If you are living in Spain you can be in the situation where – either as individual or as a Company owner- you owed certain amount of debts. The first thing we recommend to do is to contact a lawyer and ask him/her for legal advice. Most probably, the advice of the lawyer will be to send a warning letter, called Letter of Demand requiring the debtor to pay.
After collect all the documents the solicitor will decide if it is necessary to write down the letter – it is important to keep always receipts and bills as well as important documentation – and make a previous overview of the case. In this letter, the debtor is warned of your determination to start legal actions if the debt is not paid in a period of time specified in the letter.
This letter is a formal request, which means it is more serious than a warning from the creditor to the debtor, this also means fees and extra costs derived from the judicial procedure will be charged to the debt as well. Even though the Letter of Demand can be draft without a lawyer, our advice is to always consult a solicitor so you can be sure that important details or documents are included on it.
Once the Letter of Demand is sent it is necessary to wait for the debtor to answer the letter, make the payment or ignore it.
Negotiations with the debtor
If the debts you owed will lead to a complicated trial and also to minimize costs it is advisable to arrange a negotiation meeting with the debtor and analyse the case in order to to reach an agreement and finish the issue without going to trial. If the debtor is not likely to change his/her point of view or ignore the appointment then the next step is to start a legal actions.
Taking the case into Court
After the failure of the Letter of Demand and the negotiation, the only way left to recover the money is to start proceedings before Spanish Courts. There are several ways to claim these debts. We will explain each of them as it follows:
Proceso Monitorio
This first option is the fastest procedure which exists in Spain. It applies for monetary, due and enforceable debts. You (through your lawyer) will be required to fill and collect all mandatory documents and documentary proof to back up the debt. Once this step is done, courts will give to your debtor 20 days to either pay the debt or object to it. If the debtor respond and opposes to the debt, next step will be the normal procedure in courts, deciding the judge whether or not the debt exists and it’s due and enforceable. If the debt is under 6.000€ a Juicio Verbal” will take place, if it’s over 6.000€, “Juicio Ordinario”.
If the debtor does not respond to the calling, the judge in charge will issue the execution of the debt which carries the expedition of an enforcement order with a 5 years validity.
Juicio Verbal or Juicio Ordinario
As said before, when the debtor opposes to the debt, there are two procedures, “Juicio verbal” and “Juicio ordinario”. They are both very similar, but the first one is a faster one, it is mostly oral and it’s made for debts under 6.000€, while the juicio ordinario takes longer and it is for debs over 6.000€. The second one has a preview of the case, called “Audiencia previa” in order to rectify errors and details to bear in mind during the trial. After it the trial takes place, where both sides can show evidence to probe their version. Also the court can ask for specific measures in order to clarify matters still remaining uncertain. After that, the judge will make his/her judgement, which can be appealed in the Court of Appeal (not in all cases, it depends on the amount though).
Juicio Cambiario
When the debts are unpaid bills of exchange, cheques or promissory notes, a Juicio cambiario will take place. The court will give the debtor 10 days to pay the debt after the lawsuit is presented. If the debt is not paid, a seizure order will be issued. It is important to request this measure in the lawsuit; otherwise the judge will not apply it. If the debtor does not prove the amount claimed is wrong or provide proof of the payment of the debt, the seizure order will become a final decision and it will be executed.
Bankruptcy (concurso de acreedores)
Different from all the processes above, in his one the debtor has gone into bankruptcy and has several creditors over the debtor’s assets. What makes this process different is in that case it is the debtor the one who start the judicial procedure in order to satisfy his debts and organise the payments. Under Spanish Law, this procedure is called “concurso de acreedores”.
If you are interested in reading more information about it, please note some of the content of this post has been uptaded in our new posts How to claim unpaid invoices (part I) and How to claim unpaid invoices (part II).
