If you are in a situation where you or your company are owed money and negotiations have failed, there are certain actions that you can take to recover outstanding payments.

1)Letter of Demand

It is important to always keep a record of all the documents and contracts which originated the debt. If you have been organized and you have those documents, our law firm will draft a letter of demand against your debtor. This is a formal request to be paid within a certain date, clearly stating the details of the debt and the legal action which will take place if payment is not attended. It will serve as proof in court if the debt is not paid.

 

Usually, a letter from a Law firm, will demonstrate how serious you are, about wanting the  payment and it will also indicate that if legal actions are taken against the debtor,  legal fees and interests will also be included  to the final amount owed.  A letter from a Law firm tends to be more convincing and intimidatory.

Even if you want to draft the letter of demand by yourself, it is better to consult a solicitor, even if you are sure that the other party will ignore the letter.  A lawyer will ensure that all important details are included in the letter, particularly if it will be used later in Court.

2) Negotiating with the Debtor

It is always advisable before going  into a long and complicated trial in the Spanish Courts, an attempt to negotiate with the debtor, by analyzing the alternative ways of payments or the most beneficial solution for both parties.

Our law firm´s objective is to recover the debt minimizing the cost to our clients.  We will go to court only  if the debtor´s intention of not paying is beyond question.

3) Filing a case in the Court

Taking legal proceedings is the only way to recover the debt if all your demands of payment have been ignored.

In Spain you will find different proceedings for debt recovery:

 

a) Proceso Monitorio

This is a fast process in the Spanish Courts..This procedure applies to monetary debts, which are overdue, claimable,  its amount determined and not exceeding 250,000€, when the debt of that amount is credited by documents . Once filed the paperwork to back up the debt, the court gives the debtor 20 days to pay the debt or challenge it. If the debtor does not respond , the judge will issue the execution of the debt, the enforcement order will have a validity of 5 years.

If the debtor opposes to the debt claim, the process will follow the usual court procedures to recognize debts ( the judge will rule about the existence of such debt)  , which in accordance to the amount of the debt will be followed by the Juicio Verbal ( debts up to 6,000€) or Juicio Ordinario ( debts over 6,000€ or unable to be determined in advance)

 

b) Juicio Verbal  & Juicio Ordinario

Juicio Verbal is for debts up to 6,000€. They are faster than the Juicio Ordinario, and the process is more oral, in which both parties attend the hearing (called Vista), and the judge makes his decision based on the oral declarations of the parties

 

Both proceedings, have similar steps and development. The proceedings are initiated with a lawsuit, which will be served  on the defendant, who must present a defense to the court. Then a hearing ( Audiencia Preliminar) will take place,  with the aim to reach an agreement, rectify material errors, make complementary pleadings, or report any infraction of procedural rules.

 

If as a result of the hearing, no agreement is reached, the proceeding continues to the evidence phase. After it, the court can order specific measures to clarify matters or facts that continue to be uncertain and then will pass judgement. This ruling can be enforced if the plaintiff applies for the enforcement order.

 

The judgement can be appealed in the court of Appeal

 

c) Juicio Cambiario

This kind of proceedings are presented when there are debts for unpaid bills or drafts of Exchange, cheques or promissory notes.  After the lawsuit is presented, the court gives the defendant 10 days to pay the debt, if the debt is not attended,  the court orders the preventive embargo or seizure of the debtor´s assets, this measure should be requested in the initial lawsuit. If the defendant does not prove he paid the debt or he fails on his defense, the order of embargo becomes definitive and enforceable.

 

d) Bankruptcy process or Proceso Concursal

In this process the debtor has gone into bankruptcy, and there are many creditors with credits over the defendant´s assets. In this procedures it is the debtor who proposes the judge to arrange an agreement with his/her creditors  and to organize the debt´s payments.

 

The rulings of all the before mentioned processes can be appealed to a higher Court, nevertheless the appeals will not affect the enforcement of the judgement, this will mean that you are still entitled to be recover the owed amount decided in the court sentence.

 

If you wish to recover a debt or need assistance regarding which steps to follow, please do not hesitate to contact us.