Debt collection in Guatemala

The debt collection procedure in Guatemala begins with an assessment of the debtor’s solvency, his field of activity, the history of the enterprise, the availability of documentary evidence of the debt, current court cases and enforcement procedures, as well as the possibility of challenging the debt. This assessment determines the strategy that will be used on behalf of the client during the collection process.

If the debtor does not have current court cases or outstanding court decisions on debt collection, and he is actively engaged in commercial activities, then it is advisable to use the stage of out-of-court debt collection.

This stage involves active negotiations with the debtor to reach an agreement to pay the creditor’s claims or other possible settlement options (for example, return of goods, transfer of debt to a third party, exchange of services or goods).

Interaction with the debtor begins immediately after sending the notification by mail, email, telephone or instant messengers. This process involves intensive communication with the debtor in order to apply constant pressure. The main task is to establish contact with key decision makers to achieve speedy debt repayment.

The average time for unofficial out-of-court collection is up to 60 days (except in cases where an installment plan for debt repayment has been agreed upon). If this stage does not bring the expected results, or after an initial analysis it becomes clear that it is not applicable, you should proceed to recovery through the court.

Before initiating legal action, you should pay attention to the statute of limitations. The general limitation period is 5 years. For claims related to the collection of the cost of sold items, the statute of limitations is 2 years. The limitation period is interrupted if the debtor acknowledges the debt, or partially pays the debt, interest or other penalties on the debt. After the interruption, the statute of limitations begins to count again.

Guatemalan law provides for judicial collection of debt through ordinary judicial proceedings and oral proceedings.

The usual judicial procedure is carried out by filing a statement of claim with the court, after which the court decides to open a case, notifies the defendant and prepares for consideration of the case on the merits. The statement of claim must be accompanied by evidence that confirms the stated requirements. If the plaintiff does not have such evidence, he is obliged to indicate the place where it is located so that the court can later request it.

If the plaintiff is a foreigner or a temporary resident, the court may order the plaintiff to provide a bond to cover possible fines, legal fees, losses and damages from his lawsuit. Such obligation does not apply if the plaintiff proves that in his country of origin such guarantee is not required of Guatemalan citizens.

After accepting the claim, the court summons the defendant to hear his position within 9 days after receiving the notice. If, after the expiration of the summons, the defendant does not appear, the claim will be considered recognized, and at the request of the plaintiff, the case will be continued in absentia.

From the moment the defendant is recognized as being in absentia proceedings, his property may be seized in a sufficient amount to ensure the outcome of the process. If the defendant appears after the default proceedings have been declared, he will be able to continue to participate in the process at the stage at which he is. An application for trial in absentia and seizure may be rejected if the defendant proves that he failed to appear due to force majeure. It may also be proposed to replace the seizure of the debtor’s property with other sufficient security at the discretion of the judge.

If the defendant agrees with the claim, the judge makes a judgment without further legal proceedings. If the defendant disagrees with the claim, he must file a response stating any categorical objections he has to the plaintiff’s claims.

If the court determines that there are disputed facts, the process will be opened to present evidence for a period of thirty days. This period may be extended by another ten days if, due to the fault of the interested party, it was not possible to submit evidence in a timely manner. If the claim or response to the claim has proposed evidence that must be obtained outside the republic and which can be accepted legally, the judge, at the request of either party, will set a final period sufficient depending on the circumstances of the case, which cannot exceed 120 days.

Upon completion of the evidence stage, the judge schedules a final hearing. At this meeting, the parties’ attorneys, as well as the parties themselves, if they wish, may speak orally or present their arguments in writing. After the final court hearing, the court makes a decision, which comes into force after the deadline for appealing it has expired.

Oral proceedings are applicable for cases with a small amount of claims and are implemented similarly to the usual judicial procedure, only with certain simplifications. The statement of claim may be submitted orally, in which case the secretary draws up a corresponding protocol. If the claim meets the procedural requirements, the judge sets a date for the parties to appear at an oral hearing. At least three days must pass between the summoning of the defendant and the date of the hearing.

At the first meeting, the judge will try to reconcile the parties, offering them fair options for reconciliation and will approve any agreement they come to, provided that it does not contradict the law. If the defendant does not agree with the plaintiff’s claims, he must clearly state the facts on which he bases his objection.

The parties are required to appear at the first hearing with their evidence. If at this meeting it is not possible to present all the evidence, a new meeting will be scheduled, which should not exceed fifteen days. In exceptional cases, if due to circumstances beyond the control of the court or the parties, it was not possible to present all the evidence, the judge may order a third hearing solely for this purpose. This meeting must be held within ten days.

If the defendant agrees to the lawsuit or admits the facts stated in it, the judge will issue a verdict within three days. If the defendant fails to appear at the first hearing without good reason, the judge will issue a verdict, provided that the evidence offered by the plaintiff has been presented. The judge will issue a verdict within five days after the last hearing.

The decision of the court of first instance can be appealed within 3 days from the date of rendering the contested decision. The complaint is considered in a court hearing with the participation of interested parties. As a result of consideration of the appeal, the court makes a decision, which comes into force from the moment of its announcement. The decision of the appellate court can be appealed to the Supreme Court within 15 days from the date of notification of the contested decision. On the day of the hearing, the parties and their attorneys may be present and make oral or written submissions. The hearings will be public at the request of any of the interested parties or as ordered by the Supreme Court. As a result of considering the complaint, the Supreme Court makes a decision that comes into force from the moment it is announced and is not subject to appeal.

Once the judgment becomes final, the creditor must obtain an enforcement order and initiate enforcement proceedings. The final court decision can be submitted for execution within 5 years from the date of entry into force. As part of the enforcement of a court decision, the creditor’s claims can be satisfied by seizing and writing off funds from the debtor’s accounts; seizure of movable and immovable property of the debtor with their subsequent sale; arrest and confiscation of securities; arrest and confiscation of company shares.

If the debtor has signs of insolvency, the creditor should consider the option of bankruptcy of the debtor. Insolvency arises if the debtor’s liabilities exceed its assets, or if there are two or more arrests in enforcement proceedings, or members of the debtor’s governing body are in hiding for more than 60 working days, leaving the legal representatives without authority and sufficient assets or funds to fulfill their obligations. At this stage, if the debtor’s assets are insufficient to fully satisfy the creditors’ claims, it is possible to cancel the debtor’s transactions that caused damage to the debtor or deprived him of his assets. Among such transactions, we should highlight in particular: transactions made free of charge; transactions made in favor of related persons with the debtor; establishment of real guarantees in favor of pre-existing obligations or new obligations accepted in their place; transactions for which the debtor paid an amount exceeding the cost of the goods or services received, when it can be proven that these transactions resulted in the debtor being insolvent; actions and transactions where the debtor acted fraudulently and to the detriment of creditors, and the counterparty knew or should have known that the debtor was in a state of insolvency. Cancellation of such transactions is allowed only if they were completed within two years before the date of opening of bankruptcy proceedings. As a result of the cancellation of such transactions, it is possible to return back to the debtor what he lost from such transactions and thereby increase the liquidation estate to satisfy the claims of creditors and cover the costs of implementing the bankruptcy procedure.

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

# DEBT COLLECTION AGENCY GUATEMALA

20.08.2024

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