Debt Collection Agency Italy
Amicable Debt Collections Italy
1. General information
Cosmopolite Collections maintain a professional collection process, focusing on the relationships between our clients and their debtors at all times. Our team of collection specialists carry out the collection process in-house, contacting debtors both verbally and in writing whilst adhering to federal and state laws.
When there is a case of dispute, we aim to reach an amicable solution between the creditor and the debtor.
We do this by analysing all contractual documents (e.g. signed contracts, orders, confirmations, invoices and delivery notes, as well as all standard terms that have been agreed upon).
All investigations are completed with the assistance and agreement of our legal team.
1.2. Local agents
Cosmopolite Collections can perform direct collection activities. This is managed by a selected network of local agents, who can visit debtors across the country in order to collect monies.
This solution has proven to be successful for medium to small amounts, for individual sole traders, shops and small companies, and particularly in sectors such as food, textiles, clothes and shoes.
The local agents’ network can also investigate locally in order to search for an untraceable debtor.
Cosmopolite Collections always charge interest to debtors at 8% on a daily basis.
The European Directive 2000/35/CE, implemented in Italy with D. Lgs on 9th October 2002, n. , has been updated by the European Directive 2011/7/ EU on 16th February 2011 and implemented by Italy, modifying the previous D. Lgs /2002 by the D. Lgs on 9th November 2012, n. 192. Interest is always requested at both the amicable and judicial phases.
From a cultural point of view, Italian debtors very rarely agree to pay late payment interest, and it is often used as a negotiation tool between debtors and collectors.
Often, they tolerate some delay in the payment of invoices (particularly in sectors such as clothes, shoes and food).
1.4. Debt collection costs Italy
Due to contract laws, the collection convention between Cosmopolite Collections and the creditor must be signed, so that another person cannot be linked to the tariff.
The law allows us to request collection costs, but if we do so without specifying the amount, including the legal tariff of lawyers, it is not seen as valid.
There are strong cultural obstacles against paying for collection costs, and we cannot claim them back in court as there is no jurisprudence for us to do so.
The prescription period of a credit is ten years (article 2946 of the Civil Code), which can be interrupted by the creditor notifying the debtor about the interruption of the prescription and asking for payment.
Once this has been received, the period of prescription would be calculated again. For shipping contracts or contracts of carriage, the prescription period is one year, and for transport contracts from a non-European country, the prescription period is 18 months.
1.6. Accepted and most common payment methods
The most common payment methods are bank transfers andcheques. Cosmopolite Collections will also accept drafts issueddirectly by the debtors, but not from a third party.
1.7. Types of companies
In Italy, there are two main types of companies: partnerships and capital companies.
The partnerships are:
- Società in nome collettivo (S.n.c) Unlimited liability of partners
Has to be registered in the ordinary section of the Registro delle Imprese.
- Società Semplice (S.s.) Unlimited liability of partners
Has to be registered in the special section of the Registro delle Imprese.
- Società in accomandita semplice (S.a.s) Unlimited liability of only the declared unlimited partners (‘socio accomandatario’)
Has to be registered in the ordinary section of the Registro delle Imprese.
The capital companies are:
- Società a responsabilità limitata (S.r.l) A minimum capital of EUR 10,000 Registered at the Registro delle Imprese Limited liability of partners.
- Società di capitali (S.p.a) A subscribed minimum capital of EUR 50,000 Registered at the Registro delle Imprese Limited liability of partners.
- Società in accomandita per azioni (S.a.p.a) Registered at the Registro delle imprese Limited liability of partners (‘soci accomandanti’) Unlimited liability of partners (‘soci accomandatari’) A minimum capital of EUR 50,000.
For an individual company, the owner is a person that has unlimited liability for the debts incurred and is a minor entrepreneur, craftsman or farmer.
1.8. Sources of information
Cosmopolite Collections can evaluate the solvency of debtors and the financial situation of companies. To investigate in a more accurate way, we can add some extra services for our clients, such as bank account research, officially booked goods research (vehicles, crafts, etc.), estate research and estimation in the public registers. All these elements can help create a clear picture of the debtor’s situation, and so we can advise on the best way to collect the money.
In order to trace a debtor, we check the information registered at the Chamber of Commerce and we can ask for a certificate at the Town Council.
We can also entrust the local agents of our network to investigate locally. At the Chamber of Commerce, we can obtain all information referring to the company, such as the legal form, the legal address, the names of the shareholders and the status of insolvency.
