Debt collection in Bosnia and Herzegovina and compulsory enforcement - Law office
At a glance
- Who: Law Office Prnjavorac, attorneys Azur and Alma Prnjavorac, in practice since 1993.
- Office: Đorđa Mihajlovića 10b, 75000 Tuzla; telephone +387 35 258 110; e-mail advokat@advokat-prnjavorac.com.
- Coverage: representation of creditors before the courts throughout Bosnia and Herzegovina, in Sarajevo, Banja Luka, Tuzla, Mostar, Zenica, Bijeljina, Brčko, Prijedor, Doboj, Trebinje, Cazin and Travnik.
- Stages of collection: out of court, through the attorney's demand letter and negotiations, and judicial, through a lawsuit where the debt is collected on an invoice or a contract, or through a motion for enforcement where an enforceable instrument or a bill of exchange exists.
- Limitation periods: the general period is five years in the Federation of BiH and ten years in Republika Srpska (Art. 371 of the Law on Obligations), three years for the supply of goods and services between legal entities (Art. 374), one year for utilities supplied to a household (Art. 378).
- Default interest: 10% per year in the Federation of BiH, 0.03% per day in Republika Srpska; accrued interest may not exceed the amount of the principal.
- Costs: court fee according to the value of the claim and the attorney's fee under the tariff; as a rule the debtor bears them in the end.
- Creditors from abroad: we conduct the entire procedure under a special power of attorney, without the client travelling to Bosnia and Herzegovina.
- Languages: Bosnian, German, English.
For most creditors in Bosnia and Herzegovina, debt collection is first a question of time and only then a question of law. A debt that could have been collected in the first months of default often ends up written off two or three years later, because the debtor has meanwhile been left without assets or the limitation period has expired. Our office has represented creditors since 1993 and conducts collection through both stages, out of court and judicial, always starting from the question of whether recovery is worthwhile at all. We take on the matter regardless of where the claim is located: the debtor may be in Sarajevo, Tuzla, Mostar or Banja Luka, and the client in an entirely different city or abroad.
Before we send the first demand letter we check the debtor's solvency: the accounts in the Single Register of Accounts of Business Entities of the Central Bank of BiH, real estate at the land registry offices, registered vehicles and shares in companies. Only on the basis of that picture do we tell the client what is realistically recoverable and what the procedure will cost. If there are no assets, we say so openly instead of opening proceedings that bring nothing but costs.
The out of court stage begins with an attorney's demand letter containing a precise calculation of the principal, the default interest and the payment deadline. A significant share of matters ends right there. Where the debtor asks for time, the debt can be rescheduled by a settlement on discharge of the obligation, and the safest form is a notarial deed bearing an enforceability clause, because it gives the creditor an enforceable instrument without litigation if an instalment is missed.
When the demand letter goes unanswered, the further route depends on the document the creditor holds. If there is an enforceable instrument or a bill of exchange, we move straight to a motion for enforcement; if it is an ordinary invoice or a contract, the judgment must first be obtained in civil litigation. We are authorised to act before all courts in Bosnia and Herzegovina, so the matter is conducted where the debtor has its registered office, residence or assets, irrespective of the entity. The choice of the means of enforcement decides how fast recovery is: seizure of funds in the account is the fastest and cheapest, withholding part of the salary the most reliable with employed debtors, and the sale of real estate or a vehicle comes into play when there is no money in the account. The entire course of enforcement proceedings is described on a separate page, and enforced debt collection against commercial entities is dealt with separately.
Besides classic collection, we represent secured, separation and bankruptcy creditors in insolvency proceedings, file claims and contest the filings of others, conduct collection under financial and operating lease agreements and assist clients in taking over real estate and movables once enforcement is completed. Creditors who are only now entering a business relationship are advised to secure the claim in advance, by a bill of exchange, mortgage, pledge or notarial deed, because collecting a secured debt is disproportionately easier than collecting a bare invoice. We write about the wider framework of these relations under civil law and commercial law.
A considerable part of our caseload is conducted for foreign creditors and for our diaspora from Germany, Austria and Switzerland. Under a special power of attorney we carry out the entire procedure in Bosnia and Herzegovina without the client needing to travel, and foreign court decisions are first recognised before the cantonal court in the Federation of BiH or the district court in Republika Srpska.
