Asset Seizure

Asset seizure is an action performed by the district commissioner at the request of a creditor, which involves placing a lien on the debtor's assets, if available, to secure the payment of claims against them.

Conditions for Asset Seizure

A creditor can demand asset seizure from a debtor if an enforcement order is in place, which allows the debt to be collected through seizure. Enforcement orders include court judgments and rulings or claims for taxes and other charges collected under law by state collectors.

In some cases, asset seizure can be demanded without prior legal proceedings, for example, in cases of tax claims or promissory notes.

Cost

An enforcement fee of ISK 13,000, payable to the state treasury, is added to the claim.

When an enforcement order is in place, it is sent to the district commissioner, who summons both the creditor and the debtor to an appointment at their office to review the request for asset seizure.

The debtor is notified by a letter served by a process server or sent by registered mail. The process of seizure depends partly on whether the debtor, or someone on their behalf, attends the meeting. A representative attending for another person must have written authorization from them.

If the debtor or their representative attends, they are informed of the seizure request and given an opportunity to respond to the claim. If the debtor raises no objections but still does not pay the debt, they are asked to point out any assets they may own that could be seized to secure the payment of the claimed amount.

The seizure process concludes in different ways, depending on whether the debtor has sufficient assets to cover the claim or not.

If the Debtor Owns Assets

If the debtor has assets sufficient to secure the payment of the claim, the seizure process ends with the seizure of those assets.

The district commissioner records which assets are seized, and the creditor can register the seizure against the assets where applicable. This places a lien on the asset. The debtor is prohibited from disposing of the seized asset in a way that would destroy or diminish its value.

Four weeks after the seizure, the creditor may request that the asset or assets be sold at a forced auction, with the proceeds going toward the payment of the claim.

What Can Be Seized?

Assets or rights that can be assessed for value and sufficiently identified may be seized, including real estate, vehicles, and claims.

Certain assets are exempt from seizure, including:

• Personal property necessary to maintain a continuous household.

• Items of significant sentimental value, provided their monetary value is not such that exempting them would be considered unfair to the creditor.

• Items essential due to disability or illness, such as specially equipped vehicles.

• Educational materials necessary for schooling.

• Items used for work, with a total value of up to ISK 50,000.

If the Debtor Owns No Assets

If the debtor does not have sufficient assets to fully secure the claim, the district commissioner concludes the process with unsuccessful seizure. As a result, all creditors with a due claim against the debtor may request that the district court declare the debtor's estate bankrupt. This right is valid for three months after the unsuccessful seizure.

Postponement or Cancellation of Seizure

The debtor must contact the creditor to arrange a postponement of the seizure process. If the debtor wishes to pay off the debt, this must be done in consultation with the creditor, who can then withdraw the seizure request.

Generally, no postponement is granted during the process unless both parties agree.

The creditor is responsible for recording unsuccessful seizures on the default registry. The district commissioner cannot remove entries from the default registry unless they are the creditor. If the debtor has not been removed from the registry, they may submit objections to the registration on the Mitt Creditinfo website by logging in with electronic ID.

If the Debtor Does Not Attend the Seizure Appointment with the District Commissioner

The date of the seizure appointment is not changed.

If the debtor fails to attend the appointment, despite being served by a process server or notified by registered mail, seizure of their assets may still occur if they exist. The debtor is then informed of which assets have been seized, and four weeks later, the creditor may request that the assets be sold at a forced auction.

If the process cannot be completed due to lack of knowledge about the debtor’s assets, the creditor may visit the debtor’s home or another location where they are likely to find them to complete the process by pointing out assets to seize or declaring that no assets exist.

If the Debtor Resides Abroad

If the debtor does not have a registered residence in Iceland, there is no need to summon them to the appointment, and the process can be concluded without their presence.