Debt collection in Bolivia

The debt collection process in Bolivia begins with a legal, financial and asset-based assessment of the debtor, the origin of the obligation and the documents proving the claim. At this stage, it is important to determine whether the debtor acts as an individual, an individual merchant, a commercial company or a foreign entity doing business in Bolivia; whether its registration or business activity can be verified through the Bolivian commercial registry system; whether it owns real estate, registered rights, claims against third parties or other attachable assets; and whether there are court proceedings, enforcement cases, guarantees, pending disputes or signs of insolvency that may affect the recovery strategy.

The review should also cover the due date of the obligation, agreed currency, interest, partial payments, debt acknowledgment, business correspondence, accounting documents, guarantees and possible debtor defenses, including payment, limitation period, set-off, lack of enforceability of the document, dispute over the amount claimed or challenge to the contractual relationship. This assessment helps determine whether the case should proceed through documented out-of-court recovery, preliminary conciliation, ordinary court proceedings, enforcement proceedings, enforcement of a Bolivian judgment, recognition of a foreign judgment or a creditor proceeding.

If the debtor continues real business activity, has identifiable assets and the documents support a clear claim, the first stage may focus on obtaining voluntary payment, written acknowledgment of the obligation, sufficient security or a payment schedule that also strengthens the creditor’s position for a possible court stage.

The out-of-court debt collection stage in Bolivia should be based on formal and verifiable communication with the debtor, aimed at confirming the existence of the debt, recording the creditor’s position and obtaining a documented response regarding payment. Depending on the case, a settlement may include full payment, an installment schedule, written acknowledgment of the debt, security, return of goods, assignment of receivables, documented set-off or the involvement of a third party that assumes or guarantees the obligation.

Contact with the debtor may be carried out through the communication channels usually used by the parties, including written notice, email, business messaging, telephone communication or contact with authorized representatives. It is important to preserve evidence of sending, receipt and content of the claim, because these materials may help prove the debtor’s delay, the debtor’s position, express or implied acknowledgment of the obligation and the need to move to formal proceedings.

The duration of this stage depends on the debtor’s response, the quality of the documents, the realistic possibility of settlement, the risk of asset disposal and the status of the limitation period. If the debtor avoids responding, denies the debt without sufficient grounds, proposes an unworkable payment plan, transfers assets or uses negotiations to weaken the creditor’s recovery prospects, the strategy should move to judicial collection or another available formal procedure.

Before initiating court proceedings, it is necessary to assess the applicable limitation period. In Bolivia, as a general rule, property rights are extinguished by prescription after five years, unless the law provides a different period. The limitation period begins to run from the moment when the right could be exercised or from the moment when its holder stopped exercising it, and courts do not apply prescription on their own initiative if it is not invoked by the party entitled to benefit from it.

In addition to the general five-year period, special shorter periods may apply depending on the nature of the claim. They may relate, for example, to interest, leases, periodic payments, professional fees, certain services and the price of goods sold by merchants to persons who do not resell them. Therefore, in a debt recovery case, it is not enough to check only the contract date: the type of claim, due date, subsequent conduct of the debtor and documents that may have interrupted the limitation period must also be reviewed.

The limitation period may be interrupted by a court claim, a judicial act, an attachment act notified to the debtor, any act placing the debtor in default, express or implied acknowledgment of the creditor’s right, and the renewed exercise of the right before expiry of the period. After interruption, a new limitation period begins, and the time that elapsed before the interruption is no longer counted.

Bolivian law provides for judicial debt collection mainly through ordinary proceedings and enforcement proceedings, depending on the nature of the claim, the existence of an enforceable document and the degree of dispute over the obligation.

Ordinary proceedings apply when the law does not provide a special procedure and, in debt recovery matters, are usually used when the creditor needs the court to establish the existence, amount and enforceability of the obligation after assessing facts, documents and debtor defenses. As a rule, an ordinary claim is preceded by preliminary conciliation, except in cases excluded by law, and, where applicable, the main claim must be accompanied by the record issued by the authorized conciliator.

Ordinary court proceedings begin with the filing of a claim before the competent court. The claim must comply with the formal and substantive requirements of civil procedural law, including identification of the court, details of the claimant and defendant, subject matter of the claim, relevant facts, legal grounds, amount claimed when a monetary claim is made, specific request to the court, required signatures and documents proving the debt.

After admitting the claim, the court orders service on the defendant. Once duly served, the defendant must file a response within thirty days. In the response, the defendant must address the facts, documents, amount claimed and creditor’s requests, as well as clearly state the facts on which the defense is based and attach available documentary evidence or identify the evidence intended to be used.

