Debt Collection in Argentina

Debt collection in Argentina begins with a legal, financial and asset-based assessment of the debtor. At this stage, it is important to verify the exact company name or personal data of the debtor, Argentine tax identification details, actual business activity, documents proving the debt, payment history, rejected cheques, financial obligations reflected in banking and credit sources, pending court cases, enforcement proceedings, relevant official publications, signs of restructuring or bankruptcy, and assets that can be identified in Argentina. This assessment helps determine whether the strategy should begin with documented negotiations, pre-court mediation, executive proceedings, ordinary court proceedings, enforcement of a foreign judgment, or measures connected with the debtor’s insolvency.

If the debtor continues to operate, has verifiable contact details, does not show clear signs of asset stripping, and the available documents prove the obligation, it may be reasonable to start with an out-of-court stage. If, however, the debtor accumulates defaults, shows signs of insolvency, transfers assets, avoids communication, or other creditors are already pursuing claims, the strategy should be prepared from the outset with regard to judicial debt collection and subsequent enforcement against assets that can be located in Argentina.

The out-of-court stage includes structured negotiations with the debtor to obtain full or partial payment, agree on a payment schedule, receive security, document an acknowledgment of debt, arrange the return of goods, agree on setoff, formalize the assumption of debt by a third party, or define another solution compatible with the nature of the obligation.

Contact with the debtor should be made through channels that allow evidence of delivery, the content of the claim, and the response received to be preserved. In practice, this may include postal notices, email, regular business communication channels, messages, or other appropriate means, provided that the process is documented and can later be used to prove the debtor’s conduct, the existence of the debt, or the lack of willingness to pay.

The usefulness of out-of-court recovery depends on the debtor’s reaction, the quality of the documents, the age of the debt, the existence of assets in Argentina, the risk of limitation, and the possibility of obtaining a written agreement. If the debtor does not respond, denies the obligation without grounds, breaches a payment proposal, hides relevant information, or the initial analysis shows that negotiations do not sufficiently protect the creditor, it is necessary to assess the start of pre-court mediation or the appropriate court procedure.

Before starting court proceedings, the applicable limitation period for the debt must be assessed. As a general rule, Argentine civil and commercial law establishes a five-year general period for claims that are not subject to a different special period. This period cannot be changed by agreement of the parties and, as a rule, begins to run from the day when performance of the obligation becomes due. Special periods may apply to certain claims, including periodic payments, damages, specific debt instruments, or claims of another legal nature.

Limitation is not applied by the judge on the court’s own initiative and must be raised at the appropriate procedural stage. Its running may be suspended once by a reliable demand from the creditor for six months or for a shorter applicable period, and it may also be suspended by a request for mediation. Acknowledgment of the debt by the debtor and the filing of a court claim by the creditor may interrupt the limitation period, causing a new period to begin under Argentine civil and commercial rules.

Under the national Argentine system, many civil and commercial cases must pass through pre-court mediation before court proceedings begin. Mediation takes place before the lawsuit, with the participation of a lawyer-mediator, the parties, and their lawyers. If the parties reach an agreement, it may document the payment, the performance schedule, the security, or another method of settling the debt. If the agreement is not performed, it may be enforced like a court judgment. If no agreement is reached, the creditor may start court proceedings.

Argentine law allows judicial debt collection to be structured through different routes depending on the available document and the nature of the obligation. If the dispute requires examination of the existence, amount, or breach of the debt, ordinary court proceedings may be appropriate. If the matter is less complex or the law allows a shorter procedure, summary proceedings may be used. If the creditor holds a document with enforceable force and the obligation consists of paying a fixed or easily calculable sum of money, executive proceedings may apply.

Executive proceedings begin with the submission of the enforceable document and the enforcement request. Enforceable documents may include, among others, a public document submitted in the proper form, a private document recognized in court or with a certified signature under the legal conditions, an acknowledgment of a liquid and due debt before the competent judge, an approved or recognized account, a bill of exchange, a credit invoice, bank collection of a credit invoice, a promissory note, a cheque, a certificate of debit balance in a bank current account, claims for rent or lease payments for real estate, common expenses, and other documents to which the law gives enforceable force.

In Argentine commercial transactions, the electronic credit invoice for micro, small, and medium-sized enterprises may also be relevant. Once expressly or tacitly accepted, such an invoice may become an enforceable document and may serve as the basis for claiming payment through the corresponding route. This is important when the debt arises from business-to-business transactions and the creditor needs to verify whether the issued invoice meets the formal and legal conditions for faster recovery.

