The payment order procedure is a simplified debt collection procedure. It serves to compel the debtor to pay quickly and easily, instead of lengthy and expensive court proceedings. In the vast majority of cases, there is no need for a hearing or complicated evidence-gathering procedures, as it is simply a matter of a private individual or company failing to pay a rightful invoice. The order for payment can also cross borders: it is possible to issue a European order for payment against a debtor who is resident or has their registered office in another EU Member State.
The law makes it mandatory to enforce claims by means of a payment order if the amount of the claim does not exceed one million forints. Therefore, if we are owed less than one million forints, we cannot initiate legal proceedings against the debtor until we have attempted to collect the claim by means of a payment order.
Payment orders have become significantly more efficient and faster since they are now handled by notaries instead of courts. The increase in efficiency is also due to the fact that payment orders are essentially an electronic procedure, with only private individuals being allowed by law to submit their applications on paper. Applications for payment orders must be submitted and electronically signed on the website operated by the Hungarian Chamber of Notaries. Legal representation is not mandatory, so a company can submit its own application if it has an electronic signature. In practice, this is still rare, so companies usually seek the assistance of a solicitor with an electronic signature for the order for payment procedure.
When submitting an application for a payment order, a fee must be paid to the Hungarian Chamber of Notaries, which is 3% of the amount of the claim to be enforced, calculated without interest and other surcharges, but at least HUF 5000 and at most HUF 300,000.
The application for a payment order must clearly identify the debtor and provide details for their identification. In the case of a company, it is advisable to obtain a company extract and indicate the company registration number, as there are many companies with similar names and if the debtor is not clearly identified, this may lead to the payment order being rejected. In the event of rejection, the fee paid will be forfeited, unless the application is resubmitted in accordance with the rules within thirty days. In this case, however, half of the fee that would otherwise be payable must still be paid.
In the payment order, the notary public only examines the application formally and, if it complies with the requirements, issues the payment order within 3 working days of receipt of the application (in the case of a paper-based application, this period is 15 days). In practice, this means that a letter identical to the content of the application is sent to the debtor, requesting payment of the debt and related charges specified in the application. If the debtor does not respond within 15 days of receiving the demand, the payment order becomes final, i.e. it has the same effect as a final court judgment.
If the debtor challenges the payment order within 15 days of receipt, the payment order will turn into a lawsuit. In the objection, it is sufficient to dispute the debt; it is not necessary to present substantive arguments and evidence. In such cases, the case is referred to the competent court, which then hears it in accordance with the rules of civil procedure.