Published on Eurasian Perspectives

What happens if you don’t pay your bill? Lessons from Central and Eastern Europe

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We all have regular bills to pay for the ubiquitous services we consume – whether they be for utilities (water, heating, electricity etc.), credit cards, memberships, or car payments. But, not everyone pays.  

Across an economy, these unpaid bills convert into millions of small-value enforcement claims, which are often uncontested. An economy needs a system that deals with this debt quickly, cheaply and fairly.  If the debt collection system fails, it causes a range of systemic problems that gradually choke both the courts and the economy. 

In several countries where we work in Europe - primarily in Central, Southern, and Eastern Europe - the courts are clogged with huge numbers of backlogged cases of this kind. Yet, some of their neighbors have managed to solve the problem. 

So why don’t people pay? Why are some countries better at this than others?  And what can be done to improve systems for debt collection?

To find the keys to their success and to highlight their lessons for others, the Bank has just launched a new report, Towards Effective Enforcement of Uncontested Monetary Claims:  Lessons from Eastern and Central Europe.

Why don’t people pay (and why does that matter)?

Some say that the problem of unpaid bills is merely symptomatic of poverty – people simply can’t afford to pay. Others are more skeptical, and point to the ubiquitous mobile phone use in the region, including among the poor.  They say the problem of unpaid bills, especially utility bills, is specific to culture and context – in the former socialist countries of Europe, utilities used to be subsidized, or fully provided, by the State, and citizens have merely not formed the ‘habit’ of paying. Some others contend that restrictions on the utility provider’s ability to cut off service encourages non-payment. 

The problem of delinquency in paying utility bills tends to compound upon itself. If the debt collection process isn’t managed well, citizens invariably know this and are less likely to pay. A snowball effect emerges: companies take losses; courts become backlogged; and judges and staff waste their time on minor, often futile, cases, while worthy cases remain in the queue. In the end, the justice system, and the entire economy, suffers.

Which countries do it well?

Several countries have created a ‘conveyer belt’ system that processes these cases effectively, efficiently and equitably.

One example is Estonia. All uncontested claims in Estonia are handled by a single court division, the Centre of Payment Orders located in the Pärnu County Court. It employs only 4 assistant judges and 29 other court officers who process requests for enforcing uncontested claims within only about 10 days and at a cost of EUR 45 per claim. Creditors can file applications for pecuniary claims with a value of up to EUR 6,400 and the process is fully electronic. The Centre reviews ~40,000 applications per year.

Similarly, the E-court in Poland, a division of the Lublin-West Regional Court, has jurisdiction over the entire territory of Poland. It employs only 8 judges and 119 court clerks with law degrees. In 2015, the E-Court issued ~2 million writs of execution. Creditors in Poland can file applications for the issuance of orders for payment irrespective of the amount of the claim. The court fee is only 1.25% of the claim value. The process is also fully electronic and takes about 10 days.

Getting the balance right

Countries that do well balance cost-effectiveness with respect for citizen’s rights. They use efficient (often centralized) processes that harness ICT. They have procedures in place for debtors to contest claims, and objections are dealt with individually, quickly and respectfully.  These countries have common sense rules on statutory limitations, as well as incentives to join similar cases - preventing the accumulation of backlogs.

Recognizing that solutions, even from neighboring countries, cannot simply graft to other countries, the report also analyzes reform management, political economy and options for raising awareness and managing change.  

The report, Towards Effective Enforcement of Uncontested Monetary Claims:  Lessons from Eastern and Central Europe , outlines a series of options, and some recommendations, for policymakers that are interested in this kind of pragmatic and practical reform. 

The report is also available in SerbianBulgarian, Croatian, Macedonian, and Albanian.

This work was made possible through collaboration between the World Bank and the Ministry of Foreign Affairs of the Netherlands


Georgia Harley

Senior Strategy Officer, International Development Association (IDA)

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