If the judge considers that the submitted document is enforceable and that the procedural requirements are met, the judge issues a seizure order. Under that order, the enforcement officer demands payment from the debtor. If the debtor does not immediately pay the principal amount claimed, interest, estimated costs, and any applicable penalties, sufficient assets are seized to cover the amount stated in the order. Seized money must be deposited on the next business day with the court deposit bank. If the seizure concerns real estate or registrable assets, the relevant court notices or requests must be issued within forty-eight hours from the decision ordering the seizure.

The demand for payment also serves as a summons to file objections. The debtor has five days to submit all objections in a single filing and offer the corresponding evidence. If no objections are filed within that period, the judge issues an order for the sale of assets without further proceedings. The admissible defenses in executive proceedings are limited: lack of jurisdiction, lack of proper procedural representation, pending proceedings on the same matter, falsity or unenforceability of the document, limitation, documented full or partial payment, setoff of a liquid claim shown by an enforceable document, debt reduction, payment deferral, debt release, novation, settlement, conciliation or documented agreement, and res judicata.

If the objections are not admissible or are not stated clearly and specifically, the judge dismisses them and issues an order for the sale of assets. If the objections meet the legal requirements, the creditor is given five days to answer them and offer evidence. When the objections concern only legal issues, are based solely on the case file, or do not require additional evidence, the judge issues a decision within ten days after the creditor’s answer or from the moment the decision is requested. If evidence is produced, once the evidentiary stage is closed, the judge must issue a decision within ten days.

The order for the sale of assets may allow enforcement to continue in whole or in part, or may reject it. If the debtor litigates without valid grounds, obstructs the normal course of the case with manifestly unfounded applications, or unjustifiably delays the proceedings, the court may impose a penalty in favor of the creditor ranging from five percent to thirty percent of the debt amount, depending on the impact of that conduct on the delay.

In court proceedings, the parties must act through lawyers, and procedural documents must be signed by a lawyer. Lack of professional representation may prevent the admission or proper consideration of documents submitted to the court.

Ordinary court proceedings begin with the filing of a statement of claim before the competent court. The judge checks whether the claim meets the formal requirements and, if appropriate, orders it to be served on the defendant so that the defendant appears and files a response within fifteen days. If the defendant is the national state, a province, or a municipality, the period to appear and respond is sixty days. If the defendant resides outside Argentina, the judge sets the period for appearance taking into account distance and ease of communication.

In the response, the defendant must raise the defenses intended to be used, clearly state the facts on which the position is based, and categorically admit or deny each of the facts set out in the claim, the authenticity of the documents attributed to the defendant, and the receipt of letters or communications submitted by the claimant. Silence, evasive answers, or a merely general denial may be assessed as an admission of relevant and lawful facts, and the documents may be treated as recognized or received depending on the circumstances.

After the response is filed or the response period expires, if the dispute is limited to a question of law, the court may place the case in a position to be decided. If there are relevant disputed facts, the judge admits the case to evidence, sets the corresponding hearing, and organizes the necessary evidentiary activity.

At the hearing, the court may attempt to reconcile the parties, define the relevant facts, hear the participants, and admit the evidence it considers appropriate. If there is no pending evidence or if the evidence is limited to documents already included in the file and not disputed, the case may be ready for judgment. Otherwise, the judge sets a period for the production of evidence, which may not exceed forty days and begins to run from the hearing provided for by procedural law.

Summary proceedings apply when the nature of the matter and the evidence offered allow a shorter procedure. In this route, the claim and the response must include the evidence and documents; separate preliminary objections and counterclaims are not admitted; all periods are three days, except the period for responding to the claim and the period for stating the grounds of appeal and answering the appeal brief, which are five days. The hearing must be set within ten days after the response is filed or after the response period expires.

Court decisions may be challenged depending on the type of proceedings, the nature of the decision, and the remedy provided by law. As a general rule under Argentine civil and commercial procedural law, the period for filing an appeal is five days, unless a specific rule provides otherwise. When an appeal is granted on the basis of the case file, the appellant must state the grounds of appeal within five days from notification of the order granting the appeal, and the other party receives the same period to answer.

In summary proceedings, only the final judgment and decisions granting or denying interim measures are usually appealable. The appeal is considered on the basis of the case file and, as a rule, does not suspend enforcement, unless enforcement of the judgment could cause irreparable harm.

Access to the Supreme Court of Justice of the Nation does not operate as an ordinary third instance for reviewing any civil or commercial decision. The federal extraordinary remedy is available in the cases provided by law and must be filed in writing, with reasons, within ten days from notification of the challenged decision. If the lower court grants that remedy, the case file is sent to the Supreme Court within five days from the last notification of the decision granting it.

