Debt Collection in Uruguay

The debt collection procedure in Uruguay 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 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 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 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, 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 debt collection is 10 years. The consequences of missing the limitation period apply only at the request of the debtor. The limitation period is interrupted when the debtor explicitly or tacitly acknowledges the debt. After the interruption, the limitation period begins to count anew.

Uruguayan legislation provides for judicial debt collection in ordinary and enforcement proceedings.

A party must participate in all legal proceedings with the assistance of a lawyer, and the court must reject documents not signed by a lawyer, as well as prevent the performance of legal actions without such assistance.

Before the start of any process, it is necessary to request a court hearing to attempt reconciliation with the future defendant. The hearing will be scheduled at least three days before its holding, based on a written request, which must briefly set out the grounds and purpose of the claim that will be stated in the main process.

The reconciliation reached during the hearing, as well as the agreements concluded by the parties before the court at that time, will have the same force as the final decision of the court between the parties and their legal successors under universal law. In the event that reconciliation is not reached between the parties, the plaintiff will be issued a corresponding certificate, which must subsequently be attached to the main process.

The usual judicial process is carried out by filing a statement of claim with the court, after which the court checks the claim for compliance with the requirements of the law. If the claim complies with the established form, the judge will issue a notice and give the defendant thirty days to respond. After the expiration of the specified period or after the response has been given, the court will schedule a preliminary hearing.

In the response to the claim, the defendant must clearly state the veracity of the facts set out in the statement of claim and the authenticity of the documents attached to the claim, the authorship of which is attributed to him. The documents will be considered authentic if their authenticity is not disputed. Silence, ambiguous or evasive answers, as well as the absence of a response, will be considered an admission of the facts set out in the claim, unless they are refuted by the evidence available in the case.

The defendant may admit the claim by admitting its validity and accepting the claim. In this case, the court must immediately issue a decision, without the need for proof or other procedural actions. Otherwise, it will be necessary to continue the proceedings if the issue raised concerns public order, if it concerns inalienable rights, or if the facts on which the claim is based cannot be proven by admission.

If the defendant has not appeared after the deadline for responding to the claim, the plaintiff may request that his failure to appear be acknowledged. The failure of the defendant to appear, regardless of its admission, will mean that the court must consider the facts stated by the plaintiff to be confirmed, unless they contradict the evidence in the case file. From the moment the defendant is acknowledged as having failed to appear, his property may be seized if this is necessary to ensure the outcome of the process, at the request of the plaintiff.

If the defendant appears at the preliminary hearing, the court will conduct the following activities: approval and clarification of the claim and response; presentation of new facts; implementation of attempts at reconciliation; collection of evidence; determination of the subject of the process and evidence.

If the evidence has been fully collected or a decision is made to ignore it or the issue concerns only the law, the court will continue to collect oral statements and make a decision. Otherwise, the court will schedule an additional hearing. At the additional hearing, all evidence will be accepted and considered and experts and witnesses will be heard. At the end of the hearing, the court will give the parties time for final statements and then make a decision.

The execution process is applicable to the collection of an undisputed sum of money, confirmed by a written document. If the claim filed by the creditor falls under the criteria of the execution process, the court will issue a decision seizing the debtor’s property and obliging the debtor to pay the amount collected or to file an objection within 10 days. In the absence of an objection, the case will be transferred to the enforcement stage without the need for further proceedings. Otherwise, the court will schedule a hearing to consider the defendant’s objections, after which it will issue a decision.

The decision of the court of first instance may be appealed within 15 days from the date of notification of the decision. The appeal is heard 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 Uruguay within 15 days from the date of notification of the contested decision. The appeal will not be admissible if the decision of the second instance fully and without controversy confirms the decision of the first instance, as well as if the amount of the claim does not exceed the equivalent of 4,000 adjusted units. As a result of the consideration of the complaint, 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 compulsory execution. The court decision can be presented for compulsory execution within 10 years. As part of the compulsory execution of the court decision, the creditor’s claims can be satisfied by arresting and writing off funds from the debtor’s accounts; arresting the movable and immovable property of the debtor with their subsequent sale; arresting and confiscating securities.

If the debtor has signs of insolvency, the creditor should consider the option of bankruptcy of the debtor. The state of bankruptcy is recognized for any debtor who, for any reason, ceases to fulfill current obligations on his commercial debts. At this stage, if the debtor’s assets are insufficient to fully satisfy the creditors’ claims, the debtor’s actions and transactions that were committed fraudulently in relation to creditors may be canceled. In addition, transactions or actions carried out within sixty days preceding the date when the actual suspension of payments occurred are declared invalid upon the judge’s application, namely: gifts that do not have compensation, gratuitous transfers of movable and immovable property, as well as assignments and transfers of immovable property in payment of obligations that have not occurred at the time of declaring bankruptcy. As a result of using these provisions, it is possible to increase the chances of satisfying creditors’ claims in full.

If you have any questions or need support for international debt collection in Uruguay, 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 URUGUAY

20.09.2024

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