Practical guide to debt collection in Lebanon

In Lebanon, there is no minimum amount required to start a judicial process; therefore, the creditor has the right to collect his debts, regardless of the amount.

In Lebanon, the amount of the debt determines the competent authority to hear the claim. In fact, article 86 of the Lebanese code of civil procedure lists which civil and commercial cases fall within the jurisdiction of the sole civil judge. It is important to clarify that Decree No. 13909/2024 amended all amounts wherever they appear in the LCPC by a factor of fifty due to inflation. Accordingly, personal actions and actions relating to movable or immovable property whose values do not exceed 5 billion Lebanese pounds (around 56.000$ based om official rate dated 2.2.26) fall within the jurisdiction of the sole civil judge, whereas previously the limit was 100 million Lebanese pounds (around 67,000$ based om official rate dated 2.2.26). All other debts above the mentioned threshold of 5 billion enters in jurisdiction of the first instance chamber.

Additionally, debts arising from lease agreements fall exclusively within the jurisdiction of the sole civil judge according to article 86 of LCCP.

Sending a warning letter before starting legal action is not mandatory.

A fundamental principle applicable in Lebanon is “the contract is the law between the parties”. Therefore, the clauses of the contract determine the obligations and rights of both the creditor and the debtor and whether the creditor must send a warning letter before taking any legal actions against the debtor.

In most cases, a lawyer is consulted to send the formal notice.

If the creditor decides to send a warning letter, this notice must include the following essential elements:

• The information of both parties must be clearly stated.
• The breach should be specified and described in detail.
• The legal rules or contractual provisions breached by the debtor, which give the creditor the right to take legal action in case the debtor fails to fulfil his obligations after receiving the notice
• A warning period is preferable, to give the debtor the opportunity to fulfil his obligations and cure the breach.

If a formal notice is sent before taking any legal actions, the debtor’s response determines the course of the relationship between him and his creditor.  The debtor can refuse, contest the debt or the amount, raise counterclaims, or ignore the warning letter. And that could lead the creditor to begin legal action based on the debtor’s response or non-response

The creditors must first verify the debtor’s economic and financial situation to determine whether he will be able to pay his debts.

Regarding commercial debts, the documents listed below are very useful to obtain effective collection:

• the contract signed between the creditor and the debtor, which specifies the debtor’s obligations and the amount of the debt due for payment.
• invoices and receipts.
• payment reminders and any formal or non-formal notices.
• any documents securing the debt of the creditor (guarantees or others)

The above documents prove the creditor’s right and the amount of the debt and the date it became due, and therefore facilitate the creditor’s collection of his debts.

It is strongly recommended to ask for advice from a lawyer or legal expert when forming, collecting or using such documents.

Before initiating any legal procedure to collect a debt in Lebanon, it is advisable for the creditor to consult a specialized lawyer to guide him and assist in carrying out all the correct legal steps.

The presence of a lawyer is very important because legal procedures are complicated and require extensive expertise in this field.

A power of attorney must be signed by the creditor to the appointed lawyer in order to enable the lawyer to act on behalf of the creditor.

Before taking any legal actions to collect his debts, the creditor must ensure that he possesses documents proving his claim.

Written documents have significant evidentiary value, that’s why the creditor should preserve all important written documents that prove his debt in order to present them before the court when necessary.

Without the necessary proof, the chances of the claim succeeding are very much reduced.

The creditor has a general right of pledge over all the debtor’s assets as a whole without preference for any particular property. Precautionary measures—such as affixing seals, registering a mortgage, and interrupting the running of prescription—may be invoked by any creditor, even if the creditor’s right is subject to a term or a condition. Regarding enforcement measures, the opposite applies: a creditor may not resort to them unless the debt is due and payable. Such measures include, in particular: execution seizure, coercive fines (Article 251 of the Lebanese code of obligations & contracts COC) and the right of retention. Nonetheless, it is the right of any person who is a both creditor and a debtor within the same transaction or situation to withhold execution/payment so long as the other party has not offered to fulfil the obligation incumbent upon them.

Additionally, the creditor who requested precautionary measures will be required to prove a guarantee in order to cover any potential damages that might be caused to the debtor.

Legal entities can consider the debt as wrote off debt by taking a formal decision through general assembly declaring that the debt is unrecoverable and therefore wrote off.