HOW TO COLLECT A CLAIM IN BOSNIA AND HERZEGOVINA
The debt collection procedure in Bosnia and Herzegovina step by step, from checking the debtor to satisfaction of the principal, interest and costs.
- Checking the debt and the documentation. We check the debtor's solvency and the available instruments (invoice, contract, bill of exchange) and assess whether collection is worthwhile.
- Attorney's demand letter and out of court collection. We send the debtor an attorney's demand letter with the calculation of the debt; most matters are settled amicably at this stage.
- Lawsuit or motion for enforcement. If the debtor does not pay, we file a lawsuit with the competent court, and a motion for enforcement only where we hold an enforceable instrument or a bill of exchange.
- Court decision and carrying out enforcement. The court issues a decision on enforcement; seizure of funds in the account, withholding part of the salary or the sale of the debtor's assets follows.
- Satisfaction. The recovered funds are applied to the principal, the default interest and the costs of the proceedings, which as a rule the debtor bears.
WHAT TO PREPARE BEFORE COLLECTION BEGINS
The outcome of collection is largely decided before the first pleading, in the folder the client brings to the first meeting. The tidier the paperwork, the shorter the road to the money and the narrower the debtor's room to stall. At the first meeting we ask for:
- the contract, the purchase order or any written record of what was agreed and at what price;
- the invoice or receipt showing the amount and the due date;
- proof that the goods were delivered or the service performed, such as a delivery note, a handover record or photographs of the work carried out;
- every message, e-mail or letter in which the debtor mentions the debt, acknowledges it, promises payment or asks for time;
- the account statement showing what, if anything, has already been paid towards the debt and when;
- the debtor's exact details: name and surname or full company name, address, registration or identification number and any known account numbers;
- demand letters sent earlier, together with proof that they were delivered.
If one of these documents is missing, that is no reason to give up. Collection often succeeds on circumstantial evidence as well, but every missing document lengthens the procedure and raises the risk that the debtor will succeed with an objection. That is why we advise clients who are only starting out in business to adopt the habit of tidy paperwork from day one, and not only once payment fails to arrive.
HOW WHAT THE DEBTOR ACTUALLY OWES IS CALCULATED
The amount the debtor owes is rarely equal to the amount on the invoice. The claim consists of the principal, the default interest running from the day of default and the costs incurred in the collection procedure. The debtor falls into default when the obligation is not performed within the period set by the contract or the invoice. Where no period is set, default arises only after the creditor has called for payment, so a written demand letter with a clear additional deadline is useful even when it is not a statutory requirement.
A special rule applies where the debtor pays less than is owed. Under Art. 313 of the Law on Obligations, a payment is applied first to the costs, then to the interest and only lastly to the principal, and this applies regardless of the debtor having stated on the payment slip that the principal is being paid. Creditors regularly record this incorrectly and claim less in court than is due to them, or conversely are surprised when the court rejects part of the claim. For the same reason we record every payment by date and amount, because the correctly framed claim depends on it.
With debts that drag on for years it is useful to know the upper limit as well: accrued default interest may not exceed the amount of the principal debt, and this rule applies in both entities. A creditor who waits too long therefore not only risks the limitation period but at a certain point also stops earning on interest.
COLLECTING A DEBT BETWEEN INDIVIDUALS
Alongside business debts, a large number of matters concern money lent between private individuals: relatives, friends, neighbours and business acquaintances. Such loans are as a rule given without a contract and on trust, so it later seems there is no evidence. That impression is mistaken.
A loan is proved by all available means. A transfer order or a bank statement stating the purpose of the payment is particularly persuasive, because it carries the date, the amount and both parties. To that are added the receipt, messages and correspondence in which the debtor mentions the debt, statements of witnesses who were present when the money was handed over, and the very fact that the debtor has already returned part of the money. The court assesses this evidence as a whole and not item by item.
Where there is no written trace at all, we try to obtain an acknowledgment of debt before filing suit. A short statement by the debtor is enough, and the best is one certified by a notary, because it interrupts the limitation period and removes the dispute over the basis of the claim at the same time. With individuals, enforcement is most often directed at the current account, the salary or the pension, and with larger amounts at a vehicle or real estate. We conduct such matters throughout the country, in Sarajevo and Tuzla as much as in Mostar, Banja Luka or smaller places where the debtor resides.
