Debt collection in Spain

The debt collection procedure in Spain 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 recovery.

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 limitation period is 5 years. The limitation period is interrupted by any act or action of the debtor indicating recognition of the debt. After the interruption, the statute of limitations begins to count again.

Spanish law provides for judicial collection of debt in the form of ordinary and oral proceedings and by issuing a payment order.

Ordinary legal proceedings are 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. Ordinary court proceedings are used for cases with a claim amount of EUR 15,000 or more. After receiving a copy of the claim, the defendant has 20 days to object. After receiving a response to the claim or after the deadline for providing a response has expired, the court, within three days, schedules a court hearing, which must be held within 20 days. The parties are required to appear at the court hearing accompanied by a lawyer.

The hearing is held for the purpose of reaching an agreement or transaction between the parties ending the process; consideration of procedural issues that may prevent its continuation and termination; establishing factual or legal positions on which there is disagreement between the parties. Taking into account the subject matter of the dispute, the court may require the parties or their representatives and lawyers to reach an agreement terminating the proceedings. If there is no agreement between the parties to terminate the trial and agreement on the facts, the trial continues to present and accept evidence. Once the relevant evidence has been accepted, a trial date will be set, which must take place within one month of the conclusion of the hearing. During the trial, the court hears the statements and conclusions of the parties, evaluates the evidence, and if it considers itself sufficiently informed about the case with the findings and conclusions of the parties, it closes the trial and makes a decision in the form of a verdict within 20 days.

Oral proceedings are carried out similarly to the ordinary proceedings, only with certain simplifications. Oral proceedings are used for cases with a claim amount of up to 15,000 euros. After receiving a copy of the claim, the defendant has 10 days to object. After receiving a response to the claim or after the deadline for providing a response has expired, the court, within five days, schedules a court hearing, which must be held within 30 days. The parties are required to appear at the court hearing accompanied by a lawyer. If the amount of the claim does not exceed 2,000 euros, it is not necessary to have a lawyer.

When the parties appear, the court declares the case open and checks whether there is a dispute between them. If the parties have not reached an agreement or do not wish to immediately conclude it, the court gives the parties the floor to give explanations and establish the facts on which there is a contradiction. If agreement is not reached on all of them, the court hearing continues to present and accept evidence. After checking the evidence, the court may give the parties the floor to orally formulate conclusions. The hearing will then be adjourned and the court will render a decision within the next ten days.

The decision of the court of first instance can be appealed to the court of appeal within 20 days from the date of notification of the contested decision. Appeals against judgments rendered in oral proceedings with a claim amount of up to 3,000 euros are not permitted. The case is considered through an oral hearing. The court will make a decision on the appeal within ten days after the end of the hearing. If a hearing is not held, a decision is made within one month from the expiration of the time limit for the defendant to object to the appeal.

The decision of the appellate court may be appealed in cassation within 20 days from the date of notification of the contested decision. A cassation appeal must be based on a violation of a procedural or substantive norm if there is a cassation interest. A complaint will be considered to have cassation interest if the appealed decision contradicts the legal doctrine of the Supreme Court of Spain or resolves issues on which there is conflicting practice of provincial courts. The complaint is considered through a hearing procedure. As a result of considering the appeal, the court makes a decision that comes into force from the moment it is announced and is not subject to further appeal.

The procedure for issuing a payment order is applicable to the collection of amounts of money, provided that the debt is confirmed by written documents, invoices, telegrams and other similar or commercial documents signed by the parties that document the existence of the debt. The procedure is implemented by submitting a corresponding request to the court for the issuance of a payment order. If the court considers the request to be justified, it issues a payment order with a requirement to pay the debt within 20 days from the date of its receipt or to object to it within the same period. If the debtor does not submit his objections to the court within the specified period, the payment order acquires the force of a final decision and can be enforced. If the debtor files an objection, the issue in dispute will be finally resolved at the court hearing through ordinary or oral proceedings, depending on the amount of the claim.

After the judgment comes into force, the creditor should initiate enforcement proceedings. 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; seizure and sale of securities; arrest and confiscation of company shares; arrest and confiscation of the debtor’s property, which is in the possession of third parties.

If the debtor has signs of insolvency, the creditor should consider the option of bankruptcy of the debtor. Insolvency may be current or imminent. A debtor who cannot regularly meet its required obligations is in a state of current insolvency. A debtor who expects that within the next three months he will be unable to regularly and punctually fulfill his obligations is in a state of imminent insolvency. 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: gratuitous transfer of movable and immovable property; any payment for debts that are not due on the payment date; transactions with related parties. The cancellation of these transactions is carried out as part of the bankruptcy procedure, provided that such transactions were completed within two years before the opening of the bankruptcy procedure. 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 Spain, 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 SPAIN

26.07.2024

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