What are the conflicts of interest involving Credit Recovery?
The judicial process is the means to extinguish legal crises, among them the default crisis, which is nothing more when someone fails to fulfill an obligation, as in the case of payments. Thus, for credit recovery through the judiciary, we highlight three main ways, and the path chosen, depending on the existing documentation, will determine the time for collection and payment of the debt.
The first of these is the Extrajudicial Title Execution Action, used to recover the credit of certain titles, such as checks (less than six months past due), promissory notes, bills of exchange, confession of debt and contracts signed by two witnesses.
The main characteristic of the enforcement action is that it is faster than other options, since, once filed, the debtor has three working days to settle the debt. Once the said period has expired, the creditor can start carrying out enforceable acts, such as online attachment to bank accounts, blocking of movable and immovable property, entering the debtor’s name in the defaulter registers, and also pledging a percentage of income /debtor’s revenue, among other acts. In addition, generally the stay of execution presented by the debtor does not have suspensive effect, allowing the free adoption of expropriation acts by the creditor without having to wait for the judgment of the stay of execution.
The second form is the Monitoring Action, usually used for checks overdue for more than six months and bills overdue for over three years. In this action, it is necessary for the creditor to have a title based on written evidence and the debtor’s defense suspends, until the trial in the first degree (when the sentence is handed down), the progress of the collection, which makes it more time consuming when compared to execution.
Finally, the third form is the Collection Action, used when the creditor does not have an enforceable title itself and needs to prove the existence of the credit against the debtor. This is the case, for example, when the creditor only has an invoice, without any other proof that the service was provided or the product sold to the debtor. As it is a process of knowledge, the creditor must prove the existence of the credit before initiating any judicial collection and only with the constitution of the credit via court decision can it begin the execution phase.
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