Credit recovery activity
“Debt recovery” is an activity that aims to obtain the payment of a credit (total or partial), both when the debtor refuses to honor him, and when he is in a situation of temporary difficulty in fulfilling his obligation.
In any case, before embarking on the judicial procedure (court case with consequent burden of charges, costs and time), in most cases (see for example, condominium credit), an attempt is made to resolve the problem in a “good-natured” way by obtaining even partial fulfillment within a reasonable time.
The credit recovery activity is divided into 2 different phases:
- Out-of-court phase
- Judicial Phase
Debt recovery – Out-of-court phase
Already in this “out-of-court” phase, the Institutes and the financial institutions (from the big ones like OneCash, to an Agos, Compass, etc.) make use of the services of the debt collection companies or a law firm (better to choose those with local presence the which does not represent a problem for large cities such as Milan or Rome), which will attempt to agree a repayment plan with the debtor through letters, telephone reminders and, in some cases, direct contacts through officials.
In general, debt collection companies operate according to a very specific scheme:
- Epistolary reminder: there are different degrees, which also herald different levels of gravity. First a letter is normally sent that alerts the debtor of the situation, which discloses the risk of passing to a subsequent phase of intervention, and which requires the debtor to pay the amount due (indicating the capital, interest and major charges). Generally it takes 15 days from receipt of the letter to be able to proceed with the payment, or to oppose the request (see also Warning to fulfill). It can follow another correspondence, where the tone changes, we talk about “payment notice” and we inform you that the procedure will be entrusted to an office in charge of debt collection. In this case the timeframe for paying or objecting is 7 days on average.
- Telephone reminder: the telephone operator in charge of the procedure provides for making telephone payment reminders (including by fax and / or e-mail), trying to resolve any disputes. The times of the calls should take place within the time slots of the only non-holiday days, from 8.30 am to 9.30 pm (Saturday only by 3.00 pm). We must therefore pay attention to the timetables.
- Direct collection: the Credit Protection Agents (their names must be communicated to the competent Police Headquarters), through the “physical” contact with the debtor, examine the real situation (if it is a deliberate refusal to honor the commitments or if, despite being unable to perform, the debtor is willing to cooperate), verify the feasibility of recovery and try to agree on a repayment plan, even partial or in installments.
- Formal notice: it is the first formal step to attempt credit recovery: by means of a last registered letter with return receipt the debtor is ordered to pay the amount due within a fixed period, after which it is possible to initiate the legal action with the charge of all the major expenses incurred.
Do you have problems with debt collection companies?
Letter credit recovery
The minimum requirements of the letter are: -date of the letter, -cause of credit (eg contract, invoice, etc.), -date in which the credit arose, -account total amount, -a reasonable period to fulfill (usually 15 days).
Egr. Sig…… (Dear Company……)
in reference to the contract nr ……………… relating to (indicate what it is: service supply / lease) stipulated on …………………, with this we request the payment of the invoice (rental fee nr …… ………… expired on ……………………….
As of today, there is a failure to pay USD ……………………….., (specify the reasons for which payment is requested in the most detailed way possible), despite the various attempts made to obtain the payment of the amount due. In the absence of your reply, within 15 days of receipt of this reminder letter, the procedure will be entrusted to (recovery company, law firm, etc.) so that it fulfills all the formalities necessary to be able to obtain payment of the amount due (plus of expenses, interests, etc.).
This reminder is valid for all legal purposes as a formal formal notice, pursuant to art. 1219 cc.
As is the case for debt collection from work, if the letter is signed by a law firm, the debtor (even in the case of the employer) will be more inclined to take the content into consideration.
In the event that the recovery in a “good-natured” way does not lead to any result, it will be possible to carry out economic / patrimonial assessments to evaluate the opportunity to start the legal action.
Similarly, if an agreement is reached and the debtor is available for payment – immediate or in installments – the Law Firm or the Recovery Company will do the necessary to protect the creditor and ensure compliance with the agreements made (for example in the in the event that additional time is granted, the agreement with the debtor could consist in the provision of greater guarantees such as: credit instruments, pledges, mortgages, etc.); also in this case it will be possible to carry out economic / financial assessments to verify the real economic conditions of the debtor.
