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How to collect an unpaid invoice from a debtor in Riga?
If you need help recovering a claim in Riga, Latvia, this guide will provide you with all the information you need. If you are in search of a debt collection agency or lawyer, you can submit a form on our website to receive three free quotes within two days.
Overview of the debt collection process in Riga
At Riga Debt Collection, our team thoroughly evaluates each situation and formulates a personalised procedure based on the size of the claim and the type of debtor. This tailored approach ensures greater success in our efforts to facilitate recovery for our clients, boasting among the highest successful recovery rates in the industry. The concrete steps of collecting debt may vary depending on the given situation; however, our team of debt collection experts will always anticipate and strive to exceed your expectations.
The image below explains our standard framework for collecting debt in Riga:
Step 1: Find a local collection agency or attorney
You can easily post your request to Debitura and you'll get three price offers from Riga-based debt collection firms prepared to help you.
Step 2: Pre-legal collections
We initiate the procedure by sending out multiple notices to the debtor on your behalf, utilizing email, text messages, physical mail, and other available methods of contact in Riga. The purpose of these reminders is not just to ensure the debtor pays their debt, but to encourage them to take notice and coordinate a suitable payment plan. If we cannot successfully acquire your money, we don't charge anything!
Step 3: Evaluation:
If the debtor has not fulfilled their obligation to pay you after you've taken the initial steps, it is the moment to consider what should be done next. We'll use your claim's size, the chances of getting paid and the laws in Riga to determine the best course of action. Latvia provides three common options to choose from for your following steps.
Step A: Surveillance:
If the amount of your claim is less than $5,000, it is usually not worth your while to take extra legal action. Therefore, you should use our debt surveillance service. This means that we will continue to make contact with the person you owe the money to and aim for a reasonable resolution.This service is the precursor to further legal action, and if there are any changes in the circumstances, we will let you know what to do next.
Step B: Legal collections:
It is generally recommended to initiate a legal procedure for claims of more substantial sums: normally this threshold is set at $5,000. This sum can fluctuate based on the debtor's ability to pay and additional conditions. The process of issuing a legal summons differs from instance to instance and can be influenced by whether the debtor has voiced an objection or neglected to respond to earlier pre-legal communication. For smaller claims, a more straightforward method of legal action is typically feasible. The legalization of the collection typically takes 12 to 18 months, and a fixed fee to cover legal costs will be imposed. A wide selection of attorneys providing debt collection services may be found in Riga, and it is always beneficial to compare their quality and prices.
Step C: Debt enforcement:
If you have already been acknowledged by the debtor, or you have a court order, you may seek to enforce your claim through the bailiff's court. Generally, this process will take up to a year and a half while in Riga, as well as perhaps having to pay a certain fee to the courts and any applicable legal charges to your debt collection solicitor. The quantity of such expenses is dependent on the size of your claim. If you require a precise cost computation, you should upload your claim to Debitura.
Pre-legal debt collection in Riga
Pre-Legal Debt Collection involves measures taken before the courts become involved to collect an outstanding debt. Popularly referred to as 'amicable collection', pre-legal debt collection is recommended by experts when the debtor has not disputed the debt. This brings a number of advantages, such as continuing a positive relationship with the debtor, faster proceedings, and limited financial risk due to reduced administrative fees.
For the pre-legal collection process, you have two choices. The first option is to go the do-it-yourself route known as first-party collections. The other choice is to look for help from a third-party collection agency. This type of debt collection involves an external organisation that specialises in retrieving payments and is often the fastest and most successful route for collecting overdue invoices.
Regularly assessing the collection process and taking appropriate action promptly
Maintaining an understanding of the debtor's personal situation, to help facilitate amicable solutions.
Pre-legal debt collection in Riga is a structured process that aims to achieve an amicable solution to a debt repayment. This process begins with an initial assessment of the debt and the debtor, including confirming the amount owed, who is responsible for the debt, and researching the debtor’s contact history. Once this assessment is complete, the debt collection agency contacts the debtor to inform them of the debt and see if it can be paid or if a payment plan can be negotiated. Communication via all available channels is essential. The goal should be to resolve the issue amicably by finding a solution that works for both parties. It is important to remember the debtor has rights, including those outlined in the law, which must be respected. To ensure all actions taken remain within the law clear records should be kept of communication, as well as an understanding of the debtor. With the pre-legal debt collection process, parties can collaborate to reach a mutually beneficial resolution.
Best Practices for Amicable Debt Collection:
Understand your own rights, as well as the debtor’s rights under the law
Be professional and respectful in all communication
Keep accurate records of all communication and interactions
Remain within the bounds of the law, avoiding harassment or abuse
Assess the collection process regularly, taking action promptly
Take the time to understand the debtor’s personal situation
You may modify and change the interest rate and add late payment fees on top of the original principal claim amount. These interest rates and fees depend on the amount of time passed and the size of the claim. This helps to efficiently encourage the payment of the debt.
We follow the civil law guidelines and regulations, and ensure that the process is always client-focused.
Debitura are 100% committed to ensuring that collection processes are completely transparent, compliant and effective. Try out our services and help to get your claim paid quickly and efficiently!
