14 Oct 2016

Debt Collection In italy

If you are a business-man dealing with companies at home or abroad, you are probably well aware that the possibility that your customer does not pay what due is always just around the corner. Companies frequently face difficulties when trading with customers who could suddenly turn unruly or reckless. In particular, the struggle is finding a way to prompt seriously delinquent customers in order to stop them from taking advantage and collect the full sum before it becomes a bad debt.

In Italy, generally speaking, debt collection is not a particularly complex procedure, meaning it is not so hard to collect swiftly, however it is also becoming more and more complicated to comply with the demands of international companies, which find themselves faced with a different system and another mentality. Question is: what to do now?

First thing first, we would like to stress that often a debt collection lawyer is the most effective tool. Indeed, a recourse to a debt collection agency, in most countries – Italy included – has revel more difficult than expected and a path that has proved largely unsuccessful. Conversely, a lawyer has various possibilities to take appropriate action to collect your debt, e.g. start legal procedures, file a petition for bankruptcy, and have an attachment placed on assets of the debtor.
Analysing the necessary steps to undertake for debt collection we find:

1. Send a demand letter
It is a letter before action, which means the first attempt is to recover the debt without legal proceeding. The moment that your Italian customer does not pay promptly, within the stipulated terms of payment, creditor can decide to engage in a pre-judicial procedure in order to obtain payment without detriment to his relationship with the debtor. Thus, it is advisable to send a reminder of the due payment, with notice of default to the debtor by registered mail.

As mentioned, lawyers are preferred to agencies for debt collection; therefore, debtors are often prepared to settle the debt amicably. The letter will be usually sent by the creditor himself or by a debt collector on the creditor’s behalf, requesting the exact of the amount of the debt and indicating that, if the debt remains outstanding, legal action will follow. We suggest you approach you debtor, both in writing and by phone. If your customer does not respond to your reminder, it is necessary to act quickly and hand your outstanding claim over to our legal team, as we can provide you legal support through Kenton & Miles Debt Recovery Lawyers.

2. Handing over a claim
If an out-of- court solution is not possible, legal action can be taken. This necessitates a firm approach towards Italian debtors, and our Italian team knows how to act accordingly.

Kenton & Miles Legal benefits the aid of native-speaker lawyers, which can consequently not only guarantee you a perfect command of your debtor’s language, but who are also very familiar with the legislation, rules, and culture of the country. Our Italian departments can grant you the support needed through the help of English-speaking professionals specialised in international debt recovery: lawyer and paralegal who know how to decisively collect your claims in Italy.

Extrajudicial debt recovery
After you have handed over your claim to our legal team, our lawyers will summon your debtor to pay, both in writing and by phone. In Italy, a demand letter from a lawyer is taken very seriously. If the debtor does not pay within the stipulated term of payment, we can then help you through further advice.
We will therefore draft a file, incorporating information, which has been collected during the extrajudicial phase, and proceed with judicial debt recovery.

Judicial debt recovery
In this procedure, the lawyer of the creditor will file a subpoena with the competent Court in order to register the debtor’s obligation to pay the claim. Please notice that, for claims under € 2,500 the “Giudice di Pace” is the competent Court; in all other cases the claim will be referred to the Tribunale where the debtor has his place of business.

In Italy, there are two ways of proceeding against debtors. This can be done by means of extensive common proceedings or by means of a quick order for payment. An enforcement order is required in order to enforce a claim in Italy. This can be an order for payment (decreto ingiuntivo) or a judgment, for instance.

Order for payment “Decreto ingiuntivo”
In Italy, the possibility exists to start an order for payment procedure. The procedure benefits the undisputable advantage to rapidly request the court for execution by anticipation.

After the opposing party has been served, it has 40 days to raise a defence against the order. If the opposing party defends its case – which is highly likely – common proceedings will automatically start.
Simultaneously, if the court has awarded the execution by anticipation, we will proceed with the enforcement proceedings. This will allow us to freeze the opposing party’s goods until the end of the common proceedings. Indeed, whether the debtors fails to settle the debt after court proceedings, then it becomes possible to enforce action for recovery, that means and include charging orders, third party debt order and attachment of earnings.

Common Proceedings – “Processo ordinario di cognizione”
These proceedings are used for civil cases (damages, insurance, contracts, etc.), usually hence more complex than debt recovery cases. They consist of hearings, and the Court will study the case in-depth, which is why these proceedings take longer and are more expensive. We advise to undertake this path in casa of complicated matter of debt recovery matter, and/or when there are other aspects involved.

In Italy, it is not possible to submit a winding-up petition against a debtor without obtaining a previous judgment. Proceedings are always necessary in order to get an enforceable title, such as a judgment or an order, before any winding-up proceedings can be initiated.

Prejudgment seizure
Prejudgemental measures are often advisable to guarantee the creditor that the debtor’s goods will not disappear. A prejudgment seizure is nothing more than a way to anticipate the seizure of goods.

The prejudgment seizure is based on:

  • Reasonable appearance of claim (fumus boni iuris);
  • Danger of loss of guarantee (periculum in mora).

As you may see, proof and evidences are strictly necessary to obtain efficient measure of protection of your credit. As soon as a definitive judgment has been awarded, the prejudgment seizure will be converted into an actual seizure.

4. Advice on debt recovery in Italy
If you have any further questions regarding debt recovery in Italy, please do not hesitate to contact our Italian department or send an email to info@kentonmiles.net, we will offer you legal assistance and guidance for settling rapidly and cost efficiently.
Kenton & Miles Legal offers a full range of debt collections options for Italian debts across Italy, through an international network of experienced and skilled Italian debt collection lawyers, English-speaking Italian professionals, therefore if you need more information about debt recovery in Italy, our team is at your disposal.

Valentina Giarrusso is the Regional Managing Partner at KM Legal Network and is Head of the Corporate and Commercial department.

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