Judicial debt collection in Italy is a legal procedure, which is implemented by filing a claim to the court. It aims to recover a debt, caused by a non-payment.
The judicial authority steps in to enforce payment between the creditor, the one who is waiting to be paid, and the debtor, the one who has not paid.
The ordinary court or the Justice of the Peace may be involved, depending on the amount of the claim. With due exceptions, the action should be filed with the Justice of the Peace for amounts up to 10,000 euros, and with the Court for higher amounts.
Choosing the legal procedure for debt collection is almost never straightforward, but it is normally an obligatory choice due to the failure of accommodating attempts put in place through extrajudicial debt collection.
Judicial recovery can be put in place after a series of economic assets, which are carried out during the out-of-court phase to assess the debtor’s creditworthiness.
If there are no attachable assets, court action may be economically inconvenient because of the costs of legal assistance and court procedures for recovery.
In Italy, judicial debt collection is a complex process that requires the compulsory assistance of a lawyer.
The fastest judicial recovery procedure is an action for an injunction, which allows an order for payment to be obtained.
How does the Judicial Procedure for Debt Collection in Italy Work?
The procedures for the Debt Collection process are the following:
- The creditor’s lawyer files an appeal for payment with the competent court, accompanied by a set of documents proving the existence of the debt and the default on the part of the debtor. To the amount of the debt shall be added a claim for reimbursement of legal fees incurred in recovering it. This procedure is set only for claims that are already certain, liquid and collectible.
- If the Court grants the application, the debtor is ordered to pay. The Court issues an order for payment or injunction.
- The creditor must notify the debtor of the issuance of the injunction. The debtor must pay within 40 days of the notification.
- Once the summons is received, to dispute the claim in its entirety or at least its amount. He could, for instance, prove that he has already paid, or that he is not required to pay because the debt is time-barred. He/she could also prove that the nonpayment is due to a default by the creditor.
- If there is a dispute, the process of cognition will be opened, which will deal with the existence of the claim
- If the debtor fails to object, the injunction becomes final and can no longer be challenged. If the debtor fails to comply, the creditor may proceed to seize his movable and immovable property to recover the debt.
- With the writ of execution, payment of the claim plus additional costs is intimated to the debtor, who will have an additional ten days to voluntarily pay what is owed (Article 480 of the Code of Civil Procedure). The writ of execution is the act by which enforcement proceedings are initiated.
- After the 10 days have elapsed without response or following a negative response, enforcement proceedings may be initiated, with attachment of movable property, real estate, or claims against third parties.
The Enforcement Procedure
In order to collect the debt, one may resort to forced expropriation of the debtor’s property, the subsequent sale of which will enable the initiator of the lawsuit to satisfy his or her claim.
Forced expropriation can be carried out through what is known as a deed of attachment, which can be movable, real estate, or third party, depending on the subject of the expropriation.
The attachment procedure can be carried out on all of the debtor’s property: real estate, vehicles, furniture, bank accounts, salaries, …
The Bankruptcy Petition
A bankruptcy petition may be filed by a creditor if the debtor is an insolvent business owner.
When bankruptcy is established, a receiver is appointed, and the debtor’s assets may be liquidated so that the proceeds of the sale are divided among all creditors who apply.
International Debt Collection
When it comes to international judicial debt collection, there are additional factors to be taken into consideration. One can make an analysis of the so-called Judicial Country Risk, which shows the degree of performance and fairness of a court. Hence, allowing one to speculate on the chances of success or failure of a legal case in that particular country.
the Litigation Department lawyers within Boccadutri Law Firm will happily answer your questions and concerns on this topic, please do not hesitate to contact us.
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