Debt Collection Agency Brazil: Navigating Recuperação Judicial & the STJ
Debt Collection Agency Brazil: Latin America’s Largest Economy, Longest Courts
The Brazilian Paradox
Brazil is the world’s 8th-largest economy and Latin America’s dominant commercial market. It’s also one of the most challenging jurisdictions for debt collection. Brazilian courts are notoriously slow — average resolution time for commercial claims: 2-4 years in state courts, with appeals potentially doubling that timeline. Yet Brazil offers creditors powerful pre-judgment tools that, when deployed correctly, produce amicable settlements in 60-70% of cases without ever reaching trial.
The paradox: the very slowness of Brazilian courts becomes the creditor’s leverage. The debtor knows that once litigation begins, their assets may be frozen for years while the case crawls through the system. This knowledge — combined with professional collection pressure — drives settlements.
The Collection Process
Notificação extrajudicial (extrajudicial notice). A formal demand issued through a Cartório de Títulos e Documentos (notary office) creates official proof of the demand. This is not merely a letter — it’s a legally registered document that establishes the creditor’s formal attempt to collect and strengthens the subsequent court case.
Protesto (public protest). The creditor can “protest” the unpaid title (invoice, promissory note, duplicata) at the Cartório de Protesto. The debtor is publicly registered as a defaulter — affecting their commercial credit rating (Serasa, SPC) and ability to obtain financing. For Brazilian companies dependent on bank credit lines, protesto is devastating and often produces immediate payment.
Ação de execução (execution action). For títulos executivos (enforceable titles — duplicatas, cheques, promissory notes), the creditor can file directly for execution under the Código de Processo Civil (CPC), skipping the ordinary knowledge phase. The court can order penhora online (electronic asset seizure) via the BACENJUD system, freezing the debtor’s bank accounts across all Brazilian financial institutions simultaneously.
Recuperação Judicial
Brazil’s recuperação judicial (judicial recovery — similar to US Chapter 11) is increasingly used by companies facing collection pressure. When granted, it imposes an automatic stay on all collection actions for 180 days. The creditor must then negotiate within the recovery plan framework. Identifying the early warning signs of recuperação judicial filing — and accelerating collection before the filing — is critical.
Key Parameters
Statute of limitations: 5 years for most commercial claims (Article 206, §5 of the Código Civil).
BACENJUD: Brazil’s electronic judicial seizure system is unique — one court order freezes all the debtor’s accounts nationwide. No other Latin American country has an equivalent.
Brazil’s complexity rewards creditors who work with agencies that understand both the amicable tools (protesto, notificação) and the judicial system (execução, BACENJUD). Speed matters — acting before the debtor files for recuperação judicial is often the difference between recovery and write-off.
