Debt Collection in Spain

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1. Non-Judicial Phase

1.1. We are dealing with a professional staff specialized in debt collection. It is always our intention to move towards an amicable debt agreement by payment plans, mediation, and review of the debtor's amount-related documents.

1.2. All of our processes are in-house, and debtors are approached by our practitioners both via telephone communication and written mail delivery. We use the documents received by our company to insure an amicable resolution and reimbursement in the case of a dispute. Our in-house legal team works out any debtor enquiries.

2. Local agent

2.1. Our field counsel keep us informed of any transactions and are in a position to receive compensation from the claimant to be used towards the outstanding balance of the loan. If that method fails, before agreeing on the next course of action, we must contact the agents and our legal team.

3. Interests

3.1. Our strategy is to comply with any benefit stipulations as laid out in the initial debtor-creditor arrangement. If no such stipulations do apply, we can quote an interest rate dependent on the Spanish National Bank's fixed rate. In Spain this value is known as a means of negotiation.

4. Debt collection expenses

4.1. Debt collection fees may be paid to the defendant in Spain to cover the costs of late payment penalties. The Spanish Civil Code and the Spanish Commercial Code provide for laws relating to that fee. If the trustee requires specific contractual terms for paying the collection costs, they will be used as a reference in deciding the debtor's assessed payments.

4.2. Spanish debtors regard collection costs as a bargaining element, and those costs can be that to ensure full fulfillment of the outstanding balance of the debt.

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5. Requirements

5.1. The Spanish Statute of Limitations is regarded as an important piece of legislation. The length of this term is 15 years from the first moment a liability appears. Forwarding arguments are subject to a shorter period of only six months.

5.2. It is not lawful or acceptable to obtain a loan from a debtor after those two periods of time. A supply duration may be extended under the following conditions:

• Settlement of default claims by the judiciary;
• The debtor makes an extrajudicial lawsuit;
• The claimant accepts the debt.

6. Approved and most general forms of payment

6.1. Debt payments shall be made by bank transfer or cheque. Direct debit is not available for accounts.

7. Business structures

7.1. In Spain there are several business structures, each subject to specific duties and regulations. These include:

7.2. "Sociedad Limitada," or S.L.: those firms require a minimum capital amount of EUR 3,000.00. "Anonima Alliance," or S.A:. This form of business can only be built with capital of at least EUR 60,000.00.

7.3. For both cases the properties of the owners are not impacted by the obligations of the company. It is important for the business to claim that when loans are incurred, bad financial actions are followed up before a court.

7.4. Community: This more entrepreneurial type of business is popular to sole proprietors or limited partner communities. It is necessary to take their financial assets to pay for the loans and they are personally liable for the debt load of the business.

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8. Sources of information

8.1. We access records registered in the database. Such information includes financial reports and risk assessments from Spain, Portugal, or Brazil-based companies. Combined with the knowledge we have received from our customers, these findings provide a critical next phase in prosecuting debtors and are used to evaluate the best course of action.

8.2. The information contained in the report makes it easy for us to identify such debtors that are still involved in industry and still in trade. When our experts agree that a complaint should be brought, we will appoint a local field representative to visit the organization to evaluate further details regarding their operations and their justifications for not returning the money.

8.3. In collecting such material, private investigators are not used in Spain as it is possible to find information about the company using several different tools at no additional cost to our employees or our customers.

8.4. It is essential for us to use the entities and sources of information held by the court whenever we participate in a legal procedure, further improving the operation. There is uncertainty that it would be more successful for a private investigator than these outlets.

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9. Retention of title

9.1. Retention of title is normal in Spain but must be litigated in court regularly. In fact, businesses need to prove ownership of products which the seller has not yet charged for. Often, this initiates a period where the court attempts to trace the whereabouts of the goods, as well as the debtor.

10. Safeguarding steps

10.1. Our goal during the pleasant process is to receive a signed document from the debtor who recognizes the presence of the debt. Such certificate does not allow a notary to validate, but is enforceable in any legal claim so long as it contains the debtor's signature.

10.2. To guarantee full reimbursement, the investor is willing to securitize loans using anything from deposits to loan assignments. Contractual transfer of debts or properties is necessary, whereas securitization with a guarantee requires notarisation only.

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11. Legal proceedings

11.1. Public matters between an individual and a State shall be regulated by public law in Spain, while civil law shall refer to ties between corporations or individuals. Legal proceedings against a debtor can be launched by notifying them before the start of the trial, but this is usually not achieved, because legal proceedings in Spain are slow and expensive— even during the debtor's conflicts. For this purpose it is always important to follow nice collections before legal actions.

12. Legal system

12.1. Civil courts shall manage all legal proceedings concerning unpaid debts or delinquent balances. The argument will be tried before the Court of First Instance during the first step of the legal process. It is during this process that a ruling on the debt will be made, making the path to a higher court for appeal.

12.2. This is recognized as the Spain Regional Court, which will be sent to the closest regional court, the last known physical address or corporate headquarters of the debtor.

12.3. Some arguments that do not follow the Regional Court's requirements will be referred to third-instance court. Claims which do not meet the criteria of that court will be entirely dismissed. In order to pursue legal action against the defendant, penalties must be due on the legal process.

13. Required paperwork

13.1. To begin the legitimate dunning process, we will need the following documentation:

• Original copies of the contract;
• Original versions of the invoices;
• Original versions of the account statements, containing refunds and liability adjustments.

13.2. If a case is brought in a First-instance court is the court which manages legal dunning. The loan is not challenged through formal dunning, and the court is only required to declare legally the creditor's claim to the money.

13.3. The court must allow the debtor to compensate through an official correspondence, including any charges of interest or fees. If there is any protest on the debtor's side, urgent legal action must proceed.

