One of the main problems every company must deal with is the claim for unpaid receivables.
Informal reminders, by telephone or e-mail, are usually followed by a letter of formal notice. But if these reminders do not work, in Spain it is necessary to go to the courts, since Spanish law does not provide a mechanism for out-of-court debt collection, as in France, where such claims are processed through the huissiers de justice.
In Spain, there are 5 basic types of judicial proceedings to recover commercial debts (leaving aside the claim for bank loans, which will not be the subject of this article), depending on the documentary support, the nature and the amount of the debt claimed, as we will see below.
1. The order for payment procedure
When the debt consists of one or more overdue invoices, we can resort to the payment order process. If the invoice is not signed or stamped by the debtor, it is also advisable to provide other means of proof of the credit, such as delivery notes, certifications or other documents stating that the amount is due.
Using this procedure, debts in favor of the Communities of Owners are also claimed, providing specific documentation issued by the Secretary (or Administrator) of the Community.
In this case, the debtor has 20 days to pay, deny the debt or do nothing. If the debtor says nothing, the procedure will continue, opening the execution phase and practicing all the necessary seizures for the complete satisfaction of the credit.
However, if the debtor denies the debt, another phase will take place to discuss whether the debt is owed (declaratory proceeding, see next section).
2. Declaratory procedures
These are the verbal and the ordinary trial. Debts less or equal to €6,000 are processed through the verbal trial; those higher than €6,000 are processed through the ordinary trial.
The verbal trial is a simple procedure, which seeks quick processing. The debtor has 10 days to respond in writing to the creditor’s claim, and a hearing will only be held if requested by one of the parties or if the court deems it necessary.
The ordinary procedure is a longer procedure. Apart from the fact that the debtor has 20 days to answer the claim, there are usually two hearings: one to discuss procedural issues and another where the parties, witnesses and experts are examined, and lawyers make their conclusions on the case.
At the end of any of these proceedings, if the Court rules in our favor we will obtain a judgment which, if it is not voluntarily complied with, will allow us to open the enforcement phase mentioned below.
3. The enforcement procedure
In certain cases, Spanish procedural legislation allows claiming a debt by going directly to the enforcement procedure, in which the debtor’s assets will be seized and converted into money to cover the claimed debt.
The main cases where we can resort to this type of process are debts that are recorded in public deeds, before a notary, such as in loan contracts or debt acknowledgement contracts.
4. The “juicio cambiario“
The least common procedure for claiming unpaid debts is the “juicio cambiario“, a sort of enforcement procedure to which the creditor may resort to when its credit appears on a check, promissory note or bill of exchange that has been unpaid.
The judge will require the debtor to pay within 10 days and will also order the seizure of the debtor’s assets for the debt plus interest for late payment, expenses, and costs.
The debtor may pay, deny the debt, or do nothing. If they pay, they must also pay the court costs. If they oppose, a new phase will be opened, which will be processed as the verbal trial explained above. If the debtor does nothing, the enforcement measures will continue until the satisfaction of the claim.
Should you have any questions or would like to receive more information, please AGMAbogados.
Guillermo Bayas Fernández, Partner
Dispute Resolution Area
AGM Abogados
