Spain Debt Collection – No Win No Fee
Creditreform operates a global specialist International debt collections service. We have local offices and fully approved expert international debt collection agency partners in every country worldwide. All our International debt collection agency partners and offices operate on a No Win No Fee basis charging an agreed commission against monies recovered only.
Herewith details of our debt collection service Spain
Location of office(s) in Spain
Fernandez de la Hoz 27 29010 Madrid
Number of staff
7 members ( 5 paralegal 2 lawyers)
How long been operating in Spain
What type of debts do you recover?
We do both commercial (B2B) and consumer (B2C) debts
Statute of limitation in Spain
Depends of the kind of debt but commercial debt is 5 years
How EU laws effect debt collection in Spain?
Really it does not have effect because although European laws are applicable directly most of debtor just pay principal amount and does not pay interest and cost unless there is judgment.
How many registries in Spain for businesses? (i.e. UK just has 1 central registry)
There is just one Commercial Register for all the Spanish companies ( SL, SA etc.). It is located in Madrid.
What is the process in Spain?
When we receive a new collection order, we acknowledge receipt of the file to our Partner and then entered into our system. We send a collection demand letter to debtor´s address and an email ( if available) at the same time. In this Payment Order we encourage debtor to pay in 5 days to avoid legal action and provide the banking details of our law firm ( or the one of the client if they prefer so) After two days we start with the phone calls.
Once we contact the person in charge of accountancy we require to pay as soon as possible. If debtor cannot afford the payment at once we propone a payment plan however we do not accept any payment plan if we do not have the confirmation of the client through the partner.
During this period we report the client once every two weeks approximately but we always adapt to client´s requirements.
If we do not obtain the payment and the amount is high enough we consider legal actions but previously we check debtor situation ( if located and working). If the company is closed or is not active we recommend the closure of the file.
If we obtain a payment plan we sign a document between debtor and us ( or the client) because this document would always help us to show evidence of the debt in case they do not fulfill and we will have to fill a lawsuit.
We are lawyers so in case debtor accepts to fill a lawsuit we start legal actions but always we try an amicably settlement.
We send several letters if this is the only way to contact debtor ( no telephone) and also several emails. We always phone several times a week at different hours to obtain a response of payment from the person liable of the debt.
Average length of time to collect?
Depends on the proceeding and the Court. Around one year in case of opposition then there is a preliminary hearing and hearing till judgment)
Can late payment fees / interest be added to claims?
Yes interest according our commercial ruling about default in payments ( very high since invoice is due) Procurator and lawyer costs
Details on legal service / process in Spain
Spain has a Civil Law system in which the rules are essentially codified and supported by case law evolutions. The judiciary divides into various court levels including Municipal Courts (Juzgados de Paz) dealing with small claims, District Courts (Juzgados de Primera Instancia), Commercial Courts (Juzgados de lo Mercantil) in place in the main cities, Administrative Courts (Juzgados de lo Contencioso-administrativo), Appeal Courts spread at the provincial level (Audiencias Provinciales) and a Supreme Court (Tribunales Superiores de Justicia) acting as the court of final jurisdiction.
CIVIL PROCEDURE ACT: COURT PROCEEDINGS
A) Declaratory Proceedings
Ordinary Proceedings (over 500,000 Pesetas and unliquidated amounts)
B) Special Proceedings
Claims for amounts due or Juicio Monitorio
Proceedings on Negotiable Instruments
In the case of Ordinary Proceedings the lawyers acting for the parties must attend two court hearings ( preliminary hearing and hearing).
The preliminary hearing is described by the LCP as the pre-trial hearing. Matters that can be dealt with at this preliminary hearing, at which all the parties should be represented, include reaching agreements or settlements, remedying defects of procedure, specifying the questions in dispute and questions of admission of evidence to be decided then and there by the Judge.
Further, at this preliminary hearing, if no additional proof of evidence is required, the Judge may proceed to order judgement. In any other case the Court will set down the day and time for the trial.
The object of the trial is to hear the evidence that has been judged admissible and the summing-up of the advocates based on the evidence and the legal arguments. After that the Judge issue the judgment. This judgement is not definitive and can be appeal.
The ‘Juicio verbal’ is a similar although oral procedure which can be initiated for claims below EUR 6,000. This proceeding has been modified last October 2015
B) Special Proceedings
The ‘juicio monitorio’ procedure, in addition, only requires common commercial documentation. If the buyer recognizes the debt (or fails to appear within twenty days from the claim notification), the process becomes an attachment proceeding against the debtor goods. If the buyer doesn’t recognize the debt, however, the process becomes in an ordinary process.