AN INVOICE IS NOT AN ENFORCEABLE INSTRUMENT: WHAT THE LAW RECOGNISES AS A BASIS FOR ENFORCEMENT
This is the most frequent and most expensive mistaken expectation among creditors. An unpaid invoice proves that the business was performed, but on its own it does not open the door to enforcement proceedings. The court orders enforcement only on the basis of an enforceable or an authentic instrument, and the law lists the authentic instruments exhaustively and very narrowly.
In the Federation of BiH, under Art. 29 of the Law on Enforcement Procedure, an authentic instrument is only a bill of exchange and a cheque with protest and a return account where these are needed to establish the claim, together with invoices or extracts from business records for the price of the utility services of water supply, heating and refuse collection. In Republika Srpska the list is somewhat longer: it also covers invoices for telecommunications services and the broadcasting licence fee, as well as accounting extracts of the Bar Association concerning membership fee debt. Invoices for goods, construction works, transport, trade or consultancy services are on that list in neither entity.
The practical consequence is clear: a debt from an invoice must first be adjudicated, and only then collected. A lawsuit is filed with the competent court, and in it we expressly propose that judgment by default be issued. If the defendant fails to submit a written response within the statutory period to a duly served lawsuit, the court grants the claim without a hearing under Art. 182 of the Law on Civil Procedure. Only that judgment becomes the enforceable instrument on the basis of which a motion for enforcement is filed.
With a bill of exchange this detour is skipped, because litigation is not needed before enforcement. By the decision issued on the basis of an authentic instrument the court orders the debtor to settle the debt together with the costs within eight days, and within three days in bill of exchange and cheque disputes. There is a difference in the moment of effect as well: a decision issued on the basis of a bill of exchange or a cheque is served on the bank immediately after it is issued so that the funds can be seized, whereas with other authentic instruments service on the bank waits until the decision becomes final. An objection is possible here too: if the debtor files it in time and with reasons against the part establishing the claim, the motion for enforcement is thereafter treated as a lawsuit and the matter goes to litigation.
For that reason we advise creditors who work with deferred payment to secure the claim in advance: by a blank bill of exchange with a properly drawn bill of exchange statement, or by a notarial deed bearing an enforceability clause. Both solutions skip litigation and shorten collection by months, sometimes by years. We give the same advice to clients across the country, in Sarajevo, Tuzla and Mostar as much as in Banja Luka or Bijeljina, because the rule on instruments applies irrespective of the court before which collection is conducted.
QUICK GUIDE THROUGH DEBT RECOVERY
The shortest answer to the question of where to start: look at which document you hold.
| What you hold | What follows |
|---|---|
| An invoice for goods supplied or services rendered | lawsuit with a request for judgment by default; enforcement follows only after the judgment |
| A bill of exchange of the debtor, with protest where required | motion for enforcement on the basis of an authentic instrument, without prior litigation |
| An invoice for water, heating or refuse collection | motion for enforcement on the basis of an authentic instrument |
| A final judgment, a court settlement or a notarial deed with an enforceability clause | enforcement on the basis of an enforceable instrument; for a judgment or a court settlement limitation only after ten years (Art. 379), while for a notarial deed the limitation period of the claim itself applies |
| The debtor contests the debt | lawsuit and proof of the claim in litigation |
| The debtor acknowledges the debt and asks for time | settlement before a notary with an enforceability clause |
| The debtor is employed, with no other assets | withholding part of the salary through the employer |
| A debt older than three years | check the limitation period before any other step |
Notes: in Republika Srpska invoices for telecommunications services and the broadcasting licence fee are also recognised as authentic instruments, which is not the case in the Federation of BiH. When checking the limitation period, mind the entity: the general period under Art. 371 of the Law on Obligations is five years in the Federation of BiH and ten years in Republika Srpska.
INTERRUPTING THE LIMITATION PERIOD: THE DIFFERENCE THAT DECIDES COLLECTION
The limitation period does not erase the debt, it gives the debtor the right to refuse payment. Art. 360 of the Law on Obligations expressly provides that the court may not take the limitation period into account if the debtor has not invoked it. From this follows a practical consequence many do not expect: a judgment may be issued even on a claim fifteen years old, if the debtor fails to raise the objection of limitation.
Creditors most often confuse two institutions. Suspension means that the period temporarily does not run and that, once the obstacle ceases, it continues where it stopped. Interruption means that all the time elapsed until then is lost and that the period starts again from the beginning, from zero. The difference is enormous, because interruption gives the creditor a full new period.