13.4. All further hearings will take place in the first-instance trial, though this court can not make a judgment on the fairness of the claim. The argument would proceed to the second-instance trial for that ruling.

14. Litigation

14.1. Lawsuits start until the amicable recovery has expired and the claimant has been deemed secure enough to pay the balance of the loan in full. It publishes and distributes a pre-procedure text. The creditor and debtor share views with the court by postal mail until the judge has obtained sufficient evidence to begin a jury.

14.2. A hearing date will be scheduled at that point, and it will allow the two parties to attend the meeting. The judge must set a date for issuing of the judgment after the trial. The court where the trial took place must hold the sides aware of the result. The verdict can be immediately executed.

15. Appeal

A decision may be challenged which will send the matter to a second instance judge. A further appeal to the third-instance court is probable, although this challenge will only help to assess whether or not the rules and regulations have been applied correctly.

16. Claims

16.1. We use the network of several attorneys, which results in a substantial reduction in the claims paid to borrowers when taking legal action against a debtor. The costs incurred during the litigation process would depend on the loan amount which is unpaid. Costs are determined according to a scheme of percentages.

16.2. Expenses paid during the legal process cover court costs, expenses for attorneys, paper payments and other costs. The precise results of the legal proceedings are difficult to predict, and we will only provide an approximation on a case-by-case basis.

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17. Expected timeframe

17.1. A final decision may take from three months and several years to be made by a judge on the grounds of the scope, the nature of the dispute and which court will decide the case.

18. Damages and expenses in the litigation process

18.1. Expenses associated with taking legal action against a claimant shall be included in the sum of the final judgment made by the court and payable. The sum will include tax, expense of processing, court fees and fine charges.

18.2. The Spanish Civil Code allows the losing party to bear the full burden of a legal proceeding, but this may be overridden by the judge if he or she thinks that the claimant should not be responsible for a majority of the costs incurred by the plaintiff in the process of legal proceeding. All parties are responsible for their own expenses, in the case of a resolution.

19. Enforcement

19.1. Debt enforcement

19.1.1. The creditor may impose debts by blocking the debtor's bank account, keeping its tax claims or blocking claims for life insurance. Company or business securities may also be held up to the balance due interest, and income may be fully or partially garnished to execute the verdict.

19.1.2. All of these steps are quite successful and have been known to encourage debtors to make payment arrangements or to meet their duty to the borrower in full. To reduce costs, creditors can potentially opt for implementing only part of the judgment.

19.1.3. The temporary enforcement clause requires a judgment to be executed even while the defendant challenges the decision in litigation. This must be required by lodging a writ that placed the initial judgment with the judge.

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20. Implementation of a final judgment

20.1. The claimant shall have 20 days to pay the amount or face the implementation procedure after the judgment has been ruled definitive. After 20 days have passed, the claimant can order that the court impose the judgment.

20.2. Enforcement is done by taking the debtor's belongings up to and including the value of the debt owing to the borrower. If not identified, the location of the debtor will be sought from the judge, who will check for them using bank records, company records, and public service papers.

20.3. Property will be auctioned, and the creditor's profits will be distributed as insurance and verdict fulfillment. The compliance expenses will be the debtor's liability.

21. Estimated timeline

21.1. Compliance is difficult to estimate, since it varies widely depending on the debtor's ability to locate and the valuation of his estate. The key to a successful compliance procedure in Spain is caution.

22. Insolvency proceedings

22.1. General Limited, common and required insolvency shall all be allowed in Spain and shall be treated as mutual execution of the debts owed to the shareholders of the company. All particular enforcements against the claimant are suspended at the outset of an insolvency proceeding; this suspension is not enforced until the insolvency process is complete.

22.1. The insolvency aim in Spain is to assess the value of the assets of a corporation, liquidate those assets and transfer the value of those assets to the investors as a dividend payment. During bankruptcy the aim is to recover a debtor's enforceable profits upon making them bankrupt.

22.3. Insolvency proceedings begin when either the claimant or the borrower has filed a motion for insolvency with the first instance judge. The debtor's accounts will then be reviewed to decide if they have a verifiable right of insolvency or not. If they do, then the judge must name a bankruptcy trustee.

22.4. The insolvency itself will be reported in the Official State Gazette of Spain. The release date ends a 30-day span in which investors demanding a dividend payout of the liquidated properties can file lawsuits against the debtor. The bankruptcy trustee must review the cases and decide whether to accept or deny them. Rejected cases may be re-filed for secondary consideration at one point.

22.5. A proposal that involves the amount of the distribution distributed from the company's assets will be shown on accounts, and they have the power to approve or reject the request on a majority rule basis. The court must authorize the proposal with an understanding of 50 per cent.

Without such a deal, every borrower will be winded up with fair payouts.

23. Required paperwork

23.1. To file an insolvency petition, we need the following documentation:

• Original Power of Attorney;
• Copies of Invoices;
• Copies of Account Statements;
• Original Contract Copies of Payments, Approvals and Confirmations;
• Copies of Transaction Terms and Conditions, if appropriate;
• Copies of communications confirming claim.

24. Estimated timeline and outcome

24.1. Insolvency requires between Claims must be made in the Official State Gazette within 15 to 30 days from the date of release of the insolvency.

25. Arbitration and mediation

25.1. Arbitration and mediation shall be available to investors and debtors who decide to try an out - of-court debt solution. It is usually much simpler and more cost-effective than a conventional legal proceeding, but those interested in arbitration or consultation will have no means of challenging the decision.

25.2. Such proceedings are held by the Chamber of Commerce and other outside bodies, and are supervised by experts from third parties who establish an unbiased approach to the process and outcome of proceedings.