Debt сollection in Colombia

The debt collection procedure in Colombia begins with an assessment of the debtor’s solvency, its field of activity, its business history, the existence of documentary evidence of the debt, current court cases and enforcement proceedings, and the possibility of disputing the debt. This assessment determines the strategy to be used on behalf of the client in the collection process.

If the debtor has no current court cases or outstanding judgments for debt collection and is actively engaged in commercial activities, then it is advisable to use the out-of-court debt collection stage.

This stage involves active negotiations with the debtor in order to reach an agreement on the payment of the creditor’s claims or other possible settlement options (e.g. return of goods, transfer of the debt to a third party, exchange of services or goods).

Interaction with the debtor begins immediately after sending a notice by mail, email, phone or instant messengers. This process involves intensive communication with the debtor in order to exert constant pressure. The main objective is to establish contact with key decision makers to achieve the fastest possible debt recovery.

The average time for informal extra-judicial collection is up to 60 days (except in cases where a payment plan is agreed upon). If this stage does not bring the expected results or after an initial analysis it becomes clear that it is not applicable, it is necessary to proceed to collection through the courts.

Before initiating judicial collection, it is worth paying attention to the limitation period. The limitation period for enforcement actions is 10 years, for ordinary actions 20 years. The consequences of missing the limitation period apply only at the request of the debtor. The limitation period is interrupted if the debtor acknowledges the obligation, explicitly or implicitly. After the interruption, the limitation period begins to count anew.

Colombian law provides for judicial debt collection in ordinary legal proceedings.

Persons who must participate in the process must do so through a registered lawyer, unless the law allows their direct participation.

The courts of first instance are municipal courts, which hear cases in which the amount of the claim does not exceed ninety minimum monthly legal wages, and district courts, which hear cases in which the amount of the claim exceeds ninety minimum monthly legal wages. However, if the amount of the claim does not exceed fifteen minimum monthly legal wages, then such a case is heard within one instance in one hearing without the possibility of appealing the court’s decision.

The ordinary judicial process is carried out by filing a statement of claim with the court, after which the court decides to accept the claim, notifies the defendant and prepares for the consideration of the case on the merits. If the claim complies with the legal requirements, the defendant will be sent a notice with a warning to provide a written response to the claim within ten days (if the dispute does not exceed 15 minimum monthly legal wages, the response may be given orally). In his response, the defendant must clearly state his position on the claims and facts of the claim, indicating those that are admitted and those that are denied. If the defendant does not know a fact, he must indicate so.

The absence of a response to the claim or a clear statement of the facts and claims of the claim, as well as assertions or denials that contradict reality, will be considered by the judge as a serious argument against the defendant. In the response to the claim or at any time before the verdict in the first instance, the defendant may clearly admit the claims of the claim, acknowledging their factual basis, in which case the verdict will be rendered in accordance with the stated claims. However, the judge may reject the admission and order the examination of evidence on his own initiative if he finds fraud or collusion, or if a third party participating in the proceedings as a main party so requests.

After receiving the response to the claim, or after the deadline for its submission, and after resolving preliminary objections, if any, the judge will set a date for a hearing, which will take place on the tenth day after the decision is made. The judge will also notify the parties of the need to present documents and witnesses at this hearing. At this hearing, the court attempts to reconcile the parties to the dispute, establishes the facts of the dispute, verifies the evidence, and resolves a number of other procedural measures. If the court performs all of these actions within one hearing, then, after completing the presentation of evidence, the judge will allow each party time to make a final statement. The verdict will be rendered at the same hearing, even if the parties or their representatives were not present or left. If necessary, a break of up to two hours may be announced to deliver the verdict. 

The decision of the court of first instance may be appealed within 3 days from the date of notification of the decision. The appeal is considered at a court hearing with the participation of the interested parties. After the hearing is completed, the appellate court makes a final decision. The decision of the Court of Appeal may be appealed to the Supreme Court of Colombia within 3 days from the date of notification of the contested decision, if the value of the decision unfavorable to the appellant is equal to or exceeds four hundred and twenty-five minimum monthly legal wages. As a result of the consideration of the appeal, the Supreme Court issues a decision that comes into legal force from the moment of its announcement and is not subject to appeal.

After the court decision comes into legal force, the creditor should initiate the procedure for enforcement. The court decision can be presented for enforcement within 10 years. As part of the enforcement of the court decision, the creditor’s claims can be satisfied by seizing and writing off funds from the debtor’s accounts; seizing the movable and immovable property of the debtor with their subsequent sale; seizing and confiscating securities and financial instruments.

If the debtor has signs of insolvency, the creditor should consider the option of judicial liquidation of the debtor. The commencement of the judicial liquidation process of the debtor presupposes the existence of a cessation of payments situation. A cessation of payments is inherent, the debtor has failed to fulfill the payment obligation for more than ninety days on two or more obligations in favor of two or more creditors incurred in the course of its activities, or if at least two enforcement actions from two or more creditors are filed against it with the aim of collecting debts. Within the framework of this procedure, if the assets are insufficient to pay the debtor’s obligations, the liquidator must demand from the owners of the debtor company payment of unpaid contributions on shares or stocks, as well as an amount corresponding to the additional liability provided for by the charter. In addition, if the state of insolvency or judicial liquidation was caused by the actions of controlling persons by virtue of subordination and in the interests of this company, against the interests of the debtor, then such controlling persons will bear subsidiary liability for the obligations of the debtor. As a result of using these provisions, it is possible to increase the chances of satisfying the creditors’ claims in full. 

If you have any questions or need support on international debt collection in Colombia, our company is ready to provide its expert assistance to effectively resolve your financial issue. Contact us to get additional information and professional support from specialists of the leading debt collection agency.

# DEBT COLLECTION AGENCY COLOMBIA

05.09.2024

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