How is the debt recovery procedure?
This is the procedure that is followed when carrying out a judicial debt recovery procedure:
- Executive claim: a claim is filed with the debtor in the Courts of First Instance.
- Notification of the demand to the debtor and request for payment to the same
- Certification of the Property Registry: The Judge will request a registration of the mortgage registration and a list of the charges on the property.
- Auction of the mortgaged asset and payment to the creditor financial institution: until the day set for the auction to be held, the debtor may stop the procedure.
- Change of ownership of the property executed in the Property Registry, possession of the Property and, where appropriate, judicial launch: Once the auction is executed, the ownership of the property in the Property Registry will be modified in favor of the successful bidder in the auction who will have the right to be put in possession of the property.
Types of debt recovery
There are three types of debt recovery: friendly debt, which will be analyzed in the next section; judicial recovery and recovery of debts of less than € 4,000.
Judicial recovery can be of the following types:
- To pay: The creditor sends or presents through his lawyer, an application to the court of the debtor's domicile. The application does not require any type of particular formality, except that it must be dated and signed and contain a series of mandatory data, such as surnames, names, professions and addresses of creditors and debtors. In turn, it must contain a precise indication of the amount of the claimed sum and specify the basis for the claim.
- The provisional summary: This type allows a creditor to obtain quite quickly from the President of the competent court a decision ordering a debtor to pay both the full amount or otherwise a partial part of the claimed debt. The judge arbitrates according to the documents provided and the arguments developed by the parties, whether or not there is a serious dispute about the resolution of the claim.
- The summons: This is the classic type of procedure; however, it should not always be used. It usually favors those occasions in which the creditor does not have irrefutable evidence to establish the reality of the credit or its amount. It is also useful when it is necessary to interpret the contract on which the creditor's rights are based, because the obligations contained in it are not clearly defined or are subject to contradictory interpretations.
Finally, in the event that it is a debt of less than € 4,000, a different collection procedure must be carried out. The law of August 6, 2015 introduced a new collection method for debts that have a contractual cause or that result from a legal obligation.
The creditor has to contact an usher directly or through his lawyer and inform him of his desire to initiate this procedure and enter the documents to make the claim. The usher will send a registered letter with acknowledgment of receipt to the debtor to take part in the procedure. He has the option of accepting or rejecting the procedure.
If the debtor accepts, the procedure is continued, in the event that it says that it is not rejected and the creditor has to find another method to make the request.
Friendly debt recovery
The amicable collection tries to make the creditor, directly or through a lawyer, put into operation several procedures with the aim of inducing the debtor to voluntarily settle the debt.
This can be done from simple ways such as a phone call or by going personally to the debtor. You can also send one or more written documents, such as letters or emails, as well as the more formal sending of a request by certified mail with acknowledgment of receipt.
The objective of all these actions is to remind the debtor that he has an outstanding debt and to inform him that if it is not settled within the established period, the creditor plans to initiate a judicial procedure for recovery.
Judicial debt claim When to resort to it?
Companies have the option of resorting to a legal claim when they have debts pending collection.
However, it is not recommended that this type of claim be the priority.
An amicable claim would be ideal for quick and easy debt management. However, if several friendly methods are used and the debtor still does not pay, it would be time to file a legal claim. However, it would be pertinent to notify the company that the claim will be judicially requested.
Should I try to collect a debt considered prescribed?
Taking into account that both the creditor and the debtor have a certain term to manage said debt, it would be recommended that the creditor try to collect their debt within the established term.
If you are trying to collect a prescribed debt, the ideal way would be using friendly methods. On the contrary, creditors will not have any type of advantage if they do it using a judicial procedure.