Debt Collection Agency Chile
Amicable Debt Collections Chile
1. General information
We provide debt collection services following a rigorous selection process in order to meet our clients´ needs. Our local partners carry out the collection process in-house, adhering to federal and state laws.
1.2. Local agents
We offer strategic and competitive services. We work with a range of selected partners to supplement our local knowledge and expertise. Together, we form part of the Cosmopolite Group. Our local partners are located in Santiago. They do not usually offer a visit service to debtors’ premises. In case the debtors wish to visit our office, we will gladly meet them to discuss possible solutions for your case face to face. In addition, concerning payment methods, cheques are still very useful in Chile to pay debts, since they allow companies to schedule the payment dates to 30, 60 and 90 days.
Generally, in the amicable phase, interest is charged to debtors. However, the percentage can be negotiated. Interest is daily and it can vary according to the table that comes from the SBIF (Superintendency of Banks and Financial Institutions).
1.4. Debt collection costs
In Chile, debt collection costs are charged to debtors at the end of the process, especially in the last instalment. From a cultural perspective, Chilean debtors are used to paying debt collection costs, though often the actual amount of these costs is considered a matter of negotiation.
2. Legal collections
2.1. General information
Legal action is taken when all approaches have been exhausted in the amicable phase. This legal process starts after the debt’s expiration. The legal proceedings have a first phase regarding negotiations that is generally short. The lawyer negotiates with the debtor in order to try to reach an agreement. In case an agreement is not reached, the lawyer verifies whether the debtor has properties on their behalf, in order to confirm if there is any condition for these properties to be taken legally on behalf of the client.
2.2. Required documents
In order to start the legal collection process, the required documents are:
-Original invoices or promissory notes
-An actual and clear statement of account, indicating payments and credit notes
-Original bills of lading
-A power of attorney with an apostille.
As soon as the debt is paid with the interest and extra costs, the legal proceedings are ended.
2.3. Legal dunning procedure
The legal dunning procedure comes before a lawsuit. However, there are no costs involved, and it becomes more attractive and profitable to both parties. Regarding the Civil Procedure Code, this procedure is only applicable for monetary debts. Precautionary measures can be granted by the court either before the trial or during the trial, when there are grave and qualified motives to believe that the defendant may be in serious danger of being unable to fulfil their obligations if they are defeated.
Chile follow a Civil Law System and there are two debt collection court proceedings: Ordinary debt collection Executive legal suit. The executive legal suit is supported by an expedient claim title and an executive title, which means that the documents need to follow certain formalities. In the absence of such titles, the creditor must resort to an ordinary proceeding.
2.5. Debt collection costs
All costs depend on the outstanding principal amount and are calculated proportionally. There are different fees depending on the applicable procedures, so cost estimations will be provided on a case-by-case basis should legal action becomes necessary.
2.6. Expected time frame
The average duration of legal proceedings depends on the complexity of the case, but we can consider five years for ordinary debts and between one and three years for the execution procedure.
2.7. Interest and costs in the legal phase
Interest and costs in the legal phase follow the same parameters as those established for amicable collections, such as 7% to 8% of the claim, and can be claimed as part of the outstanding debt during the legal proceedings. The general rule states that the losing party is liable for lawyers’ fees and costs. Nevertheless, in practice, the courts determine the amount that the losing party must pay, which is just a fraction of the actual legal fees and costs.
3. Insolvency proceedings
3.1. General information
The Bankruptcy Act allows the debtor and their creditors to come to a formal rescue agreement to avoid potential bankruptcy. These agreements can provide for either a bankruptcy pre-emption process or a bankruptcy release process. Through Chile’s rules, there is a possibility for the debtor to establish negotiations in order to evaluate their behaviour. The debtor can also make suggestions for partnership before the insolvency declaration, since they are not considered to be blamed for some criminal action.
As soon as the bankruptcy is declared, individual debt collection actions and all pending legal actions are suspended. In exceptional cases, certain secured creditors may pursue individual debt collection procedures even after the bankruptcy declaration. In particular, for mortgage or pledge creditors, individual debt collection actions may continue or be commenced under certain conditions in order to liquidate the assets in question and to obtain payment from the liquidation proceeds.
In general, within a bankruptcy, the following sequence of events takes place:
-A bankruptcy petition (voluntary or involuntary) is filed.
-The court declares bankruptcy.
-The automatic stay takes effect (individual collection actions are stopped).
-The creditors of the bankruptcy are notified.
-An interim trustee or receiver is appointed.
-The debtor files schedules of assets and debts.
-The creditors hold the first meeting and confirm or elect the permanent trustee or receiver.
-The creditors file their claims for verification.
-The trustee or receiver determines which property is subject to liquidation.
-The trustee or receiver liquidates the assets included in the bankruptcy.
-The trustee or receiver distributes the proceeds of the liquidation.
The receiver must apply the funds available to pay the creditors in accordance with the applicable statutory priority according to the five categories of claims specifically listed in the Civil Code.
-The court closes the case after two years since the approval of the trustee’s final account, provided that the debtor has acted in good faith.
3.3. Required documents
In order to lodge a claim, we need:
-An original power of attorney (with an apostille if granted outside of Chile)
-Copies of orders, order confirmations and delivery notes
-Original general conditions of sale, if there are any.
-The power of attorney, which represents the client, must be written or translated by a public translator to the local language (Spanish), granted before a notary and legalised by an apostille.
3.4. Expected time frame and outcome
The deadline to lodge claims ranges from one to two months, depending on the complexity of the procedure, and starts from the bankruptcy petition (voluntary or involuntary). The average duration of liquidation is between two and three years. The whole duration of the insolvency proceedings is between three and six years.