Debt recovery from an individual or a company in Lithuania: differences

Debt recovery from an individual and from a company follows the same court route: a statement of claim or an application for a court order. Four things differ. First, statutory interest and compensation for recovery costs: when both parties are businesses or private legal persons, different interest rules apply (Article 6.210(2) of the Civil Code (CK)), and compensation for recovery costs under the Law on the Prevention of Late Payment in Commercial Transactions (MĮSVAĮ) can be claimed only under commercial contracts (MĮSVAĮ Articles 1(2) and 7). Second, when the debtor is a consumer, the court checks on its own initiative whether the contract terms are unfair (CK Article 6.228⁴(9)). Third, the bailiff (antstolis) cannot recover from an individual’s basic necessities and from certain benefits. Fourth, only the individual can start personal bankruptcy proceedings (Article 1(4) of the Law on the Bankruptcy of Natural Persons (FABĮ)).

Below we look at each difference and what it means for you as a creditor.

Where to sue: place of residence or registered office

A claim is brought before the court of the defendant’s place of residence. A claim against a legal person is brought according to its registered office as shown in the Register of Legal Entities (Juridinių asmenų registras) (Article 29 of the Code of Civil Procedure (CPK)). A claim under a contract that names a place of performance may also be brought there (CPK Article 30(9)). A claim under a consumer contract may also be brought at the consumer’s place of residence (CPK Article 30(11)). Where several courts have jurisdiction, the claimant chooses (CPK Article 30(12)).

When the debtor is an individual, you need their address. An application for a court order (teismo įsakymas) is not examined if the debtor’s place of residence and place of work are unknown (CPK Article 431(2)(4)) or if the debtor lives abroad (CPK Article 431(2)(3)). If the address turns out to be unknown after the court order has been issued, the court sets it aside. Before doing so, however, the court must give the creditor a time limit to give the debtor’s correct place of residence or to take steps so that the court can serve the documents another way (CPK Article 431(3)). A company’s registered office is in the Register of Legal Entities.

Interest and recovery costs

• Statutory interest. Unless a law or the contract sets a different rate, a debtor who pays late owes annual interest of five per cent (CK Article 6.210(1)). Where both parties to the contract are businesses or private legal persons, the interest is six per cent (CK Article 6.210(2)).
• Commercial contracts. The Law on the Prevention of Late Payment in Commercial Transactions (MĮSVAĮ) applies to commercial contracts between undertakings, or between undertakings and public entities, under which goods are supplied, services provided or works carried out for payment (MĮSVAĮ Article 1(2)). An undertaking is a person carrying on an economic, commercial or professional activity (MĮSVAĮ Article 2(6)). The law does not apply to transactions with consumers buying for personal, family or household needs (MĮSVAĮ Article 1(3)(1)).
• An individual can be a business. Where the debtor is an individual, the purpose of the contract decides: an individual making contracts for their trade, business, craft or profession is also a business (CK Article 6.228¹(3)).
• MĮSVAĮ interest. If the commercial contract sets no interest rate, the rate is the interest rate applied by the European Central Bank to its latest main refinancing operation plus 8 percentage points, as in force in the half-year in which the debtor’s obligation to pay interest arose (MĮSVAĮ Articles 2(5) and 3(2)). Once the payment period has expired, a creditor who has performed its own obligations and has not been paid on time is entitled to the interest without warning the debtor, unless the debtor is not responsible for the delay (MĮSVAĮ Article 3(1)). The six per cent under CK Article 6.210(2) applies only where no other law and no contract sets a different rate. If a commercial contract covered by MĮSVAĮ sets no interest, the MĮSVAĮ rate applies (MĮSVAĮ Article 3(2)).
• Recovery costs. A creditor entitled to interest may, without warning, claim fixed compensation in the amount set by law (MĮSVAĮ Article 7(1)). In addition, the creditor may claim all recovery costs connected with the late payment that exceed that sum, including lawyers’ fees and the costs of out-of-court recovery (MĮSVAĮ Article 7(2)). These sums cannot be claimed from a consumer under MĮSVAĮ, because the law does not apply to transactions with consumers.

If you apply for a court order, note that the application is not examined if the late-payment penalties claimed exceed the late-payment interest rate set in MĮSVAĮ (CPK Article 431(2)(6)).

When the debtor is a consumer

A consumer contract means any contract between a business and a consumer (CK Article 6.228⁴(1)). Terms that were not individually negotiated and that, contrary to good faith, cause a significant imbalance in the parties’ rights and obligations to the consumer’s detriment are unfair. Among the terms presumed unfair are a disproportionately high liability of the consumer for non-performance and exclusive jurisdiction of the court of the business’s registered office (CK Article 6.228⁴(2), points 5 and 18).

This directly shapes a debt case:

• the court hearing the case must assess the terms against the unfairness criteria ex officio, that is, even if the debtor does not ask (CK Article 6.228⁴(9));
• a term the court finds unfair is void from the date the contract was made, and the other terms remain binding if the contract can be performed without it (CK Article 6.228⁴(8));
• the business must prove that a term was individually negotiated (CK Article 6.228⁴(4)).

