The globalized landscape sees the growing importance of commercial contracts. Subsequently, the chance of experiencing delays in payments is strongly increasing. Furthermore, the international nature of business pushes creditors to recover their transnational credits. Therefore, it is important that jurisdictions establish the proper legal framework for debt recovery.

Debt collection represents an effective instrument to deal with a company or individual who fails to comply with their financial duties and obligations. The aim of debt collection is to recover (total or part of) the debt from the debtor. Given the importance of such a matter, an increasing amount of businesses and individuals need to rely upon the legal instruments that the Italian jurisdiction has implemented.

In dealing with debt recovery cases in Italy, VGS professionals warmly suggested a step-by-step approach. This means hiring a lawyer which is also an expert in debt recovery procedures. There are two means of debt collection: by extrajudicial means or by means of the court.

Debt Collection via Extrajudicial ways

The extrajudicial nature of debt recovery usually represents the first stage of the process. The sole purpose of this phase is seeking to settle the debt as soon as possible. This is probably the most crucial phase because it does not see the participation of judicial courts while allowing money and time to be saved.

This phase first starts with the collection of elements concerning the legal claim. For instance, the lawyer will need to recover any contract or written agreement between the parties, invoices, checks, and promise of payment. Based on this, the legal professional will draft the letter of formal notice. The purpose of this letter is to determine whether or not the debtor is prepared to pay the amount that is due, or if there are any objections on their part.

In particular, this procedure consists of giving the debtor written communication to pay within a precise time window. If the time limit runs without receiving the payment, then it will be possible to appeal to the judicial authority. Normally, the notice period is between 7-17 working days. This letter is important because suspends the credit regulation and determines the effective beginning of default interest.

The purpose of this letter is to determine whether or not the debtor is prepared to pay the amount that is due, or if there are any objections on their part. In the event the debtor fails to reply, lawyers, proceed with a second letter that includes a warning plus a formal notice.

In the event of the debtor failing to reply, we supply a second letter of exhortation, containing a warning and a formal notice. This letter offers the last opportunity for the matter to be resolved outside of the courts and, in the event, the debtor is available to pay, the lawyer will draft a binding agreement between the parties.

However, in case the debtor fails or refuses to pay, the legal professional will start the judicial phase.

Debt Collection via judicial ways

The creditor – through the legal professional – will proceed through a judicial order. This is the most common procedure and it consists of presenting before the Court the documents necessary to prove the existence of the debt. In the event the judge confirms the existence of the debt, the order of payment is temporarily enforceable. Whenever the sum is lower than €5.000.00, the appeal shall be filed before the Giudice di Pace. Contrarily, the appeal may be presented before the other competent Court. At this point, the Court has three different options:

Confirmation of the order of payment;

  • Dismissing the appeal;
  • Ask for further documents that may clarify the debt situation

In the event, the Court released the order of payment, the creditor’s lawyer shall present it to the debtor within the period of 60 days. Contrarily, the order loses its legal efficacy. In addition, in the event the debtor files an official objection to the order of payment, an ordinary proceeding will begin.

VGS professionals are keen on advising their clients of being completely aware of their legal rights. In fact, should the creditor not act in time, the main risk would be not being able to recover the due amount according to the law. For this reason, relying on legal professionals with proven expertise in debt collection is a fundamental part of the process.

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