Collecting a debt in Spain requires a process that can be somewhat complex if you do not have specialised advice. Getting to the point of having to claim an unpaid debt from a third party is a complicated situation in itself, so in this article we will go through all the steps to follow and the details that must be taken into account before starting this type of process.
What is debt recovery?
Claiming a debt is based on contacting the debtor so that he/she complies with the outstanding payments. Sometimes the debtor settles the debt quickly and the transaction is closed, but there are circumstances in which a debt collection lawyer is necessary and this can initiate legal proceedings.
Limits for claiming payment of debts in Spain
Debts become time-barred over the years and it is advisable to take the necessary steps before this period expires. In Spain, the deadline for claiming payment of personal or general debts is 5 years, although we will describe the different types of debt later on.
What is necessary for a debt to expire once its term is over
For a debt to disappear after the limitation period, these two conditions must be met:
That the creditor has not exercised any action, either judicial or extrajudicial, claiming the debt.
When the natural or legal person to whom the debt is owed has not taken any action to claim the debt either judicially or extrajudicially.
That the debtor has not acknowledged or accepted the outstanding debt.
If, in addition to the above condition, the debtor has not accepted to be responsible for the non-payment of the debt expressly or tacitly, the debt may be time-barred.
Ways to avoid the statute of limitations on debts
In order to ensure the collection of a debt and recover the money, one of the two situations opposite to the ones we have seen above must occur. Thus, the way to avoid the debt’s statute of limitations passing is:
Claiming payment in court from the debtor.
It is necessary to demonstrate that the creditor has claimed the non-payment from the debtor, this can be done by means of a burofax with acknowledgement of receipt or by a notarial summons.
Getting the debtor to acknowledge the debt in writing
This situation is much more complicated to achieve since, if the debtor does not want to face up to his non-payment, he will not put in writing that such a debt exists. This is usually achieved when the debtor is aware that he cannot avoid paying the debt and needs time to be able to cope with the payments.
Types of debts
Depending on the creditor, there are different types of debt and each has a different limitation period:
Personal debts
Personal debts are between natural or legal persons and are the consequence of non-payment by one of the parties, generally arising from contracts for the sale of goods or services. As we mentioned at the beginning, the deadline for claiming a personal debt is 5 years.
Mortgage debts
In this type of debt the creditor is a bank and the non-payment corresponds to a mortgage loan. Although nowadays this type of debt does not occur thanks to the protection systems used by banks, the statute of limitations is 20 years.
Debts with the tax authorities and social security authorities
Debts in which the creditor is the Tax Authorities or the Social Security have a period of 4 years. This case is also very complicated to occur, as these bodies are very well protected against non-payment.
Other debts
Other types of debts can be fines or financial penalties, for which the deadline to claim is 4 years. Also debts with bank credit cards, which expire after 5 years or debts caused by damages caused by traffic accidents and civil liability, which have a claim period of 1 year.
Pathways to claim debts in Spain
There are two mechanisms for claiming debts:
The extrajudicial route.
The extrajudicial route as a mechanism to collect debts is the first that a creditor uses. It consists of contacting the debtor and reaching an agreement to settle the debt. It is advisable that this route is taken through lawyers specialised in debt collection who ensure that the agreement is as fair as possible for the creditor and that the procedure is carried out without surprises, in an amicable manner and with guarantees.
The judicial route
If an out-of-court settlement has not been reached, a judicial claim for debt can be made. In this case, the creditor can file a claim for non-payment in court, preferably through a specialised lawyer.
Within this route, there are three procedures for claiming non-payment:
- Monitorio proceedings: For debts that do not exceed the amount of 250,000 euros. To carry it out, the existence of the debt must be proven through an invoice or contract.
- Verbal or Ordinary Proceedings: Verbal proceedings occur when the amount owed is less than 6,000 euros or when there is unpaid rent. Ordinary proceedings occur when the non-payment is greater than 6,000 euros.
- Exchange Procedure: This procedure to collect debt occurs when there are unpaid documents such as promissory notes, cheques or bills of exchange. In other words, it obliges the debtor to pay the outstanding amount that is documented in one of the securities provided for in the Exchange and Cheque Law. With this mechanism, the debtor’s assets can be seized within 20 working days if the debtor does not settle the debt.
What documentation is required to claim for non-payment?
The right to collect personal debts can be demonstrated through this documentation:
Budget
The budget is the document that reflects the expected profits and expenses of an activity. This basic document can serve as the basis for initiating a claim for debts between individuals.
General conditions of sale
This document details the obligations of the seller and the rights of the consumer when a purchase of goods or services is made. It can also be used to collect a debt.
The sales contract
Among the private contracts that can be presented for the claim of non-payment is the contract of sale. To be valid, it must contain the details and signature of the parties, the price and the object.
Proforma invoice
This is a draft of the final invoice with the details and conditions of a sales transaction. It can also be used to claim debts.
Confirmation of order
This document informs the buyer of the acceptance of an order or order from the seller to the buyer.
The invoice
The invoice details the quantity, amount and to whom the purchased goods or contracted services are delivered and is a document issued by the creditor.
Like the pro forma invoice and the order confirmation, these documents do not guarantee the performance and completion of the work ordered or requested in the contract or quotation, so the debtor may not be satisfied or may declare that he has not received such goods or services.
The delivery note
This is the most common way of proving non-payment. A delivery note signed by the debtor is the best evidence to prove the existence of a debt for an outstanding amount.
Documents of payment (cheque, promissory note…)
With other private exchange documents such as cheques or promissory notes it is also possible to initiate a claim for non-payment.
Summary
There are debtors who make it very difficult and the process of claiming the money you are owed can be very tedious and complicated if it is not carried out by a professional. If you find yourself in this situation as a creditor and wish to start the process of claiming your debts under the expert legal advice of a specialised lawyer, please contact us by email at ignacio@garciataboada.es or by phone (+34) 670 853 386.