So before you go to court, check the size of the penalties and the jurisdiction clause in your standard terms. For a claim under a consumer credit agreement, the court order route is not available if the annual percentage rate of charge does not meet the requirements of the Law on Consumer Credit (CPK Article 431(2)(5)).

If you lent money as a private person to another private person, this is not a consumer contract, because a consumer contract is one between a business and a consumer (CK Article 6.228⁴(1)). In that case, unless the contract provides otherwise, a loan repaid late carries the interest under CK Article 6.210(1) (CK Article 6.874(1)).

What the bailiff can recover from an individual and from a company

Enforcement against an individual cannot be directed at household, farm, work and study items and other property the debtor or their family need to live, work or study. The list of this property is set in the Instructions on the Enforcement of Judgments (Sprendimų vykdymo instrukcija) (CPK Article 668(1)). Nor can recovery be made from certain benefits, for example maternity, paternity and childcare benefits, child benefits and funeral grants (CPK Article 739, points 3, 4 and 5).

Deductions from salary and equivalent payments are made by bands, unless a law or the court provides otherwise (CPK Article 736(1)):

• from the part up to the minimum monthly wage (MMA): 10 per cent;
• from the part between one and two MMA: 30 per cent;
• from the part above two MMA: 50 per cent.

Higher deductions apply when recovering periodic maintenance and compensation for damage caused by injury to health or by the death of a breadwinner (CPK Article 736(1)). If the debtor supports family members unable to work, the bailiff may, at the debtor’s written request, reduce the deductions in the second and third bands by 10 per cent for each dependant. A share set by law or by the court cannot be reduced this way (CPK Article 736(2)).

Enforcement is not directed at an individual’s property if the debtor proves to the bailiff that the debt and enforcement costs can be recovered from income within twelve months. Where recovery would be from the last home the debtor lives in, the period is thirty-six months (CPK Article 663(1)). Recovery from such a home is possible only if the amount due and the enforcement costs exceed the amount set in CPK Article 663(3). This limit does not apply if the home is worth less than the amount due and the enforcement costs (CPK Article 663(3)). Nor does the limit apply to mortgaged or pledged property (CPK Article 663(5)). The home the debtor lives in is in the last, fifth, place in the order of recovery (CPK Article 664(5)).

From a company, after pledged property (when recovery is for the pledgee, CPK Article 665(1)), recovery is made from money, property rights, securities, finished goods and property not directly used in production (CPK Article 665(2)). Property essential for production comes last (CPK Article 665(4)). How the bailiff finds a debtor’s assets and income is explained in our article Finding a debtor’s assets and income.

When the debtor is insolvent

An individual. Only the individual can start personal bankruptcy proceedings (FABĮ Article 1(4)). An individual intending to file must notify all creditors in writing at least one month before filing (FABĮ Article 4(2)). At present, insolvency means that the person cannot meet debts that have fallen due and that exceed the number of minimum monthly wages set in FABĮ Article 2(2). From 1 January 2027 the amount test disappears: a person is insolvent when they cannot meet debts that have fallen due and there is no reason to believe they will be able to meet them within a reasonable time (FABĮ Article 2(2), version in force from 2027-01-01).

Once you receive the notice, follow the case. When the ruling opening bankruptcy proceedings becomes final:

• recovering debts from the individual through the courts or out of court is prohibited, and the accrual of interest and penalties stops (FABĮ Article 6(5)(1));
• the bailiff hands the enforcement documents over to the court hearing the bankruptcy case (FABĮ Article 20(1)), and unsatisfied claims are met under FABĮ (FABĮ Article 20(2));
• the court’s ruling sets a period of not less than 15 and not more than 30 days from the date the ruling opening bankruptcy becomes final, within which creditors may lodge claims (FABĮ Article 6(3)(3)).

Lodge your claim, with the documents supporting it, with the bankruptcy administrator within the period set by the court (FABĮ Article 23(1)). If you miss the period, you can file the claim directly with the court. The court accepts it if it finds the reasons for the delay important and the claim well-founded (FABĮ Article 23(3)).

Claims are met in two stages: first without interest and penalties, then interest and penalties in the second stage (FABĮ Article 29(2)). An ordinary creditor’s claim falls into the second rank (FABĮ Article 29(4)). When the bankruptcy process ends, the claims left unsatisfied under the plan are written off, except where the case ends because the person can and will be able to meet their obligations (FABĮ Articles 29(7) and 30(3)(2)). Claims that are not written off include, for example, damage caused by a criminal offence and child maintenance (FABĮ Article 29(7)).

A company. The insolvency of legal persons is governed by a different law. Whether and how a creditor can start a company’s bankruptcy is covered in our article Company insolvency without shareholder consent. If the company is being liquidated, read Debtor company in liquidation: how a creditor claims the debt.

More on debt recovery

• Debt recovery in court: service page
• Finding a debtor’s assets and income in Lithuania: you vs the bailiff
• Debtor company in liquidation: how a creditor claims the debt in Lithuania
• Interest and late-payment penalties in Lithuania: what the law allows

How to start

Send us the documents supporting the debt (contract, invoices, correspondence) and the debtor’s details: an individual’s name and address, or a company’s name and registration code. We will assess which interest and costs can be claimed and which court route to take.

Phone +370 5 212 1506, email info@linden.lt

More about this service: debt recovery in court.