Legal debt collection in Riga
If your initial attempts to receive payment from the debtor have failed, it may be time to consider initiating legal debt collection. For typically small debts, the resources required to pursue collection may outweigh the recovery, so it is wise to pursue legal action only if your claim exceeds 5.000 USD. Legal debt collection is a time-consuming and costly process so it is only recommended to attempt recovery of larger sums for which the time and costs associated with collection can be justified. Depending on the specific situation, it may well be worth investing in legal services to pursue recovery. Ultimately, the decision to engage a lawyer must be balanced against the cost of the claim, the likelihood of success, the availability of other methods of debt recovery, and the desired outcome.
Debitura makes it easy to find the right debt collection attorney for your case in Riga. We can provide you with free quotes from 3 local attorneys, so you can compare prices and see the process steps involved. With our help, you can quickly find the right agency or attorney to handle your legal debt collection needs.
When it comes to legal debt collection, our local partner takes several steps. First they will reach out to the debtor and try to negotiate a payment plan. If this fails, the partner will take legal action, such as litigation, debt enforcement, mediation or bankruptcy proceedings. Depending on the amount of debt, the civil law of Latvia will regulate the actions. This whole process can generally take between 12-18 months.
Cost of debt collection in Riga
Average success fee for pre-legal debt collection in Riga
The cost of debt collection services in Riga may vary depending on the size of the claim to be recovered and the stage of debt collection. Generally, businesses will only pay a success fee for amicable debt collection if the amount is recovered. The success fee amount of an amicable debt collection is dependent on the burden of the claim.
Hourly rate for legal-debt collection services in Riga
When it comes to debt collection in Riga, you will likely need to pay legal taxes that are based on the amount of your claim. You may also need to pay for legal assistance, either through a debt collection agency or a lawyer, where the cost is determined by their hourly rate multiplied by the number of hours required to resolve the claim. The more complicated the claim is, the longer it will take, and the higher the cost. This table provides an overview of the average hourly rate of legal debt collection in Riga.
Riga city risk profile
We have investigated Riga's critical financial data and extrapolated a risk assessment. You can use this analysis to classify your payment terms and manage your risk when doing business with customers in Riga.
Our analysis concludes that the risk of doing business in Riga is low.
Based on this low score, You can feel reasonably confident that you will be able to get paid when trading with customers in Riga. Nonetheless, we always recommend doing a specific credit analysis on an individual customer basis before offering any credit.
The low risk score is based on the following factors:
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Economic risk in Riga
Latvia has a low economic risk, ranking #2 out of 6 due to its GDP of 38.87 bn. USD growing at a rate of 4.48% the past year. This makes it a medium-sized economy. Its GDP per capita is high, at 20642 USD, putting it at #42 out of 183 countries. This gives its citizens higher purchasing power compared to the rest of the world. Its inflation rate was 3.3% in 2021 which is also considered low. This is evidenced by monetary KPI's such as low inflation and interest rates. In conclusion, Latvia demonstrates great economic success and stability.
Business risk in Riga
Riga, Latvia, offers a business environment with relatively low risk. According to research, the business environment risk in Latvia is rated at 1 out of 6, and this is seen as a low scoring score in Europe. Property and Freedom from Corruption Indexes of 75 and 48 respectively are considered average, while the Fiscal and Business Freedom Indices are 77. The Economic Freedom, Overall Index comes in at 72. Data is provided by the World Bank's Doing Business study, which bases its ratings on ten performance indicators. This suggests that Riga's business environment is relatively low risk and offers a range of economic opportunities.
Political risk in Riga
Headline: Low Political Risk in Riga | Rule of Law Index is Very High
Riga, Latvia's capital, boasts very low political risk, with a score of 1/6, one of the lowest in Europe. Governance and political stability indicators such as the rule of law index, government effectiveness index, control of corruption, political stability index and the Corruption Perceptions Index are essential as they measure the ability to enforce commercial contracts. The rule of law index in Riga is, at 0.98 points, one of the highest, showing a very good chance of enforcing contracts. The control of corruption, political stability index and the shadow economy are all good indicators, at 0.75, 0.69, and 16.62%, respectively. All this has resulted in Riga having a very low political risk.
Commercial risk in Riga
With a commercial risk score of 4/4, Riga is considered to have a high commercial risk relative to the rest of Europe. According to the latest figures, Latvia has a negative trade balance of -2.08% of GDP, meaning that the country imports significantly more than it exports. Despite this, its exports of goods and services are still growing at 6.18% annually, taking up 64.07% of the country's GDP. However, the imports of goods and services still high, coming in at 66.15% of the GDP. Foreign exchange reserves for Latvia are currently 5.49bn USD.
Financial risk in Riga
The financial risk of doing business in Riga, Latvia is one of the lowest in Europe. The banking system, efficiency, and stability contribute to this low risk which is measured as 1 in 4. The credit information sharing index is also 8 out of 8, which means that the accessibility and quality of credit information available in Riga is high. As a result, understanding the credit risk of a counterpart is straightforward. Additionally, legal rights for creditors and borrowers are strong at 9 out of 12. Thanks to these strong factors, Riga is a safe and secure place to do business.
Looking for more detailed information? Then have a look at our country guide.
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