Debt Collection in Peru

The debt collection process in Peru begins with an assessment of the debtor’s solvency, their business sector, the history of the business, the availability of documentary evidence of the debt, current court cases and enforcement proceedings, and the possibility of disputing the debt. This assessment determines the strategy that will 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 debt repayment installment 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 general limitation period is 10 years, for the collection of the cost of services rendered it is 3 years. The consequences of missing the limitation period apply only at the request of the debtor. The limitation period is interrupted when the debtor acknowledges the obligation or in the event of a notice of recognition of the debtor as having failed to fulfill his obligations. After the interruption, the limitation period begins to count anew.

Peruvian legislation provides for judicial debt collection in ordinary and simplified judicial proceedings.

A typical trial is conducted by filing a claim with the court, after which the court checks the claim for compliance with the requirements of the law. If the judge evaluates the claim positively, he considers the evidence offered and sends the claim to the defendant so that he appears in the trial and provides a response to the claim within thirty days.

In the response to the claim, the defendant must speak out on each of the facts stated in the claim. Silence, an evasive answer or a general negative position may be perceived by the court as an admission of the truth of the alleged facts. In addition, the defendant must state the facts on which his defense is based accurately, consistently and clearly.

If, after the expiration of the time for responding to the claim, the defendant, who has been duly served with the claim, does not respond, he will be declared in default. After declaring default, the judge will decide on the legality of the process. If he finds it legal, he will proceed to pass judgment, except in cases where the law requires that the claims be supported by a document, but this document was not attached to the claim; or the facts stated by the plaintiff in the claim do not inspire confidence in the judge.

If the defendant participates in the case and objects to the claim, the court appoints a conciliation hearing and obliges the parties to submit the disputed issues to the judge in writing within three days of notification. After this period, regardless of the parties’ proposals, the judge determines the disputed issues and decides to admit or reject the proposed evidence. Only if evidentiary actions are required, the judge appoints a day and time for a hearing to consider the evidence. In the event of a refusal to hold this hearing, the judge proceeds to an early decision, without limiting the parties’ right to request an oral hearing.

The parties are given 10 days to present evidence and 50 days to hold hearings to consider the evidence. After the examination of the evidence is complete, the judge declares the hearing complete and the trial ready for a verdict. The verdict must be rendered within 50 days of the completion of the trial.

The simplified trial is applicable to cases in which the amount of the claim is more than one hundred and less than one thousand procedural reference units. The process is carried out similarly to the regular trial, only in a shorter time frame (the time frame for responding to the claim is 10 days; for providing evidence – 5 days; for holding hearings to consider evidence – 20 days; for passing a sentence – 25 days).

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 in a court session with the participation of the interested parties. After the hearing, the appellate court makes a final decision. The decision of the appellate court may be appealed to the Supreme Court of Peru within 10 days from the date of notification of the contested decision if the amount of the claim exceeds 500 procedural reference units or the claim cannot be assessed in monetary terms. As a result of the consideration of the appeal, the Supreme Court makes 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 may be presented for enforcement within 10 years. As part of the enforcement of the court decision, the creditor’s claims may 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; seizure and confiscation of securities; seizure and confiscation of company shares.

An alternative option for debt collection may be the bankruptcy procedure of the debtor. The creditor has the right to initiate the bankruptcy procedure of the debtor in the event that the creditor’s claims are subject to immediate payment, have not been repaid within 30 calendar days after the payment deadline and which in total exceed the equivalent of fifty current tax units at the time of filing the application. Within the framework of this procedure, if the debtor’s assets are insufficient to fully repay the creditors’ claims, the judge may invalidate encumbrances, transfers, contracts and other legal actions of the debtor, whether gratuitous or compensated, which are not related to the normal development of the debtor’s activities, cause damage to his property and were committed or concluded by the debtor within a year before the date of opening the bankruptcy procedure. The procedure for recognizing the above actions as invalid is carried out in a simplified manner. The person or organization managing the debtor, the liquidator, or one or more recognized creditors have the right to file such a claim. The court that has recognized the actions of the debtor as invalid will order the return of property to the bankruptcy estate or the removal of the established encumbrances, depending on the circumstances. 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 for international debt collection in Peru, our company is ready to provide its 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 PERU

17.09.2024

888