If you, or your company, is owed money and negotiations for payment have broken down, there are a number of avenues that you can take to recover any outstanding amounts.
A) Letter of Demand
You will need to keep a record of all of the documents and contracts which gave rise to the debt. If you have done so, our lawyers will draft a Letter of Demand against those who owe you the money.
A Letter of Demand is essentially a request to be paid by a certain date; it should outline the details of the debt and state that legal action will occur if payment isn’t made. It can/will be used later in court if payment is not made.
Sometimes, a letter from a Solicitor’s office will indicate just how serious you are about wanting payment and may be the push that your debtor needs to reach into his/her pockets.
It is also a good idea to see a Solicitor to draft the Letter of Demand even if you know your debtor is going to ignore the letter. A Solicitor will be able to ensure that you have all of the details etc correct, especially if the Letter is to be later relied on in Court.
B) Negotiations with the debtor
Before to enter in long and complicate disputes in Spanish Courts and in Tribunals, our Solicitors will try to negotiate with the debtor, agreeing different formulas of payments, and other solutions profitable for both parts.
Our aim is to obtain a debt recovery with the minimum costs for our clients. Only when we find that the intention of the debtor is definitely not to attend the debt, then, we will pass to the following steps.
THIRD.- GOING TO COURT
If your demands for payment are continually ignored you may have no option but to take legal proceedings in order to recover the debt.
You should seek advice about your specific case before proceeding to litigation as there are a number of complex rules in Spain which will need to be followed. Also different Spanish Courts deal with different levels of debt. As brief summary:
1.- Proceso Monitorio. For debts up to 30.000 EUR: This is a rapid process in the Spanish Courts from which, once presented the relevant paperwork to demonstrate the debt, the Spanish Tribunal gives the debtor 20 working days to challenge or admit the debt. If he does not answer, or admits the debt, then the Judge will issue the execution of the debt by the proper enforcement of the sentence.
If in instance, the debtor answers the demand, and makes opposition against the debt, then a normal, or usual process must be started in the Courts. It is called Ordinary Proceedings, which can be two Verbal (Juicio Verbal), or Trial Judgments (Juicio Ordinario Declarativo).
2.- Juicio Ordinario y Verbal, also called Trial Judgements: Which can be two depending on the amount of the debt:
Ordinary (Juicio Ordinario): for debts exceeding Euros 3.005, or when the amount of the claim cannot be determined in advance.
Verbal proceeding (Juicio Verbal): for debts not exceeding Euros 3.005. Usually more rapids than the previous one, and the process is more oral, in which both parts attend the hearing and the Judge forms his decision from the same oral declarations of the parts.
In both cases, the steps and development of the process is similar: The proceeding starts with the lawsuit (demanda), which will be served on the defendant, who should present a defense to the court. After these first steps, a hearing (Audiencia Preliminar) takes place in order to reach an agreement, rectify material mistakes, make complementary pleadings or denounce the breach of procedural rules.
If no agreement is reached in the hearing, the proceeding goes on with the evidence period. After it, the court can order specific measures to clarify issues or facts which remain uncertain and gives judgment, which can be enforced if the plaintiff makes an application. There is a right of appeal against judgments to the Court of Appeal.
3.- Juicio Cambiario: This type of process is used for debts for unpaid bills or drafts of exchange, cheques, or promissory notes. Once the lawsuit is presented, the Tribunal gives the debtor 10 working days to settle the unpaid document. In this moment, the Tribunal orders the embargo o seizure of the assets owned from the debtor, and which can be proposed at time to place the lawsuit. If the debtor fails on his defense, then order of seizure becomes definitive, and enforceable.
4.- Proceso Concursal y de Quiebra: This is a process in which the debtor has caused bankruptcy, and there are also other creditors with credits over his/her assets. In this case, the debtor proposes the Courts to arrange an agreement with the rest of the creditors in order to administrate the assets, and to organize the payment of the different credits.
In all the above mentioned process the sentences of the Courts can be appealed to a higher Court. And even the decision of the higher Court can even be appealed to higher ones. But this appeals do not affect the enforcement of the sentence, which means that you are still entitled to recover your debt –following the Court sentence.