The limitation period is interrupted by the debtor's acknowledgment of the debt, which may be express or indirect through payment of part of the debt, provision of security or a request for time, and further by filing a lawsuit, a motion for enforcement, filing a claim in bankruptcy proceedings and any other act of the creditor taken before a court to establish or realise the claim. Where interruption occurred by filing a lawsuit, the new period starts running only once the decision becomes final.
What does not interrupt the limitation period is a demand letter, a telephone call and reminders by message. A verbal promise by the debtor to pay is in law an acknowledgment of the debt, but without a written trace it is almost impossible to prove, so it should not be relied on. It is precisely because of this difference that we set a time limit on the out of court stage and do not allow negotiations to consume the period.
SPECIAL SITUATIONS THAT CHANGE THE COURSE OF COLLECTION
The debtor has died. The death of the debtor does not extinguish the debt, it transfers it to the heirs. Under Art. 172 of the Law on Inheritance in the Federation of BiH, an heir is liable for the debts of the deceased up to the value of the inherited estate, and where there are several heirs they are jointly and severally liable, each up to the value of their share. Succession law in Republika Srpska knows the same solution. An heir who has renounced the inheritance is not liable for the debts. The creditor therefore follows the probate proceedings, obtains the decision on inheritance and directs collection at those to whom the estate has passed.
There is a guarantor alongside the debtor. If another person has guaranteed the debt, the creditor gains a second estate out of which it can be satisfied. An ordinary guarantor is liable only after the principal debtor has failed to pay even upon a call, whereas a guarantor who is jointly and severally liable may be sued immediately, just like the debtor. The wording of the guarantee agreement is therefore decisive, and we advise creditors to check it before signing rather than after the debt falls due.
The debtor has moved away. Leaving for another country is no protection against collection. If the debtor holds real estate, a vehicle, a company share or funds in an account in Bosnia and Herzegovina, the procedure is conducted before the domestic court at the place where those assets are. Service of documents abroad lengthens the procedure but does not prevent it. If there is nothing in the country, what remains is the route of recognition and enforcement of the domestic judgment in the state of the debtor's residence, of which we inform the client before the costs begin to rise.
A judgment sits unenforced for years. A final judgment is not spent because it once failed to bring in money. Every new motion for enforcement interrupts the limitation period, so collection can be reactivated as soon as assets appear with the debtor. In practice this means periodic checks of the land registry, the vehicle register and employment data, and filing a new motion at the right moment.
CREDITORS' MISTAKES THAT MAKE COLLECTION HARDER
In the long practice of our office, which represents creditors from Sarajevo to Banja Luka and from Tuzla to Mostar, certain mistakes stand out that repeat from matter to matter. The most expensive is waiting: the creditor telephones the debtor for months and receives promises, while the limitation periods quietly expire. The second is continuing deliveries to a customer already in arrears, which turns a small debt into a large one. The third is relying on verbal arrangements without a single signed sheet of paper, because the court decides on evidence and not on recollection. The fourth, which costs the most time, is the absence of security: a creditor who took no bill of exchange from the customer must first win the debt in litigation, whereas with a bill of exchange it would be collected directly in enforcement proceedings.
The good news is that all these mistakes can be put right while the claim is not yet time barred. A written demand letter with an interest calculation, stopping further deliveries and filing the lawsuit in time, or the motion for enforcement where an instrument exists for it, return the creditor to a position of strength. Those who react in the first few months of default as a rule collect the principal, the interest and the costs; those who wait for years often collect nothing but experience.
WHERE WE ACT: DEBT COLLECTION THROUGHOUT BOSNIA AND HERZEGOVINA
We take on debt collection for the whole of Bosnia and Herzegovina, regardless of whether the claim is collected in Sarajevo, Tuzla, Mostar, Banja Luka or in a smaller place. For the creditor this means one very practical thing: there is no need to look for an attorney in the city where the debtor lives or does business.
The reason is that territorial jurisdiction is determined by the debtor and not by the creditor. The matter goes to the court in whose area the debtor has its residence, registered office or assets, so a creditor from Bihać sues its debtor from Bijeljina in Bijeljina, and a creditor from Trebinje its debtor from Zenica in Zenica. The office is based in Tuzla, but matters are conducted where the law places them: in Sarajevo and Zenica, in Mostar and Široki Brijeg, in Bihać and Cazin, in Banja Luka, Prijedor and Doboj, in Bijeljina and Trebinje, and in the Brčko District.
