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Debt Collection Portugal

Debt Collection in Portugal

Updated on Monday 06th January 2014

The economy in Portugal has become diversified and in continuous growing, based on services, since joining the European Union in 1986, but the economic crises have affected several individuals and companies, leading to several debt collection procedures.

In the last decade, successive governments have privatized many state-controlled firms and liberalized key areas of the economy, including the financial sector and telecommunications.

In this sense, Portugal has settled several rulings by the Code of Consumer Protection that brought several rules that should guide creditors in exercising their legitimate right to recover the debts without harming the debtor’s integrity.

Portugal has also adopted a simplified procedure because of many pending case brought before the courts.

The first phase consists in an amicable settlement between the parties. In this sense, the creditor sends the first notice of payment in which are specified the amount due, the payment deadline and further actions that may be taken against him. When no answer is received in one week, the creditor sends the second notice of payment. After the third demand letters, which means a period of 30 days, and still no answer from the debtor, the creditor is entitled to forward the case to the next step.

It is very important to find out as much information about the debtor’s assets, financial status and payment capacities. In most cases, when the debtor is unemployed and has no assets in his property, the debt collection procedure is ineffective.

When the debtor answers to the demand letters, but can not afford to full pay the debt, the parties may agree on instalment payments. It is very important to make the agreement in written as in Portugal this kind of agreements represent enforceable documents and recognized by the competent authorities.

In case no answer is received from the debtor within 30 days, the creditor can start the second phase of a debt collection procedure.

In Portugal there are two available procedures: Injunção (simple claim) or Acção Declarativa (regular claim).

The simplified procedure (injunction) consists in obtaining a Payment Order to be delivered to the debtor. The Payment Order can be obtained when the creditor has the complete documentation of the claim and when the claim is not disputed. The debtor has a certain deadline to pay the debt after he receives the Payment Order.

This procedure is effective in most cases and less expensive to be accomplished.

When he does not full the payment, the case is transferred into a regular lawsuit.

The case is also forwarded to a court trial when the debtor disputes the claim or when it can not be obtained a Payment Order.

After the creditor has submitted the request before the competent court, the court asks both parties to exchange opinions and statements in writing until the judge considers having enough information in order to take the case in charge.

Both parties are then summoned to a court hearing where the judge examines the documentation, hears the parties’ statements and, by applying the law, issues a decision. The decision will be published at the date scheduled by the court and both parties will be informed in written about the Court’s decision. Any decision issued by the Court is enforceable.

The costs for the debt collection procedure are fixed by the Court in accordance to each action that must be taken in the entire proceeding. Most fees are calculated as a percent of the entire claim, but there are also some fixed fees established by the law.

It can last to three month to recover the debt by the Payment Order and minimum six month when the debt is recovered by trial procedure.

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