2. Safeguarding measures
During the amicable phase, it is very important that we have the acknowledgement of debt signed by the debtor, because this allows the creditor to obtain an injunction decree with provisional enforcement.
Another possibility is to ask the debtor to issue a title (cheque or draft) when we agree on a payment plan.
If the title is protested, Cosmopolite Collections can start legal action and avoid the first phase of the action (injunction decree), reducing time and costs.
We can also obtain a debtor mortgage, registered through a contract with a notary, if we have found out about the debtor’s real estate.
3. Legal collections Italy
3.1. General information
Cosmopolite Collections can supply a professional network of experienced law firms in Italy to perform judicial credit collection activities.
This network covers all of the country and is able to manage legal action in all court districts. Our lawyer will first send a warning letter (‘Lettera Monitoria’) to the debtor via registered post, so there is proof of delivery, or via certified email address (pec).
If the debtor does not pay or reply, thereby disputing the debt, the judicial phase will start with the injunction decree (‘Decreto ingiuntivo’).
3.2. Legal system
The Italian judicial system adheres to a civil law system. For credit collections, Cosmopolite Collections refer to the Italian Civil Code (‘Codice Civile’), which contains and implements all the rules of commercial law, and Civil Action Code (‘Codice di procedura Civile’) which governs civil trials in Italy.
The judicial organisation foresees several kinds of judges, according to the amount of credit involved:
- Justice of the Peace (for an amount below EUR 5,000)
- Tribunal (for an amount above EUR 5,000)
Traditionally, any legal action starts in the court district of the debtor or in the court district foreseen in the agreement signed by both parties. Ordinary civil action is rarely used to collect credit founded on a written document such as an invoice.
The civil actions are very long and can last for several years. It is also expensive due to the lawyers’ fees, witness examinations and evidence analysis involved in the case.
The main purpose of the ordinary civil action is to determine the existence of the credit that is due and the relations between the parties. If the credit is based on written documents, the law allows us to use a faster and less expensive procedure called the summary judgment (‘Decreto ingiuntivo’), which requires only limited intervention from a judge unless the debtor opposes the petition.
These are the most common ways of collecting credit in court.
3.3. Required documents
In order to start legal action, the documents Cosmopolite Collections need are:
- Readable copies of unpaid invoices
- Readable copies of transport documents signed by the debtor (CMR)
- If there are no CMR documents signed by the debtor, we need an abstract from the accountancy book authenticated by a notary
- An original power of attorney, enclosed in the petition and signed by the legal representative of the creditor.
3.4. Lawsuit In Italy
The D.L. n. 90/2014, converted into law n. 114/2014, establishes that from 30th June 2014, it is mandatory to start legal action by filing all documents online, including petitions for an injunction decree (‘Decreto ingiuntivo telematico’).
So, the lawyers will have to send the documents (copies of unpaid invoices, copies of delivery notes, a power of attorney signed by the legal representative of the creditor) to the court from a certified email address to the certified email address of the Chancery.
In this way, the lawyers can send documents at any time because there are no office opening hours online and the system is always working.
The advantages of this new procedure are:
- A reduction in the waiting time for the issue of the decree (from four to five months to 15–30 days)
- A reduction in the activities undertaken by the associated law firm A reduction in legal costs.
The D.L. n. 90/2014, converted into law n. 114/2014, establishes that:
- It is mandatory to file online from 30th June 2014 any act concerning the procedure of the injunction decree and any act in the civil procedures, such as execution on movable property and immovable property, bankruptcy and insolvency procedures It is mandatory to file online from 30th June 2015 any petition on appeal.
This new procedure cannot be applied to legal action handled by the Justice of the Peace with an amount below EUR 5,000.
This has to be filed in the Chancery together with all the enclosed documents as evidence. The judge examines the petition, and, if in agreement, an injunction decree is issued. The duration of the issue has been reduced from four to five months to 15–30 days.
When the injunction decree is issued, it has to be notified to the debtor’s last known address within 60 days from the issue of the decree. Upon receiving the decree, the debtor has 40 days to oppose it; and if the debtor files for opposition, the civil trial starts.
It is a very long process, as phases required by the Italian Code must be followed so that the judge can issue a judgment. When no opposition is raised, the decree becomes executive, and the creditor can claim an attachment of goods from the debtor. The executive seal is added to the decree and the Chancery will issue a writ of execution (‘Precetto’). Both documents have to be notified to the debtor.
The creditor has to start forced execution within 90 days (‘pignoramento’). If the debtor does not pay or oppose the debt within ten days after receiving the decree, the lawyer will bring in an executive injunction decree – an order of injunction to pay – and proof of the notification to a bailiff.
