Debt Collection Agency Portugal
Amicable Debt Collections Portugal
1. General information
Once we have tried all amicable recovery actions (e.g. sending letters by mail to the debtor along with a fax, phone calls and emails) and it was not possible to collect the debt within 30 days, we will analyse whether it would be viable to file a lawsuit.
In that event, the case will be sent to a lawyer.
1.2. Local agents
At the present time, we are using our external lawyers’ service for visiting debtors in Portugal. Lawyers’ fees depend on the recovered amount, with a percentage fixed by contract applied.
We always need a prior approval from the client to entrust their case to a lawyer.
In amicable recovery, it is difficult to collect costs and interest from debtors. Should these costs be established in the client’s general conditions of sale (GCS), we will have a better chance of claiming them.
In the amicable phase, we can settle an agreement with or without interest, depending on the payment plan in place.
In legal proceedings, there is always interest to claim. Currently the interest rate is set at 8%.
1.4. Debt Collection Costs Portugal
Concerning the costs that the creditor can charge to the debtor, it is an indemnity no lower than EUR 200 for internal administrative collection costs, in spite of the right to prove other reasonable costs.
According to Portuguese law, there are two prescription periods regarding invoices covering the supply of goods: An ordinary delay, which is 20 years (article 309 of the Civil Code) A delay of two years, which only applies to the traders’ credits resulting from goods sold to non-traders (article of the Civil Code).
1.6. Accepted and most common payment methods
Bank transfers to our bank account or our client’s bank account Cheques addressed to us or our client.
1.7. Types of companies
Sociedade Anónima or S.A.
The minimum corporate capital for these types of companies is EUR 50,000. Sociedade por Quotas or Lda In this case, the minimum capital is EUR 5,000.
1.8. Sources of information
In Portugal, we have access to Cosmopolite Crédito y Caución CCC) database, the credit insurance company of the group, and to our business information partner´s database, IBERINFORM, that include financial reports and risk evaluations of Spanish and Portuguese companies.
Using information from these reports, together with our own information (e.g. credit reports), we can get an accurate view of the debtor’s financial situation and advise on the next step of the process.
The information contained in these reports includes the official accounts in the recent years (P&L) that companies have to present annually, including volumes of sales, incomes and the likes.
After checking all the information, we advise on next steps and write a final report with a summary of all our efforts.
At this moment, if the traced debtor has a solvent company, has assets and is still open and trading, we will study the viability of legal action as the last resource.
2. Retention of title
According to the Portuguese civil code (Art. 409 – ‘Reserva de Propriedade’), it is possible to reserve the legal ownership of the goods to the supplier if the ownership is associated with a particular service or good – usually, the full payment of the goods in question – by incorporating in the contract a retention of title clause.
To be valid, such a clause has to be put down in writing and be expressly accepted by the buyer. If the buyer has not definitively accepted it, the clause may be disputed by the buyer, even at a legal level.
However, if the contract’s purpose is something subject to a registration (e.g. land or real estate), the retention of title clause will also have to be registered to be effectively enforceable against third parties.
Legally, the supplier, having sold goods with retention of title, is protected against the legal measures that may come to affect them. Such is the case in the executive or insolvency proceedings.
3. Safeguarding measures
In the scope of negotiations, we will always try to obtain a private document signed by the debtor recognising the debt.
The document can be signed by a notary, but normally this is not done due to the high costs for both parties; although it could be carried out in case of high amounts or per client’s request.
The main advantage of the document signed by the debtor is that it can be used in a future legal claim as proof.
Debtors are able to offer another form of security, such as mortgages, assignments of debts or bank guarantees.
4. Legal Debt Collections Portugal
4.1. General information
Through our lawyers´ network, we establish whether it is advisable to start legal proceedings. We evaluate if the cost is effective given the amount of the debt, compared to the amount of costs and time. We will assess the debtor’s solvency and activity. If the debtor is not trading nor has any assets, it makes no sense to prepare for possible legal action.
4.2. Required documents
In order to apply the legal proceedings, we need: A power of attorney Copies of Invoices CMR or any other documents that prove the merchandise or service delivery to the buyer Original cheques or bills of exchange issued by the debtor Any document signed by the debtor, in which the debtor acknowledges the debt Any other documentation shared between the parties.
