your favour, it will recover the legal costs from the debtor (Article 109 of the Civil Procedure Code), and the costs of a representative — in the amount actually incurred, but not more than 10% of the amount awarded (Article 113). If a pre-trial procedure is mandatory and the debtor left the claim letter unanswered, the court will charge the legal costs to the debtor regardless of the outcome.

Can a debt be settled without court?

Yes. If the debtor is ready to pay but not at once, we put the arrangement in writing: a repayment schedule, a settlement or mediation agreement. In our practice, after we prepared the materials for court, a developer offered a mediation agreement and paid the full amount.

Related articles

• On enforcement proceedings in Kazakhstan
• Is it possible to collect a money debt on a receipt?
• Liquidation of the LLP of the debtor by the tax authorities
• Does an entrepreneur need claims work? — video
• What steps should be taken to collect a debt under a court decision? — video

To prevent debts, start with the contract: contract work — payment terms, penalties and a pre-trial procedure that will later help you recover a debt.

To discuss your debt, call us: +7 700 500 05 53, or leave a request on the website.

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