If the creditor has unpaid cheques or promissory notes, they can start directly with the writ of execution. If the debtor opposes the injunction decree or the writ of execution, the summary judgment is suspended and an ordinary civil action takes place.
The creditor has to answer to the opposition with a proper statement of defence (‘comparsa di costituzione e risposta’). During the first hearing, the judge will evaluate the statements of both parties and the documents. The judge can decide to declare the temporary execution of the injunction opposed (‘provvisoria esecuzione’), and the summary judgment process will start again with the next steps (writ of execution, attachment, etc.), while the civil action takes place in parallel.
When the creditor receives a temporary execution from the judge, they have almost won the legal action, and the ordinary civil action will end shortly afterwards.
An appeal against an ordinary civil action can be filed to the court in the area of jurisdiction where the judge who issued the judgment resides or to the Supreme Court.
In the case of notification of the judgment, it is possible to file an appeal within 30 days from the notification (short-term). If there is no notification of the judgment, the term is six months from the issue date of the judgment (long-term).
3.6. Debt collection costs Italy
All costs are dependent on the outstanding principal amount and are calculated taking into account the amounts kept by each party.
There are different fees that can apply during the proceedings, which makes it difficult to predict the total costs. In addition to this, costs of witnesses and/or experts might also arise.
3.7. Expected time frame
The average duration of legal action in Italy is 10–12 months, whereas an ordinary civil action can take two to three years depending on the complexity of the case.
3.8. Interest and costs in the legal phase
The injunction decree has to mention the amount of the credit to collect, the interest (calculated on the basis of D. Lgs. 9th October 2002 n. ) and the legal fees (calculated on the basis of different ranges).
When the petition is notified to the debtor, the debtor is ordered to pay the total amount mentioned. During the ordinary civil action, the party who loses the judgment is condemned to pay the costs of the legal proceedings (article 91 of the Civil Action Code).
4.1. Enforcement in debt
The enforcement in debt requires an act of the creditor to be signed by the bailiff, who will notify the debtor and any third party. This document has to confirm the details of the creditor and the credit, the list of goods or monies subjected to the enforcement (the debtor cannot dispose of them) and the domicile election of the creditor in the city of the court.
The enforcement can refer to different types of credits, such as bank accounts, goods located at a third party and, on the basis of limits fixed by the law, any salary and retirement pension.
4.2. Enforcement in movable property
The bailiff visits the debtor’s address to find out if any property can be seized.
It is foreseen by the law that:
- The execution cannot be made against certain property (unseizable goods)
- The bailiff can visit the debtor only during the time fixed by law, i.e. between 7.00am and 9.00pm
- The bailiff cannot proceed during holiday periods The property that can be taken by the bailiff and given to the registrar (clerk of the court) are money, jewellery and credits.
Other goods must be given to the official receiver The costs are fixed and depend on the value of the goods found by the bailiff.
4.3. Enforcement in immovable property
Before proceeding with the enforcement in immovable property, the debtor’s real estate should be valued, because this procedure is very long and expensive.
The enforcement in immovable property consists of a notification and recording to the debtor of a document that contains the immovable property and rights submitted at the execution.
After the notification, the bailiff gives the original copy of the document to the land registrar for registration. After ten days from the execution, the creditor can ask for the sale of the immovable property.
4.4. Expected time frame
For the enforcement in movable property, the duration of the procedure depends on how many auction sales the judge feels are necessary to sell the property.
The enforcement in immovable property is a very expensive and time-consuming measure, often lasting several years.
Usually this procedure is used for large amounts, above EUR 100,000.
5. Insolvency proceedings
5.1. General information
On the basis of the elements required by law, insolvency proceedings can be started at the court nearest to the head office of the debtor, following the request filed by the debtor, creditors or the public prosecutor (‘ex officio’). The main types of insolvency proceedings in Italy are bankruptcy (‘fallimento’) and judicial composition with creditors (‘concordato preventivo’).
Cosmopolite Collections can analyse in detail the two main types of insolvency proceedings:
In Italy, not all debtors can be declared bankrupt. According to Italian law, small debtors such as individual shops and small-scale farmers cannot be declared bankrupt.
Neither can small owner-managed firms where the personal work outweighs the value of the goods involved. A creditor can ask for bankruptcy of the debtor if the credit is more than EUR 30,000, and the debtor has a minimum turnover of EUR 200,000.
The debtor should also not have been removed from the Chamber of Commerce for more than one year.