Nothing becomes more complicated for the client. Communication runs by telephone and e-mail, the power of attorney can be sent by post or signed before a notary at the place of residence, documents are submitted as scans, and the client comes to court only where personal attendance is truly indispensable. For clients from the diaspora even that is not needed, because under a special power of attorney the entire procedure is carried out without their coming to the country.
Clients abroad. We conduct this procedure also for clients living in Germany, Austria, Switzerland, the United States and other countries, under a power of attorney certified at a BiH consulate or before a notary, without travelling to Bosnia and Herzegovina.
Supreme Court case law
What the Supreme Court says about debt collection
Claims between legal persons arising from the use of another's property for one's own benefit are subject to the general limitation period, since they are not mutual claims under contracts for the sale of goods and services.
Supreme Court of the Federation of BiH, Bulletin 1-2/2024, No. 68 Ps 052276 24 Rev 2 of 28.11.2024 (translation from Bosnian; original decision: advokat-prnjavorac.com)
- Court jurisdiction, civil dispute, municipal fee refund (Extraordinary revisions, June 2026, 15.07.2025)
- Unjust enrichment; restitution where the legal basis has ceased to exist; interest (Extraordinary revisions, June 2026, 03.04.2025)
- Lease of business premises; claim for value added tax (Extraordinary revisions, June 2026, 21.01.2025)
Every decision in the collection is listed with the holding, the legal basis, the case number and the date; the collection is in Bosnian. Our office reads the relevant case law for you and explains it in English. Case law by practice area
FREQUENTLY ASKED QUESTIONS: DEBT COLLECTION IN BOSNIA AND HERZEGOVINA
Law Office Prnjavorac conducts debt collection throughout Bosnia and Herzegovina, regardless of whether the debtor is in Sarajevo, Tuzla, Mostar or Banja Luka. Below are answers to the questions creditors ask most often about recovering a debt.
1. How does debt collection work in Bosnia and Herzegovina and what stages does it involve?
Debt collection in Bosnia and Herzegovina as a rule passes through two stages: out of court and judicial. We begin by checking the debtor's solvency and assessing whether recovery is worthwhile, after which we send the debtor an attorney's demand letter with a precise calculation of the debt. Most matters are settled amicably at this very stage. If the debtor still does not pay, we move to the judicial stage. Where we hold an enforceable instrument, such as a judgment or a notarial deed bearing an enforceability clause, or a bill of exchange, we file a motion for enforcement immediately. In all other cases, and that includes the ordinary unpaid invoice, a lawsuit is filed first, because an invoice is not, under the law, an authentic instrument on the basis of which the court could order enforcement. We explain the prospects of success, the costs and the expected duration to the client before every step, and the procedure for companies is dealt with in more detail on the page about enforced debt collection against commercial entities.
2. What does out of court debt collection include and why do we always start with it?
Out of court collection covers the attorney's demand letter, negotiations with the debtor, an agreement on the manner of payment and, where needed, the conclusion of a settlement on discharge of the obligation. We start with it because it is considerably faster and cheaper than court: debtors take an attorney's demand letter seriously, so a significant part of the debt is paid within the deadline set in the letter. In doing so we keep in mind one trap creditors frequently overlook: an ordinary demand letter does not interrupt the limitation period of the claim. For that reason we always set a time limit on the out of court stage and, if the debtor does not respond, move to the judicial route in good time so that the deadlines do not expire to our client's detriment.
3. When is initiating court proceedings necessary?
Court proceedings become necessary when the debtor ignores the demand letter, contests the debt or avoids any agreement. We do not, however, choose the procedural route according to whether the debt is disputed, but according to the instrument the creditor holds. We file a motion for enforcement only where we have an enforceable instrument or one of the instruments the law exhaustively recognises as authentic, above all a bill of exchange. For a debt from an invoice or a contract the route runs through litigation: we file a lawsuit and in it propose that judgment by default be issued, so enforcement is initiated only on the basis of the judgment. Before initiating proceedings we set out openly for the client the likelihood of success, the amount of the court fee and the other costs, as well as realistic time frames. We never initiate proceedings without the client's express consent. This approach saves the client money and directs collection only at matters in which satisfaction is achievable.