When responding to the claim, the defendant may fully or partially acknowledge the claim, oppose it, raise preliminary objections or file a counterclaim. If a counterclaim is filed, the claimant has the same thirty-day period to respond. If preliminary objections are raised against the claim or counterclaim, the relevant party is given the period provided by law to state its position, after which these issues are resolved within the proceedings.

After the procedural time limits expire, with or without a response, the court summons a preliminary hearing on its own initiative within a period not exceeding five days. At this hearing, the parties confirm or clarify their positions, conciliation is attempted on all or some disputed issues, the subject matter of the case is determined, procedural issues are resolved, evidence is organized and admitted, and the court decides whether the case can be resolved at that stage or whether an additional hearing is required.

If the defendant does not participate after being duly served, default may be declared. Default creates a simple presumption regarding the facts alleged by the claimant until they are rebutted, and the claimant may request attachment or other necessary interim measures. This does not prevent the defendant from appearing later and taking the case in the procedural state in which it is found.

If the preliminary hearing does not allow all necessary evidence to be examined, the court schedules an additional hearing within the statutory period. At this stage, admitted evidence is examined, including documents, statements, expert reports, inspections and other relevant materials. After evaluating the evidence and hearing the parties’ arguments, the court issues the corresponding judgment.

Enforcement proceedings in Bolivia apply when the creditor has an enforceable title showing an obligation to pay a liquid, due and payable sum of money. Enforceable titles may include, among others, public documents, private documents recognized by a competent authority or before a notary, credit instruments and commercial documents with enforceable force, accounts approved by a final court decision, documents evidencing debts arising from the lease of property, acknowledgment of a liquid and payable debt before a competent judicial authority, and settlements formalized in a public document or recognized private document.

After the enforcement claim is filed, the court examines the title, its jurisdiction, the capacity and standing of the parties, the certainty of the amount and whether the obligation has become due. If the document has enforceable force, the court issues an initial judgment, orders attachment and directs continuation of enforcement until the claimed amount, interest, legal costs and expenses are collected. If the document lacks enforceable force, the court declares that enforcement cannot proceed.

After being served, the debtor has ten days to raise all objections to the claim in one procedural act, submit the documentary evidence in their possession and indicate any other evidence they intend to use. Objections may relate, among other matters, to lack of jurisdiction, lack of proper representation, absence of enforceable force, another pending case concerning the same dispute, falsity or inadequacy of the title, limitation period, expiry of the right or full or partial payment supported by documents.

If no objections are raised within the time limit, the initial judgment acquires the force of a final decision and the case proceeds directly to the enforcement stage. If objections are raised, they are considered at the relevant hearing and resolved in the final judgment, which may be appealed in the cases provided by civil procedural law.

A decision issued in enforcement proceedings may be modified in subsequent ordinary proceedings when the action concerns substantive rights and not the enforcement procedure itself. Such subsequent proceedings may be brought by either party after the judgment becomes final, within six months; after this period, the right to seek review of the decision issued in enforcement proceedings expires. Subsequent ordinary proceedings are handled separately and do not suspend enforcement of the enforcement judgment.

A judgment or final order of the court of first instance may be challenged by appeal within ten days from notification. The appeal must be filed in writing with supporting grounds and is processed with an opportunity for the opposing party to respond. In the second instance, the competent court reviews the grounds raised and issues the corresponding decision within the scope of the appeal.

A cassation appeal is available against second-instance decisions in ordinary proceedings and in other cases expressly provided by law. It is not a full rehearing of the case, but a legal review based on violation of the law, incorrect interpretation or improper application of a legal rule, error of law or error of fact proven by documents or authentic acts. The cassation appeal must be filed within ten days from notification of the second-instance decision and must clearly identify the violated legal rule and the manner in which the violation occurred.

The Supreme Court of Bolivia examines whether the requirements for cassation have been met and, where appropriate, decides the cassation within the scope of the grounds raised. The cassation decision closes the ordinary appeal path within the civil proceedings, does not allow a new appeal or new cassation in the same case and makes the corresponding decision enforceable before the lower court.

If the creditor already has a judgment issued in another country, recovery in Bolivia may require recognition and enforcement of foreign judgments. Foreign judgments may have binding, evidentiary and enforceable effect in Bolivia under applicable treaties and civil procedural law. For enforcement, the judgment must first be recognized without a new review of the merits already decided by the foreign court.

The foreign judgment must meet requirements of authenticity, legalization, translation into Spanish where necessary, international jurisdiction of the court of origin, lawful service on the defendant, respect for the right of defense, finality of the judgment and compatibility with international public order. To request recognition and enforcement, the applicant must provide a legalized or authenticated copy of the judgment, the necessary case materials proving service and respect for the right of defense, and confirmation that the judgment is final. Foreign judgments ordering performance of an obligation, including payment of a debt, may be enforced.