After the check of all petitions filed at the court within the term fixed, the debt situation will be fixed with a judge’s sentence, and the very long procedure of the liquidation of the bankrupt debtor’s assets can take place.
Composition with creditors
To avoid bankruptcy, the debtor can ask the court directly to be admitted to the insolvency proceedings. The debtor’s petition must include how much the debtor can pay to the creditors as a percentage of their debt.
On the basis of D.L. n. 83/2015, in case of Composition with Creditors (‘non in continuità aziendale’), it is foreseen that the debtor has to offer at least 20% to the unsecured creditors.
This offer has to be approved by the majority of the creditors (considering the amount of each credit) and should then be validated by the court.
After that, the insolvency practitioner starts to liquidate the assets according to the payment plan.
5.3. Required documents
In order to lodge a bankruptcy claim, Cosmopolite Collections needs:
- Readable copies of unpaid invoices
- Readable copies of transport documents signed by debtor (CMR)
- If there are no CMRs signed by the debtor, then an abstract from the accountancy book authenticated by a notary is required.
For the composition with creditors, we have to communicate to the insolvency practitioner the amount of the credit and file copies of any documents that prove the credit (e.g. invoices).
5.4. Expected time frame and outcome
For the bankruptcy procedure, the petition to lodge a claim can be: On-time (‘tempestiva’), filed at the court at least 30 days before the first hearing fixed by the court and checked during this hearing, or Late (‘tardiva’), filed at the court after the first term fixed but within 12 months since the filing of the enforcement decree for the statement of liabilities.
The average duration of a bankruptcy procedure is six to seven years. Regarding the composition with creditors, it is first necessary to communicate the amount of the credit to the insolvency practitioner.
Before the hearing is fixed for the creditors, each creditor has to vote (positive or negative) on the proposal after the hearing. After the validation by the court, the insolvency practitioner can start with the liquidation that will usually take two to three years.
5.5. Limited companies
The declaration of bankruptcy for a limited company has an effect only on the company and not on individual persons, as they are not responsible for their own goods and real estates.
5.6. Unlimited companies / individuals
Regarding unlimited companies, the partners are declared bankrupted by the judgment that declares the bankruptcy of the company.
The court proceeds to appoint one judge and one trustee. On the basis of the criteria foreseen by article n. 1 L.F., a minor entrepreneur cannot be declared bankrupt.
5.7. Pool of creditors
A pool of creditors is appointed by the judge within 30 days since the declaration of bankruptcy. The pool is composed of three to five creditors, who have to represent the quality and quantity of the credits in a balanced way.
The pool have to check the activities of the trustee, authorise the actions and give advice on the case foreseen by the law or after the request by the court or the judge.
The decisions have to be agreed by the majority within 15 days since the request.
On the basis of article 67 L.F., there are two groups of payments that can be disputed by the trustee:
- Payments made by the debtor to the creditor within one year prior to the declaration of bankruptcy where the creditor has to prove that they did not know the insolvency status of the debtor
- Other payments made by the debtor to the creditor within six months prior to the declaration of bankruptcy.
For these cases, the trustee has to prove that the creditor knew the insolvency status of the debtor. If the trustee disputes a payment, and it is one of the payments mentioned by the law, it has to be refunded by the creditor.
6. Arbitration and mediation
Besides the ordinary procedure, the creditor and the debtor have two other alternatives to solve a dispute: Arbitration (articles 806–840 c.p.c.).
The parties could agree to entrust the dispute to an arbitration hearing. An arbitration clause must be included explicitly in the contract (it must not be presumptive); otherwise, the competency of the arbitration may be called into question after the dispute.
The arbitration must be convenient for both parties, managed by arbitrators that both parties trust and be able to achieve a majority easily. Decisions taken by arbitrators (award) must pass the certification of the court in order to be effective between the parties.
It will always stay a private act, with the same effects as a judgment. Mediation (D.L. n. 28 on 4th March 2010, implementing law n. 60/2009, according to the European Directive 2008/52/CE)
The target is to drive parties to an agreement. In Italy, mediation was indicated by the law as a necessary step for some matters before starting a judgment (binding mediation).
It is optional for other kinds of matters (optional mediation) and necessary during some procedures in accordance with the order of the judge (judicial mediation). Mediation could be a convenient alternative because the whole proceeding should be concluded in three months.
The costs are lower than an ordinary proceeding and both parties are directly involved in the search for a satisfactory solution.
The agreement issued by successful mediation is as enforceable as that of a judgment. Arbitration and mediation are managed by specialised organisations, which are more flexible and place the utmost importance on finding possible solutions.