4. How long does debt collection take in Bosnia and Herzegovina?
The duration depends on the stage at which collection ends. Out of court collection takes from a few days to a few weeks. Enforcement on the basis of a bill of exchange or other instruments the law recognises as authentic is, if the debtor files no objection, usually carried out within a few months. Collection from an invoice takes longer, because litigation precedes it: if the debtor does not respond to the lawsuit, judgment by default may be issued within a few months, while if a defence is mounted the civil proceedings last a year or more, depending on the complexity of proof and the caseload of the particular court, which differs considerably from city to city. By choosing the right means of enforcement, above all seizure of funds in accounts, collection times can be shortened significantly.
5. When does a claim become time barred and which limitation periods apply?
The general limitation period is not the same in the two entities, and that is precisely what creditors most often overlook. In the Federation of BiH the general period under Art. 371 of the Law on Obligations is five years, while in Republika Srpska, under the same article, it is ten years. For particular types of claims the law prescribes shorter periods: mutual claims of legal entities arising from the supply of goods and services become time barred in three years (Art. 374), as do claims for rent (Art. 375) and for interest and other periodic payments (Art. 372), while claims for electricity, heating, gas and water supplied to a household become time barred in just one year (Art. 378). There is also a period longer than the general one: a claim established by a final court decision or by a settlement before a court becomes time barred in ten years (Art. 379), even where the law otherwise prescribes a shorter period for that type of claim. The limitation period is interrupted by acknowledgment of the debt and by filing a lawsuit, or by another act of the creditor before a court (initiating enforcement or filing a claim in bankruptcy proceedings), whereas an ordinary demand letter has no such effect.
6. What is the difference between an authentic instrument and an enforceable instrument?
The range of authentic instruments is far narrower than creditors assume, because the law lists it exhaustively. In the Federation of BiH, under Art. 29 of the Law on Enforcement Procedure, these are only a bill of exchange and a cheque with protest and a return account where these are needed to establish the claim, together with invoices or extracts from business records for the price of the utility services of water supply, heating and refuse collection. In Republika Srpska the list is somewhat longer and also covers invoices for telecommunications services and the broadcasting licence fee, as well as accounting extracts of the Bar Association concerning membership fee debt. An ordinary invoice for goods supplied or a service rendered is not an authentic instrument, so enforcement cannot be ordered on its basis. An enforceable instrument has greater legal force. Under Art. 23 of the Law on Enforcement Procedure of the Federation of BiH these are an enforceable court decision and an enforceable court settlement, an enforceable decision and settlement from administrative proceedings where they are for a monetary obligation, an enforceable notarial deed, and other instruments the law designates as enforceable. The difference becomes apparent with objections: against a decision issued on the basis of an authentic instrument an objection as a rule leads to litigation, while against an enforceable instrument the grounds for objection are reduced by law to a minimum. We therefore advise creditors, whenever they can, to secure the claim by a bill of exchange or in the form of an enforceable instrument, because that saves them an entire round of litigation.
7. Can repayment of a debt be secured in advance before a notary?
It can, and this is one of the safest solutions for a creditor. A settlement on discharge of the debt, an acknowledgment of debt or a commercial law contract for a sum of money can be drawn up before a notary as a notarial deed bearing an enforceability clause. Such a deed has the force of an enforceable instrument: if the debtor is late with even a single agreed instalment, the creditor immediately files a motion for enforcement for the entire remaining debt, without litigation and without proving the merits of the claim. We regularly use this mechanism when rescheduling existing debts, because it gives the debtor the chance to pay in instalments and the creditor full legal protection if the arrangement is not honoured.
8. Before which court is enforcement initiated and how does it proceed?
A motion for enforcement is filed with the court having subject matter and territorial jurisdiction according to the debtor's registered office or residence, or the location of the debtor's assets. In the Federation of BiH these are the municipal courts (for example in Sarajevo, Tuzla, Zenica or Mostar), in Republika Srpska the basic courts, that is the district commercial courts for commercial entities, and in the Brčko District the Basic Court of the Brčko District of BiH. On the motion the court issues a decision on enforcement, which is served on the debtor and on the bank or employer, after which seizure and transfer of funds follow, or an inventory, valuation and sale of assets. We describe the entire course of the procedure, step by step, on the page about enforcement proceedings.
