Debt Recovery Under a Loan Agreement: When a Right Must Be Properly Enforced

A loan agreement creates a clear and binding obligation: the borrowed funds must be repaid within the agreed timeframe. In practice, however, loans — especially those made between acquaintances, business partners, or within commercial relationships — are among the most common sources of disputes and financial losses. The reason is simple: trust replaces prudent calculation, and once the repayment deadline passes, the debt is often conveniently “forgotten.” In such situations, the creditor quickly faces the main risk — time works against them. Delays in responding significantly reduce the chances of successful recovery and give the debtor opportunities to conceal assets or deliberately prolong the process.

Why Debts Under Loan Agreements Are Not Repaid

The typical scenario is familiar: initial promises, followed by explanations about financial difficulties, and eventually complete silence. In more complex cases, the debtor begins to deny the very fact of receiving the funds or challenges the validity of their signature on the loan agreement or promissory note.

Most often, creditors encounter the following problems: evasion of repayment, ignoring written demands, denial of the loan itself, transfer of assets to relatives to avoid enforcement, and intentional delays in court proceedings. As a result, not only the principal debt is at risk, but also interest, inflationary adjustments, and the creditor’s ability to claim penalties.

What the Law Provides for the Creditor

From a legal standpoint, the creditor’s position is relatively strong. The Civil Code of Ukraine clearly states that a loan agreement is deemed concluded at the moment the funds are actually transferred, and the borrower is obligated to return the same amount within the agreed period.

In the event of default, specific legal consequences arise: accrual of interest and inflationary losses, the right to compulsory enforcement, seizure of the debtor’s property and bank accounts. However, these provisions do not operate automatically. The actual outcome depends on how competently the procedural strategy is constructed.

How Debt Recovery Works in Practice

Professional debt recovery begins long before a claim is filed in court. A lawyer analyzes all available documents: the agreement, promissory notes, bank transfers, correspondence, assesses limitation periods, and evaluates the prospects of recovering additional amounts.

The next stage is pre-trial demand work. A written demand to the debtor not only records the breach but often serves as the starting point for liability. In some cases, the debt is repaid at this stage without court involvement. If this does not occur, the dispute moves into the judicial phase. Depending on the circumstances, order proceedings, simplified proceedings, or general litigation may apply. In complex disputes, the active role of the attorney is critical: building the evidentiary base, refuting the debtor’s arguments, initiating expert examinations, and filing motions to secure the claim through seizure of assets.

It is important to emphasize: winning a court case does not yet guarantee actual recovery of money. The most challenging stage begins during enforcement proceedings. It is here that it becomes clear whether a court decision will translate into real financial results.

Within enforcement proceedings, measures may include seizure of movable and immovable property, freezing of bank accounts, garnishment of wages or other income, inventory and sale of assets, as well as restrictive measures — from travel bans to suspension of driving privileges. Incorrect tactics at this stage can nullify all previous efforts.

What Evidence Actually Works in Court

Courts assess not formal statements, but concrete facts confirming the transfer of funds and the obligation to repay them. The most reliable evidence remains a borrower’s promissory note — even in the absence of a separate agreement. Significant weight is also given to bank documents with a clear payment purpose, electronic correspondence in which the debtor acknowledges the debt, and evidence of partial repayment, which directly confirms the existence of the obligation.

Courts may also accept audio and video recordings, provided they were obtained lawfully, and in exceptional cases, witness testimony. The key question is always the same: do these pieces of evidence prove that the funds were received and that the repayment deadline was breached?

Conclusion

Debt recovery under a loan agreement is neither a formality nor a “quick lawsuit.” It is a comprehensive legal process in which timing, evidence, procedural tactics, and control over enforcement play a decisive role. That is why, in debt disputes, the critical factor is not only having a contract, but the ability to actually enforce one’s rights, rather than merely confirm them on paper.