Defenses in the judicial collection process

During these times of economic crisis, where the reduction in income affects the ability to repay debts, I think it is appropriate to know more about defenses in a collection process.

The first thing to understand is that a collection process (or execution) arises when there is a default or non-payment of a debt that is based on a document recognized by law as a collection title.  Born on the lack of timely payment, the law allows the creditor to go file for the repayment of the debt in default.

In order for a “debt” to be collected, it must

• Be based on a determined amount
• Collectability. Debt must be overdue (no pending deadline). This is either because the agreed date has come to an end, or because one of the agreed payments was not made, causing the transaction to enter in arrears.
• It is supported by a document that has the recognized rank of an executive title or collection document. This last issue should be carefully analyzed. Any debt to be collected, must be based on one of the following documents. These are considered evidence of the debt by law and give the creditor the right to seek garnish and eventually withdraw the debtor’s auction assets.

Documents with the status of collection documents

1. Testimony or certification of an unrecorded public deed. It is a document granted before a notary, which may have been enrolled or by default was not enrolled, but that it supports and recognizes the existence of a debt.
2. Certification of a public deed duly registered in the National Register.
3. The private document recognized judicially as well as when called under confession and the debtor accepts that it supports sums of money not fully paid.
4. A final court judgment establishing an obligation to pay a sum of money.
5. The chattel mortgage or mortgage.
6. All other documents that by special laws, have collection force, such as certifications issued by public accountants or public entities bodies whose balances are certified (such as is the case of the Costa Rican Social Security).

Each of these titles recognized by law, gives the creditor the right to seek a garnishment order against the debtor’s assets.

Defense regarding the judicial collection process

Usual defense under law call for:

1. The falsity of the basic document of collection.
2. The lack of enforceability of the obligation, as it is not expired within the agreed period, or because there is an agreement of parties.
3. Evidence of proven payment (in writing).
4. The period of validity of the title has lapsed, since any debt has a maximum period to demand its collection prior to the statute of limitations.

Having said the above with regards to the typical defenses, it is also possible for the debtor to request a conciliation with the creditor. This is an opportunity to reach an agreement within the collection process.  Also, the debtor may argue the partial lapsing of the interests for the period exceeding one year before he was served.

The task of the defense attorney in a judicial collection process

It is important to analyze with each client, its particular relationship with the creditor. This goes beyond the signed document now under collection.  Examining the reality of the credit relationship may provide legal arguments when responding to any lawsuit. This analysis may point out defects that may affect the validity of the collection title or the opportunity of the collection process filed.

Getting your money back today becomes more necessary than ever.  Do not hesitate to contact us, and we will gladly give you the best legal advice on this important topic.