9. What happens if the debtor files an objection to the decision on enforcement?
An objection is filed within eight days of service of the decision and, where it is directed against a decision issued on the basis of an authentic instrument, it must state reasons, as the court otherwise rejects it. The consequences of an objection depend on the type of instrument on which enforcement is based. With an authentic instrument a timely objection as a rule turns the procedure into litigation: the court then examines the merits of the claim as if a lawsuit had been filed, and the creditor proves the debt with the contract, invoices and other documentation. With an enforceable instrument (a judgment or a notarial deed) an objection is allowed only on narrow statutory grounds, for example if the obligation has already been performed, and in practice rarely succeeds. An objection therefore should not discourage a creditor: with proper documentation the procedure ends in recovery of the principal, the default interest and all costs charged to the debtor.
10. Against which of the debtor's assets can enforcement be carried out?
Enforcement may be ordered against funds in all of the debtor's accounts, against salary and other regular income, against movable property such as vehicles and equipment, against real estate recorded in the land registry, and against shares, ownership stakes and other property rights. In practice, recovery from a bank account is the fastest and cheapest, so we most often start with it. The law, however, also sets limits that creditors often do not expect. Under Art. 79 of the Law on Enforcement Procedure of the Federation of BiH, neither real estate that constitutes the debtor's only home, nor a farmer's agricultural land of up to 5,000 m², nor real estate where the total claim is less than one third of its market value may be the object of enforcement; those restrictions do not apply if the debtor consented to enforcement or voluntarily created a pledge over the real estate. Also exempt from enforcement are items indispensable to the everyday needs of the debtor and their family, as well as receipts from social and humanitarian assistance, child benefit and scholarships. We therefore check the debtor's assets before filing the motion, through the Single Register of Accounts of Business Entities of the Central Bank of BiH, the land registry offices and the records of registered vehicles, so that from the outset enforcement is directed at assets from which satisfaction is legally permitted and actually achievable.
11. How much of a salary or pension can be subject to enforced collection?
In the Federation of BiH, under Art. 138 of the Law on Enforcement Procedure, enforcement against salary and other regular income may be carried out up to one half. That restriction, however, applies only while the income does not exceed KM 1,000.00 per month: on the part above that threshold enforcement may be carried out up to two thirds, which considerably speeds up collection with higher salaries. Pensions enjoy enhanced protection, because with the minimum and the guaranteed pension enforcement may be carried out only up to one third, and in deciding the court also takes into account the debtor's material and financial situation. Similar restrictions, with their own amounts, exist in Republika Srpska and the Brčko District. The withholding of part of the salary is carried out by the employer on the basis of the decision on enforcement, every month until full settlement. For a creditor this is a slower but extremely reliable method of collection against employed debtors, because it does not depend on the current balance in the account.
12. What if the debtor has no assets or is unemployed?
The claim should not be written off in that case. A debt established by a final judgment becomes time barred only after ten years, and every new request for enforcement interrupts that period so that it starts running again. This means collection can be reactivated as soon as any assets appear: new employment, inherited real estate, a purchased vehicle or the founding of a business entity. Our experience shows that patient and consistent monitoring of the debtor's financial situation, with timely repetition of enforcement actions, brings recovery even in matters that looked hopeless for years.
13. What are the costs of debt collection and who ultimately bears them?
The costs consist of the court fee, calculated according to the value of the claim, the attorney's fee under the applicable attorney's tariff and, where necessary, the costs of expert evaluation or of carrying out enforcement. We present all of these amounts to the client in advance, before any engagement. Under the rule on costs, the party that loses the dispute is obliged to reimburse the other party's costs of the proceedings, which means that a diligent creditor ultimately recovers from the debtor the principal, the default interest and the full costs. It is precisely this prospect that often motivates debtors to pay the debt immediately upon receiving the attorney's demand letter.
14. Am I entitled to default interest and at what rate?
You are. Default interest is due to the creditor from the day the debtor falls into default, regardless of whether it was agreed. In the Federation of BiH the rate is 10% per year under the Law on the Default Interest Rate (Official Gazette of the FBiH, no. 18/20), with conformal calculation for periods shorter than a year. In Republika Srpska default interest is 0.03% per day under the Law on Default Interest (Official Gazette of the RS, no. 61/18). In both entities a limit applies that the accrued interest may not exceed the amount of the principal debt. Interest runs during the court proceedings as well, so any delay by the debtor increases the total amount they will ultimately pay.
