Instalment plan and the new Civil Code

The new Civil Code introduces several significant innovations in the field of debt recovery.

Author of the article: ARROWS (JUDr. Jakub Dohnal, Ph.D., LL.M., office@arws.cz, +420 245 007 740)

This article was written in 2014. If you are looking for up-to-date information on this topic, please do not hesitate to contact us at office@arws.cz or by phone at +420 245 007 740. We will be happy to advise you.

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One of them is the possibility to draw up a repayment schedule even for a debt that has already expired with the effects of debt recognition. Unlike the old legislation, the new Civil Code does not require the debtor to know that the claim is time-barred. If the debtor signs the repayment schedule in the form required by law, the claim is recognised without further delay.

The new Civil Code also regulates the issue of limitation differently. Section 639 of the new Civil Code provides that if the debtor has signed a repayment schedule (acknowledgement of debt), the right is time-barred ten years after the date of signature. However, if the debtor also specifies in the acknowledgement the time by which he/she shall pay, the right shall be time-barred ten years from the last day of the specified period. Section 641 provides that if in the instalment plan (acknowledgement of debt) the performance has been divided into instalments, the ten-year limitation period also applies to the instalments and starts to run from the date of maturity of each instalment. If the debt becomes repayable due to the loss of the benefit of the instalments, the limitation period shall start to run from that moment.

Another new feature is that under Section 1953 of the new Civil Code, a creditor who has a debtor's acknowledgement of debt or other promissory note must return it to the debtor upon satisfaction or indicate on the note that it has been partially satisfied. If this is not possible, the debtor may request that the creditor issue a certificate to the effect that the debenture has lapsed to the extent that the debt has been discharged. The provisions on the receipt are not affected. In practice, this means that once the debt under the instalment plan has been discharged, you are obliged to return the instalment plan. This is, of course, at the request of the debtor. This administrative novelty must be responded to.