If the creditor already has a foreign court judgment against a debtor with assets or business activity in Argentina, it is necessary to assess the recognition and enforcement of foreign judgments. Foreign judgments have enforceable effect in Argentina under the international treaties applicable with the country of origin. If there is no treaty, they may be enforced when the judgment has the force of a final decision in the country of origin, was issued by a court competent under Argentine rules of international jurisdiction, the defendant was personally served and had an opportunity to defend the case, the judgment meets the authenticity requirements of Argentine law, does not violate Argentine public order, and is not incompatible with an earlier or simultaneous Argentine judgment.

Enforcement of a foreign judgment is requested before the competent court of first instance. The application must include the legalized and translated document, together with materials proving that the judgment has become enforceable and that the necessary conditions have been met. If the court admits enforcement, the recovery continues under the rules applicable to judgments issued by Argentine courts.

If the obligation is expressed in foreign currency, executive proceedings are usually pursued for the equivalent amount in national currency according to the rate of the corresponding official bank on the day the proceedings begin, or the rate agreed by the parties, subject to any adjustment that may apply on the day of payment. This issue is especially important for international debts agreed in United States dollars, euros, or another foreign currency.

Once an Argentine court judgment, an enforceable arbitral award, a court-approved settlement, or an agreement enforceable through the court becomes final or enforceable, the creditor may initiate compulsory enforcement at the request of the interested party. At this stage, recovery may be carried out through seizure and transfer of funds from the debtor’s accounts, seizure and sale of movable or immovable property, enforcement against receivables, securities, shares, equity interests, or other property rights, depending on the available assets and the measures authorized by the court.

If the debtor is in a state of cessation of payments, regardless of the cause and the nature of the affected obligations, insolvency proceedings may be opened under Argentine bankruptcy and restructuring law. Cessation of payments must be proven by facts showing that the debtor is unable to regularly perform its obligations. Such facts may include default in performing an obligation, judicial or out-of-court acknowledgment of the situation, absence or concealment of the debtor or its managers, closure of the place of business, sale of assets at a grossly reduced price, concealment or delivery of assets in payment, judicial revocation of fraudulent acts, or the use of ruinous or fraudulent means to obtain funds.

Any creditor whose claim is due may request the debtor’s bankruptcy. If the claim has a special privilege, the creditor must summarily show that the affected assets are insufficient to cover it, except in the cases excluded by law. A plurality of creditors is not required to prove cessation of payments. For debtors domiciled outside Argentina, Argentine bankruptcy law also provides for jurisdiction in relation to assets located in the country.

If the debtor’s assets are insufficient to fully satisfy creditors’ claims, bankruptcy proceedings may include measures aimed at recovering assets or neutralizing harmful acts carried out before the bankruptcy declaration. The suspicion period is the time between the date determined as the beginning of cessation of payments and the bankruptcy judgment. For the purposes of declaring harmful acts ineffective against creditors, the start date of cessation of payments may not be set back more than two years from the bankruptcy order or from the filing for preventive restructuring.

Acts carried out by the debtor during the suspicion period are ineffective against creditors when they consist of gratuitous acts, early payment of debts that were due on the day of bankruptcy or later, and the creation of a mortgage, pledge, or other preference for an obligation not yet due that originally had no such security. The declaration of ineffectiveness of these acts is made without the need for a separate action or specific request and may be challenged through incidental proceedings.

Other acts harmful to creditors and carried out during the suspicion period may be declared ineffective if the person who contracted with the debtor knew about the state of cessation of payments. In that case, the third party must prove that the act caused no harm. The claim is brought before the bankruptcy judge and follows ordinary proceedings, unless the parties choose incidental proceedings. The trustee’s action requires prior authorization by a simple majority of the verified and admitted unsecured capital, and the proceeding expires if it is not pursued within six months.

Liability claims may also exist against representatives, managers, agents, de facto managers, or third parties who acted intentionally to cause, facilitate, allow, or aggravate the debtor’s insolvency, reduce assets, or artificially increase liabilities. These claims may allow the recovery of assets, compensation for damages, and interim protective measures when the legal requirements are met. Together, these tools may increase the estate available to pay creditors and cover the costs of the insolvency proceedings.

If you need support with debt collection in Argentina, Grandliga can assist at different stages of the process: analysis of the debtor and documents, assessment of asset risks, out-of-court negotiations, pre-court mediation, selection of the appropriate court route, preparation of materials for executive proceedings or ordinary court proceedings, recognition and enforcement of foreign judgments, compulsory enforcement, and actions related to restructuring or bankruptcy. The aim is to build a recovery strategy based on documents, identifiable assets, and a procedural route that matches the debtor’s real situation.

# DEBT COLLECTION AGENCY ARGENTINA

23.09.2024

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