After the judgment becomes final, the creditor may initiate the enforcement procedure before the competent authority to obtain actual performance of the obligation recognized by the court. At this stage, it is important to identify the debtor’s property, rights and receivables that may be used to satisfy the debt, because the practical effectiveness of the judgment largely depends on the existence of assets that can be located and lawfully attached.

Enforcement may be directed against real estate, registered movable property, ordinary movable property, claims against third parties and other property rights of the debtor. Attachment of real estate and registered movable property becomes effective through registration with the competent registry; attachment of movable property is carried out by seizure, with the possible appointment of a custodian; and attachment of receivables is carried out by notifying the person who owes payment to the debtor.

In a Bolivian judgment enforcement strategy, prior review of registry information, business activity, existing proceedings, guarantees, receivables and registered property helps select more effective measures and reduces the risk of starting formal enforcement without sufficient assets to cover the debt.

An additional way to protect the creditor’s interests in Bolivia may be bankruptcy or a creditor proceeding, but the appropriate mechanism depends on the debtor’s legal status. In the commercial sphere, Bolivian law regulates preventive creditor arrangements and bankruptcy of registered merchants and legally incorporated commercial companies that are in a state of cessation of payments. For debtors who are not merchants, civil procedural law provides for a necessary or voluntary creditor proceeding when the legal conditions for insolvency are met.

A preventive creditor arrangement may be requested by a registered merchant or a legally incorporated commercial company in a state of cessation of payments, with the purpose of reaching an arrangement with creditors. In the case of commercial companies, the request is submitted by their legal representatives and, depending on the type of company, may require approval by shareholders, a meeting or the competent corporate body.

Commercial bankruptcy may be declared when a merchant, without using the benefit of a preventive creditor arrangement, ceases to pay their obligations. Bolivian law presumes cessation of payments in several situations, including non-payment of one or more liquid and due obligations, absence or concealment of the debtor or managers, closure of the business for more than five business days without prior notice, sale or concealment of assets, transfer of assets to the detriment of creditors, judicial revocation of acts carried out in fraud of creditors, use of ruinous or fraudulent means to obtain funds, absence or insufficiency of attachable assets, failure or inadmissibility of a preventive arrangement, or breach of a previous preventive arrangement.

If the debtor is not a merchant, the creditor proceeding applies when the debtor is in a state of cessation of payments. A necessary proceeding may be initiated when three or more creditors have started enforcement proceedings to collect their claims and there are not enough assets to cover the obligations. A voluntary proceeding may be initiated by a good-faith insolvent debtor who wishes to assign assets to creditors, regardless of whether enforcement proceedings are pending, provided that there are three or more creditors.

The opening of a creditor proceeding has important practical consequences for the creditor. The proceeding covers the debtor’s debts and assets, except for assets exempt from attachment; monetary enforcement proceedings are consolidated; interim measures may be adopted to preserve assets and claims; a provisional administrator is appointed; the debtor is ordered to submit documents regarding debts and assets within a period not exceeding ten days; and a creditors’ meeting is convened within thirty days after publication of the last notice.

In commercial bankruptcy, acts carried out by the debtor to the detriment of the bankruptcy estate may be declared ineffective if they were performed from the retroactive date of the bankruptcy effects. These acts include gratuitous transfer of assets or transfer for manifestly insufficient consideration, payment of debts not yet due, transfer of assets in payment, creation of security for claims predating the retroactive period, onerous acts carried out in fraud of creditors where the third party knew about the poor state of the debtor’s business, and corporate changes that alter shareholder liability to the detriment of the estate.

The retroactive date of bankruptcy effects is set by the court up to a maximum of two years from the bankruptcy order. Assets, fruits and income that must be returned are delivered to the administrator to increase the available estate and allow more effective distribution among creditors. The ineffectiveness of such acts may even be declared by the court on its own initiative, without a separate request by a party.

Bankruptcy may be classified as accidental, culpable or fraudulent. If bankruptcy is classified as culpable or fraudulent, additional consequences may arise, including disqualification from engaging in commerce and sanctions provided by criminal law. Directors and representatives of a company who carried out fraudulent or culpable acts that enabled or worsened the reduction of the debtor’s assets may be liable for damages, be disqualified from engaging in commerce and face other applicable legal consequences.

If you need support with debt collection in Bolivia, Grandliga can assist at all stages of international recovery: debtor and document analysis, out-of-court strategy, preliminary conciliation, selection of the appropriate court procedure, enforcement proceedings, recognition of a foreign judgment, recovery against assets and assessment of a creditor proceeding when the debtor’s financial condition makes this route appropriate. The strategy is defined according to the available evidence, location of assets, debtor conduct and the procedure best suited to protect the creditor’s interests.

18.09.2024

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