Debt recovery – Judicial phase
The appeal to the court is the last way to go when the out-of-court phase (which allows to reduce time and costs) does not produce any result; PRINCIPAL OBJECTIVE: to obtain an enforceable title, or the deed or document on the basis of which it is possible to initiate forced execution on the debtor’s assets (eg: the car, the house, sums of money, the assets of the company, etc.).
Generally, the legal action is undertaken after verification of the successful outcome of the forced recovery of the credit, or only when, following the economic / patrimonial assessments carried out in the out-of-court phase, sufficient capital emerges to cover the outstanding credit (the possession of distraining assets).
The lack of distraught assets usually makes it “inconvenient” to initiate legal action, also because in the event of a negative outcome, the creditor will bear the legal fees. Only in the case of large credits could it be useful to proceed with the legal action, for the sole purpose of deducting the unpaid credits (this end can be pursued also through the assignment of the credit ).
Depending on the case, the creditor can act in different ways to enforce his rights:
1. Appeal for injunction
2. Precept on Securities
3. Attachment of assets
4. Conservative seizure
1- Appeal for injunction
If the creditor is in possession of documentary evidence attesting his right, our system provides for a summary procedure that allows us to obtain, in a short time, an enforceable title. To start this procedure it is necessary that the credit is: – certain (existing, or proven by documents such as: contract, invoices, accompanying notes, authentic VAT register excerpt etc.); liquid (certainly in its amount); payable (not subject to term or condition).
In the event that such conditions are not met or if an enforceable instrument (which allows you to act immediately with a writ of execution) is not already available, it will be necessary to act in the ordinary way (with a summons) always in order to obtain an enforceable title, but with a significant extension of the times.
2- Precept on titles
If the creditor is already in possession of enforceable securities (eg bills of exchange or protested checks) he will be able to take immediate action to obtain forced execution on the debtor’s assets; in other cases, enforcement may be carried out only by virtue of enforceable titles established by sentence or other measures.
With the injunction, the creditor instructs the debtor to fulfill the obligation resulting from the enforcement order within a period of not less than 10 days. In the event of non-payment within the stipulated deadline, the creditor has the right to ask the judicial officer to attach all the debtor’s assets until his credit is fully satisfied.
3- Attachment of assets
The attachment has the function of binding the assets to be subjected to forced execution and consists of an injunction that the judicial officer has the debtor to abstain from any act aimed at subtracting the assets object of the expropriation from the guarantee of the credit and the fruits of them.
With the attachment, therefore, the executive process begins, aimed at forcibly removing from the debtor certain (seizable) assets forming part of its assets and converting them into money, in order to fully satisfy the creditor.
4- Conservation seizure
Preservation is a precautionary measure aimed at guaranteeing credit, when there is a danger or well-founded fear of losing the guarantee (eg when it is assumed that the debtor can “hide” the assets subject to attachment, taking advantage of the slowness of the ordinary procedure).
Therefore, even before starting the legal action for the recovery of debts, it is possible to legally bind the debtor’s assets to then convert, subsequently (with the obtaining of the sentence of executive sentence), the attachment in attachment.
The conditions for the granting of the attachment are: – the reasonable appearance of the right (ie, existence of the credit); – the danger or well-founded fear of losing the credit guarantee.
In general, in the event that the debtor is a commercial entrepreneur and is in a state of insolvency it is possible to activate the bankruptcy bankruptcy procedure.
This procedure is aimed at coercively and equally achieving the rights of creditors, through the liquidation of the assets present in the debtor’s assets.
As for the two requisites, the quality of entrepreneur implies that they are excluded from the bankruptcy procedure: small entrepreneurs, agricultural entrepreneurs, public bodies (for which compulsory administrative liquidation is envisaged), and large companies in crisis (for which the extraordinary administration). Finally, insolvency means that the debtor is no longer able to meet his obligations regularly, and can be proved eg. through a repeated series of protest protests, a report of attachment with a negative outcome (eg due to lack of distraining assets), etc. The important thing is that the debtor is unable to prove his ability to repay even through a repayment plan.
With the judgment declaring bankruptcy the debtor is deprived of his assets (with some exceptions: checks of a food nature, strictly personal property and rights, etc.) that are submitted to the administration of the bankruptcy trustee, who draws up the inventory and provides for the their liquidation.