Once it is decided to start legal proceedings, we will determine what kind of legal proceedings it should be adequate to claim the debt. There are two types: ‘ Injunção’ (simple claim) – This kind of legal proceedings is used for undisputed debts, as it is faster and less expensive. ‘Injunções’ are for claims up to a maximum of EUR 15,000. ‘ Acção Declarativa’ (claim) – We use this legal proceedings when we expect strong opposition from the debtor, and, if the court issues a favourable judgment, we can execute with collection costs. In order to start legal action, a draft of a power of attorney will be prepared to be signed by the client. A notary’s involvement is not required in Portugal, but the document needs to be signed by the client and printed on headed paper.
If a party disagrees with a judgment, they have the right to lodge an appeal to the immediate superior court. The most common appeal in Portugal is ‘Recurso de Apelação’ (676 Civil Procedure Code), which must be lodged within ten days from the notification of the original judgment.
4.5. Expected time frame
The average duration of a legal process depends on the kind of procedure and if the case is in the first instance or second. The ‘Injunção’ proceeding takes about three months. The ‘Acção Declarativa’ proceeding, can take more than a year to obtain the court’s judgment.
4.6. Interest and costs in the legal phase
Costs of the civil law procedure (court costs) are determined by the court and are not subject to any negotiation. All costs depend on the outstanding principal amount and are calculated based on percentages.
There is a range of different fees that can apply during the proceedings, dependent on the outstanding amount and a range of fees for each action.
This makes it difficult to predict the total cost. Costs of witnesses and experts may also arise, especially when there is a dispute.
A cost estimation can be provided on a case-bycase basis should legal action becomes necessary. In legal proceedings, interest will always be claimed.
5. Insolvency proceedings
5.1. General information
Whoever has a credit against the debtor (included their own debtors), may file for their insolvency, arguing that the debtor is in a situation not allowing them to pay their overdue obligations (providing relevant proof afterwards).
To prove a credit against the debtor, the applicant may provide invoices arguing default, unpaid bills of exchange or cheques.
The aim of the insolvency proceedings is to pay out all creditors with the same percentage of the debt value by liquidating the assets of the debtor company or collecting the enforceable income from the individual who is declared bankrupt.
Once the debtor has applied for insolvency and we know the insolvency proceedings’ data, we usually prepare a draft of the writ that our client must complete, sign and send to the practitioner or the court.
We send this writ by mail to our client with instructions on how to lodge their credit. In the event that the client wants us to lodge their credit, a specific power will have to be issued to enable us to act on behalf of the client in the insolvency proceedings.
In Portugal, there are 30 days after the official publication in the Official States Bulletin to lodge credits.
They will be included in the general list of creditors in the time frame established by law. Once the practitioner receives all claimed credits, they must present a payment plan that should establish the renegotiation of the principal with the unsecured creditors, the period over which the payments will be made and support requests from the unsecured creditors (suppliers), amongst other matters.
After that, a creditors’ meeting will deliberate on keeping the company in business, suspending the liquidation, keeping the company’s present management in office, and demanding the debtor to put forward an insolvency plan.
Proceedings take a long time, and normally creditors do not get paid from this kind of proceedings (it could be 40% for approximately seven to eight years). Of course, the proposal offered to the creditors will not start to be paid until two years after the termination of the legal proceedings, which means that the total time span could be ten years.
Processo de Revitalização (PER) PER is a special refinancing process to help companies with financial problems. Since its official publication by the court, creditors will have 20 days to communicate their credits.
A two-month (extensible to three) period will be open to negotiate an agreement to help the company’s financial restructuring. During this period, all other processes (lawsuits or insolvency requests) will be paralysed.
They will be activated again when PER ends. Negotiations can conclude with the approval or not of a recovery plan.
The process can also end due to the debtor not being able to reach an agreement, or because the three months for negotiations are exceeded without an agreement.
In these last two situations, the closure of PER will imply the debtor´s insolvency declaration within three days since the communication of the end of the negotiations.
5.3. Required documents
In order to lodge a claim on behalf of our client, we need:
-A power of attorney
-Copies of invoices
-Updated statement account of the debt
-Any document signed by the debtor, in which the debtor acknowledges the debt.
5.4. Expected time frame and outcome
The deadline to lodge claims after the publication in the Official State Gazette is one month.
The whole duration of an insolvency proceeding is between two and ten years.