The debt collection system is being modernised
A new draft aims to close loopholes and to simplify procedures
Many people know the situation: an invoice remains unpaid because it seems unjustified. While this may be legitimate in some cases, it is often followed by a debt collection proceeding – sometimes even as a means of pressure. Whether justified or not, an entry is made in the debt collection register, which can significantly affect the life of the person concerned.
Landlords regularly request such an extract during apartment searches, as do banks when issuing loans or car leasing agreements. From a legal standpoint, however, the significance of a debt collection register extract is questionable. It neither reliably reflects a person’s financial situation nor their payment behaviour, as a collection procedure can be initiated with virtually no hurdles, and the entry appears regardless of the validity of the claim.
On August 14, 2024, the Federal Council announced its intention to modernize the debt collection system and prevent abuse. Amendments to the Swiss debt collection and bankruptcy act (SchKG) are planned. The consultation has been completed, and the introductory comments from the Federal Council have been provided to the Parliament. But what exactly does the draft propose?
Preventing abuse
Currently, a debt collection register extract only indicates whether a person is registered with a specific debt collection office. This opens the door to abuse: individuals with poor payment habits can obtain a “clean” extract from any office where no debts are recorded. For example, a person from Pfäffikon may receive a certificate from another municipality’s office stating that there are no debt collection proceedings – even though multiple proceedings exist in Pfäffikon. Additionally, individuals with multiple debt collection cases can simply move to a new address in another municipality and obtain a blank extract from the new local office.
The Federal Council aims to close these loopholes. In the future, the extract should also indicate whether and during which period the person was registered in the municipality’s residents' register. This allows landlords, for example, to see whether a “clean” extract comes from a municipality where the person never lived or only recently moved.
The idea of creating a nationwide, interconnected debt collection register was not pursued directly by the Federal Council. However, it noted that such a solution could still be developed independently of the proposed amendments.
Digitally delivering debt collection documents saves costs and resources. However, there is legal uncertainty – particularly regarding certificates of loss – on whether they may be sent electronically. The Federal Council therefore proposes allowing notices, decisions, and rulings to be transmitted electronically, provided the recipient expressly agrees, or provided that the person submitted their application electronically and did not request paper delivery.
Online auctions possible
An exception remains for the payment order – the document through which the debtor learns about the proceeding and may raise an objection. It should in general still be delivered as an original.
However, the payment order could be sent electronically in the future if the debtor consents and an initial delivery attempt fails. Conditions: the debtor must be clearly identified, be able to acknowledge receipt, and be immediately able to raise an objection electronically. Whether this regulation will be implemented remains to be seen. Further details would need to be defined at the ordinance level.
In debt enforcement proceedings, the authorities may sell a debtor’s assets to raise funds for creditors. One way to do this is through public auctions. Whether online platforms may be used for such auctions remains unclear. Online auctions are efficient, cost-effective, and reach a broad audience. Some offices already use them – either via commercial platforms or via self-developed platforms.
However, the lack of a clear legal basis creates uncertainty. The Federal Council therefore suggests to explicitly permit the auction of movable assets via publicly accessible online platforms. Real estate shall remain excluded.