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Litigation | National and International Arbitration | Debt Collection in Italy

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OS Law acts in the field of litigation, especially concerning commercial matters, including debt collection, at national and international levels. The firm uses its network of contacts in order to better manage transnational issues.

We represent clients in commercial litigations before Italian Courts and Arbitral Tribunals under national and the main international arbitration rules.

Our ethic is to advise the client transparently in case of a small chance of winning and/or obtaining compensation, in order to avoid costs and waste of time.

Beyond the traditional way to solve disputes, the international commercial environment may ask for alternative ways to address cross-border issues. In this light, OS Law also provides assistance in Alternative Dispute Resolution (ADR) procedures, such as arbitration and mediation.

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Italian Debt Collection procedure in a Nutshell

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Debt collection in Italy is governed by the Italian Civil Code and the Consumer Code, which regulate the relationship between creditors and debtors.

The procedure typically starts with a demand letter, followed by negotiations to reach an agreement.
This is a crucial phase since it frequently indicates that the issue might be settled without the involvement of the courts.
If a resolution is not reached, legal action can be taken to recover the debt.

The Italian legal system also provides for several methods of enforcement, such as wage garnishment, attachment of bank accounts, and seizure of property. However, before taking such measures, the creditor must obtain a court order.

Debtors have the right to dispute the debt and have the opportunity to defend themselves in court. They may also be protected from harassing and aggressive debt collection practices, such as repeated phone calls or home visits, under the provisions of the Consumer Code.

In summary, the legal aspects of debt collection in Italy are regulated by the Civil Code and Consumer Code, and creditors must follow specific rules and procedures, while debtors have rights and protections under the law.

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In Italy the procedure for debt collection typically involves the following steps:

1.  Demand letter

The creditor sends a demand letter to the debtor, requesting payment of the outstanding debt. The first stage is to gather all the facts required to support the claim, such as invoices, cheques, and promises of payment, if the parties have a contract or other formal agreement.
Using the data gathered, we can write a letter of reminder urging the debtor to pay the loan within a specific time range.
This letter’s goal is to ascertain whether the debtor is willing to pay the whole amount owed or if they have any reservations.
The formal notice also has significant ramifications in that it suspends the credit regulation and establishes the actual start of default interest.

2.  Legal action

If the debt is not paid, the creditor may take legal action by filing a complaint with the competent court.
Before taking legal action, it’s very important to do some investigation into the debtor’s financial capabilities, budget, and capital, including whether they have any real estate or registered mobile assets (such as cars, motorcycles, and boats), whether they are employed, whether they have a bank account, etc.
This is a crucial first step that must be taken before legal action can be taken against the debtor in order to give the case a realistic possibility of concrete success.

Which kind of legal actions can be taken?
This is dependent on the official document used to establish the credit. When the debt is supported by paperwork (such as invoices and written agreements etc.), it is even possible to ask for a decreed injunction.

3.  Court proceedings

The court will then hear the case and make a decision. If the court finds in favor of the creditor, it will issue a payment order to the debtor.
A decreed injunction is a court order made without the defendant’s presence and is based on the creditor’s paperwork. In this case, the creditor is required to inform the debtor once the injunction has been issued.
Then the debtor will have forty days to pay, object, or both: normal court proceedings begin in this situation, and they will end with a judgment that either upholds or rejects the decree.

 

4.  Enforcement

If the debtor does not comply with the payment order, the creditor may request enforcement measures, such as wage garnishment or seizure of property.
There are various forms of forced repossession of goods.
– Real estate is repossessed along with the debtor’s immovable property. These may be taken into custody, sold, or given to the creditor.
– The seizure of the debtor’s mobile property, or mobile assets. These might also be taken, sold, or given to the creditor.
– The seizure of the debtor’s mobile registered assets, such as their registered boats, cars, and motorcycles.
– If a third party’s property is repossessed and the value of the debt is determined by official papers, the debtor may take the items and use the proceeds to pay the third party (salary, annuity and different forms of credit). In this instance, the debtor of the debtor is a third person who is involved in the executive procedure.

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