This special procedure (known as the “proceso monitorio”) started in Spain in 2000 with the LCP. This is designed to take the form of quick proceedings leading to summary judgement and
use these proceedings provided the debt is pecuniary, due, payable Proceedings are commenced by lodging with the court a simple application accompanied by simple documentary evidence of the debt (i.e. invoice, CMR, delivery note etc.,). Once the application and the accompanying document(s) have been accepted by the Judge, he or she will order the debtor to make payment. If the debtor fails to pay and does not oppose the application, the Judge will immediately order execution. On the other hand if the defendant lodges a defence the proceedings will then change into an Ordinary or Oral Proceedings depending on the amount of the claim.
The Monitorio was originally created for claims up to EUR 250,000 but this threshold has now been deleted. In any case, the procedure must be transformed into a normal lawsuit if the debtor fails to pay or brings a defence. When the debtor company has assets in other EU Member States, a European Payment Order procedure facilitating the recovery of undisputed debts (under Regulation EC No 1896/2006) may furthermore be triggered. In this case, the demanding party may request a domestic court to issue an Order to Pay which will then be enforceable in all European Union countries (except Denmark) without exequatur proceedings.
Proceedings on Negotiable Instruments If the debt is certain and undisputed, fast-track proceedings may help solving the issue with limited courts. The ‘Juicio cambiario’ procedure aims at obtaining a Payment Order for the recovery of debts documented by a promissory note, cheque or bill of exchange. The process is very short (eight months to a year) and starts with an attachment proceeding against the debtor goods.
Arts 819 to 827 of the LCP provide for a legal process that, without either being ordinary or executory, offers the plaintiff certain judicial protection from allegations relating to the fundamental cause of the dispute. In effect the articles of the Law of Negotiable Instruments and Cheques that refer to summary proceedings have been amended and from now on the recovery of amounts owed on cheques, promissory notes or bills of exchange (provided that they comply with the requirements of the Law of Negotiable Instruments and Cheques) shall be by way of the Court Proceedings on Negotiable Instruments as established by the LCP.
Proceedings shall commence with the lodging of a statement of claim with the negotiable instrument annexed. The plaintiff must demonstrate that he is the legal holder of the negotiable instrument and expressly declare what he proposes (i.e. that court should require the defendant to pay, order that his assets be provisionally attached and issue the order for execution). Then the Judge, once he has accepted the legal validity of the plaintiff’s title to the negotiable instrument, will simultaneously order the defendant to pay and the provisional attachment of sufficient of the defendant’s assets to secure recovery without the need of a guarantee.
The defendant’s statement of defence can be only based on:
1. Failure to comply with the formalities established by the Law of Negotiable Instruments and Cheques.
2. Defects in the holder’s title (e.g. problems with the endorsement or possession).
3. Invalidity of its representation as a valid negotiable instrument (falsification of the signature, lack of authority of the person signing), and
4. Cancellation of the debt owed on the negotiable instrument (prior payment).
Afterwards a copy of the defendant’s statement of defence will be supplied to the plaintiff following which a date and time will be set down for the court hearing to which the rules governing Oral Proceedings shall apply as provided by Art. 443 of the LCP.
The insolvency procedure is subject to a liquidity test (insolvencia actual) aiming at establishing whether the debtor is permanently unable to settle its due debts. The Spanish Insolvency Act (as amended by Law 38/2011 of October 2011 and some other amendments) provides for insolvency proceedings (concurso). These proceedings s normally commence upon notification of financial difficulties to the court by either the debtor or its creditors, and include a common phase in which the judge will appoint, as a general rule, one or more Receivers (depending on the firm’s turnover) in charge of managing the business and of determining the debtor’s estate / outstanding debts. The bankruptcy can lead to a creditors agreement or to the liquidation of the company.
There are many unique requirements to recovering international debts in all countries including Spain debt collection services which differ from the UK and therefore it is very important that cases are handled directly by our expert international debt collection agencies and not from the UK office. This method of international debt collection sets Creditreform aside from the competition who in many cases try and recover debts from a UK office base only. Using the local offices and partners enables us to achieve a far greater success rate and our No Win No Fee service together with competitive commission rates against monies recovered only ensures you get the best service.