Deeds of default: the statute of limitations

Deeds of default: the statute of limitations

"The issue that concerns me is the validity of certificates of default after bankruptcy. We hear that these deeds are cancelled after 20 years. Is this really the case?

Can the validity of these deeds be extended? After 20 years, can the creditor bring new proceedings?

Jean-Pierre, Geneva

Most civil law claims become statute-barred after 10 years if the creditor has not taken the necessary steps to collect them, as explained in this section on 19 October under the heading "Prescription: what are the terms and conditions?

When creditors take action against their debtors to collect their claims and it has not been possible to pay them in full, either because the debtor is exempt from seizure or has gone bankrupt, they are issued with a certificate of default. Since the revision of the Federal Debt Collection and Bankruptcy Act (LP) in 1994, certificates of default issued on or after 1 January 1997 following unsuccessful debt collection or bankruptcy are now subject to a 20-year limitation period (art. 149a LP). Therefore, even though the basic claim would normally be valid for 10 years, the effect of the certificate of default is to change the limitation period. The limitation period is extended by 20 years from the date on which the creditor is notified of the certificate of default.

If the creditor does nothing during the 20-year period of validity of the default deed, his claim will be definitively time-barred and he will no longer be able to sue his debtor successfully. On the other hand, if during this period the creditor initiates new proceedings on the basis of a post-bankruptcy deed of default, the debtor may lodge an objection to the payment order, if necessary by raising the "no return to better fortunes" exception provided for in art. 265a LP. If the judge summarily finds that the debtor has not returned to better circumstances, the objection to the proceedings will be declared admissible and the proceedings will be suspended. The creditor may, however, retaliate by bringing an in-depth action to establish that the debtor has returned to better circumstances and, if he or she is successful, obtain a definitive release of the opposition. At the end of this procedure, the creditor who is still not completely paid off will receive a new certificate of default valid for 20 years.