15. Can creditors from abroad and the diaspora collect a debt in Bosnia and Herzegovina?
They can, and we handle such matters daily. Under a special power of attorney we conduct the entire collection procedure in Bosnia and Herzegovina without the client needing to travel to the country, from the demand letter to enforcement. Foreign court decisions are recognised before the cantonal court in the Federation of BiH or the district court in Republika Srpska, after which they are enforced as domestic ones. We represent creditors from Germany, Austria, Switzerland, Slovenia and other countries, as well as our diaspora, before the courts in Sarajevo, Banja Luka, Tuzla, Zenica, Mostar, Bijeljina, Brčko, Prijedor, Doboj, Trebinje, Cazin and Travnik, in practically every city where the debtor has a registered office or assets.
16. How is a loan given without a contract, purely on trust, to be proved?
The absence of a contract does not mean the money is lost. A loan is proved by all available means: by a transfer order or a bank statement stating the purpose of the payment, by a receipt, by messages and electronic correspondence in which the debtor mentions the debt or asks for time, by statements of witnesses who were present when the money was handed over, and by the fact that the debtor has already returned part of the money. The court assesses this evidence as a whole and not item by item. Before filing suit we regularly try to obtain a written acknowledgment of debt, if possible certified by a notary, because it interrupts the limitation period and removes the dispute over the basis of the claim at the same time.
17. The debtor has paid only part of the debt, what is that payment applied to?
Not to the principal, as most creditors assume. Art. 313 of the Law on Obligations provides that, where the debtor owes interest and costs in addition to the principal, a payment is applied first to the costs, then to the interest and only lastly to the principal. That rule applies even where the debtor states on the payment slip that the principal is being paid. A partial payment at the same time constitutes an acknowledgment of the debt and interrupts the limitation period, so the period starts running afresh from the day of that payment. For both reasons we record every payment by date and amount, because the exact amount of the claim depends on it.
18. Who is liable for the debt if the debtor dies before it has been collected?
The debt does not cease on the death of the debtor, it passes to the heirs. Under Art. 172 of the Law on Inheritance in the Federation of BiH an heir is liable for the debts of the deceased up to the value of the inherited estate, and where there are several heirs they are jointly and severally liable, each up to the value of their share. Succession law in Republika Srpska knows the same solution. An heir who has renounced the inheritance is not liable for the debts. In practice the creditor follows the probate proceedings, obtains the decision on inheritance and then directs collection at the heirs and the estate that has passed to them.
19. Can a debt be collected from a debtor who lives or works abroad?
It can, if the debtor has assets or income in Bosnia and Herzegovina. The procedure is then conducted before the domestic court at the place where those assets are, and enforcement is carried out against the real estate, the vehicle, the company share or the funds in the account, irrespective of where the debtor resides. Service of documents abroad lengthens the procedure but does not prevent it. If the debtor has nothing in the country, what remains is the route of recognition and enforcement of the domestic judgment in the state of residence, of which we inform the client in advance, before the costs begin to mount.
20. What is judgment by default and why does it matter for collecting a debt?
Judgment by default is a decision by which the court grants the claim without a hearing, because the defendant failed to submit a written response within the statutory period to a duly served lawsuit. The condition is that the claimant expressly proposed the issuing of such a judgment in the lawsuit, which is why we include that proposal in every lawsuit for the collection of a debt. No appeal lies against it, only a request for restoration to the previous state, so in practice it represents the fastest route from an unpaid invoice to an enforceable instrument. For the creditor this means that a careless debtor, who ignores the lawsuit as the demand letter was ignored before it, closes the door on their own defence.
If you hold a claim you cannot collect, the first step is a short conversation and a review of the documents. Tell us who the debtor is, how large the debt is, how long it has been overdue and what you have in writing, and we will tell you whether collection is feasible, by which route and at what cost. We work for creditors from all over Bosnia and Herzegovina and from abroad, and the debtor may be anywhere, from Sarajevo and Tuzla to Mostar and Banja Luka.
Clients have trusted us since 1993
Law office Prnjavorac has been active since 1993. Today, in its fourth decade of practice, it counts 1,056 Google reviews with an average rating of 5.0 / 5 on two independent Google business profiles.
All client reviews are publicly available on both Google business profiles, without filtering, mediation or moderation by the law office.
Other practice areas of the office
The office advises and represents clients in a wide range of legal areas in Bosnia and Herzegovina:
