General information about legal enforcement
Legal enforcement involves the securing and collection of monetary claims (and other claims) via the enforcement authorities. The general rules are set down in the Enforcement Act. The act sets out the conditions for securing and enforced settlement of monetary claims and governs the approach that must be taken in connection with this.

In cases where the creditor does not already have collateral for its monetary claim, the enforcement process will commence at the securing stage. This normally means that the creditor needs to submit a request for execution to the competent enforcement authority. Execution refers to the enforced establishment of collateral in one or more assets belonging to the debtor.

This can take place through execution liens and/or attachment of earnings and in relation to virtually any assets of financial value that belong to the debtor. This includes real estate, shares and bank balances (execution liens). In relation to individual debtors, the execution order may also take place through ongoing payments such as wages, pensions, social security benefits and similar (attachment of earnings).

When establishing execution liens with legal protection, the creditor will have the grounds to request enforced realisation. This means that the creditor will be entitled to request enforced sale of the assets for which execution liens have been established, thereby achieving complete or partial coverage of its monetary claim against the debtor.

Attachments of earnings are not contingent upon a request for enforced sale, as the creditor may achieve full or partial coverage of the monetary claim through ongoing deductions from the debtor’s wages, pensions, social security benefits or similar.

Request for execution – enforceable basis for enforcement
The Enforcement Act sets out several conditions for submitting a request for execution. The basic conditions are that there must be an enforceable basis for enforcement, cf. Section 7-1 of the Enforcement Act. The Enforcement Act distinguishes between two different types of bases for enforcement: The general and special bases for enforcement, cf. Section 4-1(2), cf. Section 7-2(1) of the Enforcement Act.

For disputed monetary claims, the general bases for enforcement listed in Section 4-1(2) of the Enforcement Act will be most practical. A general basis for enforcement may include a judgment from a court or the arbitration board instructing the debtor to make payment by a specified deadline, usually two weeks. In the event that the debtor fails to pay by the expiration of the deadline specified in the judgement, a general basis for enforcement will exist. The judgement does not need to be legally enforceable in order to request execution liens. This means that the creditor may request execution even if the judgment has been appealed or the appeals deadline has not expired. Nevertheless, the monetary claim cannot be recovered through enforced realisation of collateral before the judgement that forms the basis for the monetary claim is legally enforceable.

For undisputed monetary claims, the special bases for enforcement listed in Section 7-2(1) of the Enforcement Act will be most practical. A special basis for enforcement may include a legally enforceable debt instrument, or perhaps more practically, an invoice or written payment request (claim).

The condition for an invoice or written payment request to constitute a special basis for enforcement is that the debtor does not raise any objections against the monetary claim. If the debtor raises objections, the creditor will normally need to acquire a general basis for enforcement in order to submit a request for execution. Nevertheless, it is far from unusual for a debtor not to raise any objections against an invoice or written request for payment and this can therefore constitute a special basis for enforcement.

The fact that the basis for enforcement needs to be legally enforceable primarily means that the monetary claim must be overdue and defaulted, cf. Section 4-4 of the Enforcement Act. For the special bases for enforcement, the creditor is also required to notify the debtor that enforcement will be requested if the monetary claim is not settled within two weeks, cf. Section 4-18 of the Enforcement Act. In the event that the debtor fails to make payment by the deadline specified in the notification, a special basis for enforcement will be deemed to exist.

Different approaches
There are other alternatives to enforcement. The creditor may, for example, enter into dialogue with the debtor. This may lead to a quicker resolution in some situations. It is also possible to enter into agreements that are adapted to the finances of the debtor in question, such as various repayment plans. It is usually in cases where negotiations are undesirable or non-productive that enforcement becomes a relevant alternative. In some cases, it may also be relevant to request temporary collateral for the monetary claim in order to prevent the debtor from evading payment or divesting itself of assets that may serve to cover any subsequent enforced realisation.

It can be difficult to assess how creditors could and should proceed in collecting a monetary claim and not least what would be strategically wise in each case. Simonsen Vogt Wiig has lawyers with experience in the collecting and securing of debt and can assist as needed. Please do not hesitate to get in touch for a further assessment.