Debt collection in Spain: Five legal routes

Do you engage in commercial operations with Spanish companies and are currently facing challenges with receiving the payments they owe you? It can be frustrating to deal with continuous delays in receiving debts, especially when they often exceed 60 days. 

While legal debt collection might not be the preferred course of action, it can be quite helpful in many cases. In this guide, we will walk you through the different ways to efficiently collect debt in the shortest time possible.

(Updated August 2023 by Lexidy Admin)

Let´s dive into the various methods to claim outstanding debts in Spain. Before we get into that, lets first understand the legal framework in which invoices and receipts are paid:

• In Spain, the main regulation for the late payment of invoices and bills is called the “Ley 3/2004 contra la morosidad en las operaciones comerciales”.
• According to this law, the general term invoice expiration in commercial operations is 30 days (article 4).
• However, if your client is a public entity, the deadlines will be specified in the contractual relationship. In the absence of a specific clause, the general deadline for the Administration is 60 days.

Interestingly, despite these legally defined limits, private companies take an average of 89 days to pay according to the Informe sobre la Morosidad. The Federación Nacional de Trabajadores Autónomos (ATA) publishes this framework. This prolonged pay period happens due to the absence of a robust sanction regime in this area. Currently, the only penalty enforced is interest on arrears and roughly only 12% of cases claim it.

Now that we have defined the preliminary framework, let´s explore the different proceedings available for claiming outstanding amounts in Spain.

Pre-legal debt collection procedure

In handling debt collection, it´s always best to try and resolve the matter amicably before heading to court. The key is to find a solution that works for both parties to ensure the survival of the business relationship. That is why it is always a good practice to proceed with informal reminders. Simple things like phone calls, emails, or payment letters can often do the trick. However, if these initial attempts dont yield results, the next step would be to escalate the matter by sending a burofax.

What is a burofax?

Essentially, a burofax is a powerful document to request payment for an outstanding amount. It holds significant value as evidence against third parties and is a necessary step before taking any legal action to collect the debt. 

The content of the burofax includes a detailed breakdown of the amounts owed by the debtor. In addition, it states the reasons or justifications for the payment. It also sets a specific period of time within which the debtor must settle the amount due. In the event of non-payment, we would firmly inform the other party of our intention to pursue legal action to enforce our clients´ legitimate claims.

Lexidy offers a free hour of legal advice regarding Burofax, learn more about the service. Our service ensures that you receive a certificate confirming the receipt of the debt claim by the addressee. This adds an extra layer of assurance to the process.

Legal routes of debt collection

When faced with the need to resort to the judicial route, you can choose between three different proceedings. The choice depends on the owed amount and the type of document that reflects it. As well, the speed at which you wish to solve the matter. Let´s take a look at the three different approaches:

Small claims proceeding

The small claim procedure is the way to go if you´re dealing with small debts that do not exceed 250,000 euros. 

To kick things off, you will need to submit a request with the Trial Judge of the debtor’s domicile. From there, the process unfolds with a 20 working day window. During this window, the debtor can either make a payment or oppose it. If the debtor opposes the claim, the matter moves on to the verbal or ordinary declaratory proceeding, depending on the circumstances.

Verbal and ordinary proceedings

If you anticipate that the debtor will oppose the payment, the recommended approach is to choose the appropriate procedure based on the claimed amounts. Both proceedings begin by filing a suit at the debtor’s domicile  

For cases where the quantity owed is below 6,000 euros, we opt for the verbal procedure. This process ensures an oral hearing, even if the debtor decides not to appear. If we receive a favourable ruling, we can proceed with an executive action to enforce the payment.

On the other hand, if pending debts exceed the 6,000 euro threshold, we resort to the ordinary. This involves an additional step known as the prior hearing. The purpose of this hearing is to try to reach an agreement between the parties. If an agreement cannot be reached, this hearing will be used to establish the parties’ position and request them to propose the means of evidence they consider appropriate. As a result, this can lead to a lengthening of time and increase the costs of the process.

It´s essential to note that in both procedures, you only need to the involve of an attorney if the owed amount exceeds 2,000 euros.

Juicio Cambiario (exchange trial)

In Spain, we have what´s known as Juicio Cambiario. This is an exchange trial that specifically deals with amounts documented in bills of exchange, promissory notes, or checks. 

Similar to the previous cases, the debt collection process begins by filing a lawsuit with the Trial Judge at the debtor’s domicile. In these cases, the involvement of an attorney is mandatory regardless of the amount. Once you initiate process, the debtor has 20 working days to pay or oppose payment. If the debtor accepts the payment or remains unresponsive, the court will issue an execution or seizure order. If the debtor opposes the claim, there will be a hearing that follows the same rules of the verbal trial.

Debts outside of Spain

Now that we have examined the options at a national level, it´s crucial to consider whether complaint proceedings exist at the European level. In particular, there are two routes:

European Small claims procedure 

Lets talk about the European Small Claims Procedure. Usually, this procedure is for transnational disputes, when both parties reside in the European Union (except Denmark) and the claim amount does not exceed 5000 euros. 

One of the great advantages of this procedure is that you don´t necessarily need a lawyer to begin the process. To initiate the debt collection process, all you have to do is fill out Form A (available online) and submit it to the competent court. Usually, the court is determined either by the terms of the contract or the debtor’s domicile when there’s no specific clause defining it.

Once the court receives Form A, they have 30 days to respond, and after that, the judge has another 30 days to issue a judgment. Now, depending on the circumstances, the court has a few options moving forward:

• They can issue a judgment, ruling in favor or against you
• If they need more information to issue a decision, they may request additional information, in which case both parties will need to fill out Form B.
• They may arrange an oral hearing, giving an opportunity for all involved parties to present their side of the story.

European Order Payment 

The European Order Payment is a useful procedure for cross-border disputes. All EU countries can use this procedure, with the exception of Denmark. This procedure is governed by Regulation 1896/2006. 

To begin the process you will need to fill out Form A, found in Annex I of the EEW regulation. Keep in mind, this route can only be used if no previous procedure has been initiated for the amount owed. In such cases, the European Order Payment becomes ineffective.

Similar to the small claims procedure, the competent court for this process will be determined by the contractual agreement or the debtor’s domicile in its absence. Once the form is submitted to the court, it is forwarded to the debtor, who will have another 30 days to respond.

Here´s what can happen based on the debtor´s response:

• The court may consider or reject the claims of the creditor.
• If the debtor rejects the estimation, the process stops and the matter is referred to national procedures. 
• If the debtor does not respond in the specified timeframe, the debt obtains an execution order which becomes final and can be executed by any country of the European Union.

Can Lexidy help me with debt collection?

There are many ways routes you can take when collecting debts both within in Spain and outside of it. Consulting with a qualified lawyer is vital when dealing with debt collection. 

At Lexidy, our team of expert laywers are here to help you navigate complex legal matters and choose the best course of action. From national proceedings to European options, our lawyers can ensure you achieve efficient and effective debt recovery while maintaining positive business relationships. Fill out the form below to get in touch with one of our lawyers today.