I am a European Union company and they owe me money in Spain: how do I get my money back?
Cross-border debt collection allows European Union companies to whom they owe money in Spain to get their money back. The truth is that it is a procedure that individuals can also benefit from. So, although in this article we are going to adopt a business perspective, any person in the European Union could resort to cross-border debt collection.
Although the collection process within the European Union tends to be easier than between third countries, it is always advisable to have legal assistance in the State where the debt is located. In this case, European Union companies can have offices such as Forcam Abogados, specialized in debt collection in Spain.
Proximity can be key when recovering a bad debt, especially if you choose to try the extrajudicial route. And it is that the negotiation, although sometimes it does not allow to recover the debt quickly or completely, is usually a more agile and economical option than the judicial claim, in addition to being more peaceful if you want to maintain the commercial relationship in the case of claiming debts of international companies.
Before filing claims: consideration of European Union companies that are owed money in Spain
One of the capital elements in debt collection is the collection of interest. Interest is generally used to penalize the defaulter. And the European Union understands that it must compensate the inconvenience of collection to those who have fulfilled their obligations.
Thus, when a European Union company has fulfilled its contract with a Spanish client (supplying goods or services in a timely manner) but the latter has not paid on time, it will have the right both to charge interest and to require compensation on the payment owed.
In order to calculate the interest applicable to the defaulter, the European Union makes an interest calculator available to its companies. Despite this, we recommend that the calculation of interest and surcharges be placed in the hands of the law firm hired to carry out the claim.
Sectoral penalties or penalties derived from the contract itself may apply. Therefore, European Union companies that want to charge Spanish clients should consult this matter with their advisor before initiating claims.
Commencement of claims: out-of-court negotiation and applicable procedures
In summary, the first step before initiating claims is to study the specific amount that is entitled to be charged, including surcharges, interest, management costs… Once we know the specific amount of the debt, we will have to draw up a claim strategy.
As we have indicated, the most common and advisable thing to do is to start out of court. That is, negotiate. But negotiations cannot begin until we know what the process to follow in the event of not reaching an agreement and our expectations of success will be.
In this sense, we must know the different collection procedures applicable to the case. But in a general sense, three interesting tools in the field of cross-border debt collection should be highlighted: the large claims process, the European order for payment order and the European account retention order.
The large claims process
It is a debt claim lawsuit that allows European Union companies to demand amounts of more than 6,000 euros from other companies located in Spain. It facilitates the procedure, recognition and enforcement in Spain, and has effects in all EU countries.
It is an ideal process to claim a debt quickly and efficiently, that is why it is necessary to have lawyers specialized in debt collection.
Generally, court fees will have to be paid, although these will be recovered as soon as the claim is successful. Form translation costs may also be recovered, if any.
To start the large claims process, you will have to fill out and submit the claim. The competent court shall send a copy to the defendant. Once the response of the defendant has been received, the competent body will issue a judgment, summon the parties to an oral hearing or request more information.
The European order for payment procedure
It allows claiming debt in Europe in civil or commercial proceedings when one of the parties has residence in the European Union. Like the national homonymous procedure, it requires that the debt be enforceable, and will entail the issuance of a European order for payment within 30 days. The defendant may choose between paying the plaintiff the amount claimed or opposing it within a period of 30 days.
Like the European small claims process, this procedure gives rise to an executive injunction, with direct effectiveness in any Member State of the European Union. In other words, the homologation of the European payment order will not be necessary to urge its recognition and execution.
The European Account Preservation Order
It is an instrument that allows the European Union company that has to claim money in Spain to request the freezing of the bank account of the debtor company. Communication to the debtor is not required, which helps prevent an uprising or concealment of assets.
The European Account Preservation Order can be used against companies in any EU Member State, except Denmark, and can be applied for online.
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