European Union to Make Cross-Border Debt Collection Easier

The European Commission proposed today a new rule that would allow creditors greater security from debtors that attempt to move assets from one bank account to another in advance of a judgment.

The Commission – the executive branch of the European Union – said that the proposal could mean up to €600 million ($862 million) a year in additional debt recovery from creditors that win judgments against debtors.

The proposed Regulation would establish a new European Account Preservation Order that would allow creditors to preserve the amount owed in a debtor’s bank account, thus preventing the debtor from removing his assets before any decision is made by a court. Such a change would increase both the prospects of successfully recovering cross-border debt and people’s confidence in trading within the EU’s single market.

“Companies lose around 2.6 percent of their turnover a year to bad debts,” said EU Justice Commissioner Viviane Reding. “In these difficult economic times, companies need quick answers.”