Debtors Beware! Fast Track Debt Recovery comes to Spain!

Businesses, communities of owners, landlords, and private individuals, can all now take advantage of new streamlined processes for recovering debts, already known as a “proceso monitorio”, which came into force in Spain on 4th May 2010, and was introduced by Law 13 of 2009.

The new improvements to the process have been introduced to help reduce the high level of debt suffered by government and local authorities, business, and private individuals. The old requirements for debts to be advertised in the official provincial gazettes and for personal service of proceedings have been abolished.

The new process can be used for debts up to €250,000.00 but is of particular use when recovering much smaller debts. Before beginning a claim it is always a good idea to take professional advice on the strength of your case and the evidence you will need to prove it.

If you are claiming an amount below €900.00 the new process can avoid the need to be formally represented by an Abogado or Procurador, or use formal legal documents. It is only necessary to present an informal written statement setting out your claim –in Spanish of course – to the Court, accompanied by the invoices, statements or other written evidence which proves the existence of the debt.

If your claim is for between €900.00 and €6,000.00, or for claims for arrears of rent up to any amount, it will be not be dealt with by the Judge in the setting of a formal Court hearing, but by the “Judicial Secretary” or Registrar.

If the amount you are claiming is for more than €6,000.00 then your claim will be dealt with by the Judge in open court in traditional proceedings.

There are 4 stages to a case begun in this way,

  • First, the Court sends a summons to the debtor giving him 20 days in which to pay up or defend your claim.
  • Second, if the debtor does nothing within this time then judgment will automatically be entered in your favour and you can then enforce your judgment against the debtor.
  • Third, if the debtor pays the debt and your court costs the case will come to an end.
  • Fourth, if the debtor files a defence to dispute your claim, and the amount is below €6,000.00 there will be a an oral hearing in front of the Judicial Secretary, or if the amount is above €6,000.00 the case will continue as formal proceedings in front of the Judge, who will decide the case.

This type of Court proceeding is not appropriate for claims for compensation for accident or personal injury claims, or any other case where the amount involved is not certain. Nor should it be used if you need a ruling from the Court has on the interpretation of contracts. Claims for arrears of maintenance in divorce proceedings should be made in the family courts. Claims for unpaid wages should be made in the labour courts.

If you are in business and are owed money this new procedure could offer you a lifeline and help improve your cash-flow in these difficult times when “cash is king”. On the other hand, if you owe money and receive a summons in the new form you need to take prompt action to avoid judgment being entered against you. Either way, please contact our office for more information.