How to recover a debt in Spain

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Until a few years ago, when the consequences of the global financial crises were still visible, Spain’s credit profile wasn’t a good one. Things have changed as the economy started recovering, however, there are still companies and individuals who struggle to pay their debts. For those on the other side, who try to recover the amounts they are owed, the Civil Procedure Code and the Employment Law are quite strict about the procedure related to recovering debts. The Civil Procedure Code was also harmonized with the EU legislation and now provides for in-court debt recovery procedures no matter the amount.

The types of debt recovery legal procedures

There are two types of debt recovery procedures in Spain, one of them being the in-court process mentioned above. However, amicable debt collection procedures are also possible, as long as the parties agree. Even if the recovery starts amicably, most of the times the procedure ends up in a Spanish court of law. In both cases, the claimant can appeal to debt collection agencies or law firms for help in recovering a debt. During the amicable debt recovery procedure, the collecting agency can only contact by phone or email the debtor and then send the documents justifying the debt. As this method often fails and the debt is not retrieved, court proceedings are initiated.

Spain has a speedy in-court debt collection procedure

This type of process was introduced not long ago; however, it cannot start without a prior agreement between the parties. The accelerated debt collection procedure will usually start in a first instance court located in the defendant’s home town. There are also exceptions to this rule and they are applied when the debtor has failed to pay the amounts of money related to public utilities or has outstanding bills related to building management companies or public housing units.

The debt recovery process in Spain

Before filing the petition for the initiation of the debt collection procedure, the claimant must make sure he/she has all the documents supporting the claim. These include: invoices, delivery slips, summons and other documents which can prove the existence of a commercial relationship between the claimant and the defendant.

Then, the petition must state the addresses of both the petitioner and the defendant and the outstanding amount. Once the petition is filed, the defendant has 20 days to either pay the debt or file an opposition to the claim. After 20 days, no matter if the debtor has responded to the petition or not, the court will start the debt recovery procedure. This means that the court will issue an order of procedure which will be enforced by the financial institutions, debt recovery agencies, tax authorities or any other legal or natural persons, as indicated by the court.

Debt recovery under the Employment Law

This type of process was recently introduced in Spain and has as a main objective the recovery of outstanding payments related to employment relations. In other words, a worker can file a petition against an employer who fails to pay amounts up to 6,000 euros deriving from labor relations.

There are also a few exceptions to this process. Collective claims, petitions against insolvent or dissolved companies and Social Security authorities cannot be filed.

The debt recovery procedure has come a long way in Spain over the last few years and the process has been simplified a lot in order to not hamper courts of law with lengthy and costly proceedings.

October 20, 2017 · Tim Kevan · Comments Closed
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