In order to obtain a distraint order, the following prerequisites are necessary:
- Due Claim
- Grounds (for distraint order)
- Assets (belonging to the debtor)
To initiate a distraint order, the creditor has to have an unsecured mature claim which can be enforced via the usual debt enforcement channels.
If the claim is secured by a pledge, a distraint order cannot be obtained (nor would it produce any additional benefits for the creditor).
The said claim should be (over-) due. Two exceptions apply; namely if the debtor has no fixed domicile in Switzerland or if the debtor tries to avoid the procedural consequences by fleeing or removing his assets.
A distraint order is a legal option only if payment of the creditor’s claim is objectively endangered. All grounds, on which a claim can be sustained, are listed in the Debt enforcement Code. One of these reasons is sufficient to initiate a distraint order.
One of the grounds on which a distraint order may be obtained, is the fact that the debtor has no domicile. A domicile confirms the intention to permanently reside in a specific place.
If a former domicile cannot be established, the place of residence may be considered to be the domicile. The place of residence may also be abroad. A distraint order on grounds of lack of a domicile is therefore rarely granted. It may, however, apply to travellers (travelling fairs etc.).
The creditor may apply for a distraint order, if the debtor
- conceals his assets,
- makes himself unavailable or
- prepares to abscond
in order to evade the fulfilment of his obligations.
A distraint order may also be filed if the debtor
- squanders or gives away his assets or parts thereof, or
- transfers assets abroad.
- is going abroad permanently or is preparing to do so.
Either of the two possibilities is sufficient to apply for a distraint order (squandering or absconding). However, in both cases it has to be verified that the debtor is taking action in order to evade the fulfilment of his obligations towards the creditor.
Debtor passing through
An exception applies, even if the debtor has a domicile. Travellers and people working at fairs or markets and people who are only passing through may be subject to a distraint order. In these cases an additional prerequisite constitutes that the claimed debt is due immediately (e.g. restaurant or hotel debts, fees for market stalls or similar).
Debtor residing abroad
The execution of a distraint order abroad may be impeded by various circumstances. For this reason, the law provides a possibility for a distraint order in Switzerland, provided the following conditions are fulfilled:
- the debtor resides abroad, and
- no other reason for a distraint order is fulfilled (subordination), and
- the claim is sufficiently linked to Switzerland, or
- the creditor holds a provisory or definite title to his claim (e.g. certificate of shortfall or court ruling)
In the event that the debtor owns a branch office/subsidiary company in Switzerland and the debt enforcement is based on a claim which was raised against this subsidiary company, a distraint order based on the fact that the debtor resides abroad is not possible.
Certificate of shortfall
A distraint order is possible, if the creditor holds a provisional or definitive certificate of shortfall (Schuldschein) against the debtor. A certificate of shortfall concerning a pledge (Pfandausfallschein) is not sufficient. Equivalent foreign documents, however, are sufficient.
Distraint order to secure tax claims
The federal and cantonal tax laws define that tax claims of the state may be secured, in cases where the debt collection process is insecure or endangered. In such cases, the tax authority issues a so called distress warrant. This ruling constitutes the basis of the (execution of) the distraint order.
Object of distraint order
Not all assets of a person may be subject to a distraint order. Only such assets may be subject to a distraint order that are seizable or forfaitable. Valid assets are only those which can be realised or, such as the balance of accounts.
Assets in possession of the debtor that belong to third parties cannot be seized. This also applies, if assets belonging to the debtor are in fiduciary possession of a third party.