1.1 Amicable Phase

1.1.1 General

Accounts Receivable Portugal endeavors to maintain a professional collections process from start to finish, focusing primarily on fostering an amicable relationship between our client and the debtor being pursued. To that end, all of our operations are performed in-house by experienced collectors who know exactly how to best pursue debts of all sizes. Our amicable phase of collections involves both oral contact via telephone and written correspondence to the debtor’s primary residence or main business address. In some cases, written communication may also be pursued through emails to the debtor. It is our goal to better understand the financial situation of the debtor so that an agreeable resolution can be found and legal action can be avoided.

If we find ourselves unable to resolve the matter amicably via these means, we will seek to analyze our options and pursue legal proceedings against the debtor. Typically, we begin this process if we have not achieved some measure of success within 30 days of first making successful contact with the debtor on behalf of our client. At that time, we will consult with our in-house legal team when discussing further options.

Accounts Receivable Portugal adheres to all laws and regulations at both the federal and state levels in Portugal.

1.1.2 Local agent

Accounts Receivable Portugal does try to make contact with certain debtors by dispatching a field agent to their primary residence or main business address. It should be noted, however, that our operation in Portugal contracts with external lawyers to perform this service. Unlike in many of our other markets, field agent visits are not conducted by collections professionals. Our field visits are performed by lawyers who are divided into two geographical groups, representing the northern and southern halves of the country. This allows for much more efficient contact and quicker results in most cases.

While debtors may experience a visit from one of our external lawyers, they’re also invited to come to our headquarters and speak with one of our collection professionals in person at any time. Debtors have easy access to our address and contact information, and we welcome a chance to discuss matters with them.

In both cases, it is the goal of our external lawyers and our professional collection team to learn more about the debtor’s financial situation. This information is useful when deciding on an amicable course of action, and may be particularly useful if the collection needs to be pursued through the court system in Portugal. Despite the availability of both in-person field visits and a meeting at our headquarters, both services are very rarely used among the debtors we interact with on a regular basis.

1.1.3 Interest

Amicable recovery regulations in Portugal make it very difficult to charge interest to the debtor when a payment is past due. Even so, many contracts between a buyer and a supplier do stipulate that any past due payments could be subject to an interest rate being charged. If that is the case, Accounts Receivable Portugal will be far more empowered to charge interest and collect it during both the amicable and legal phases of collection, should a case proceed to court.

Without any interest rate established in the conditions or contracts between the creditor and the debtor, Accounts Receivable Portugal will seek first to settle a case with interest attached to the outstanding balance of the debt. If the debtor resists this attempt, our professional collection team will try to make a deal that involves either a lower interest rate or the elimination of an interest charge in its entirety. It is the policy of Accounts Receivable Portugal to always consult with our clients before making any agreement within a negotiation on their behalf.

1.1.4 Debt collection costs

In many cases, Accounts Receivable Portugal has found that Portuguese creditors will actually issue ongoing bills, or debit notes, to debtors in order to charge them for the collection costs associated with a debt. These debit notes may or may not be specified in the contract between both parties, but many debtors will actually pay them or negotiate for them to be voided. If this is the case, payment or negotiation regarding debit notes will serve as an acknowledgement of the debt and a powerful tool when pursuing the eventually recovery of the amount owed to our client.

Accounts Receivable Portugal is not subject to any limitations when imposing its own costs of collection upon debtors who have a significantly past due balance. Costs charged to debtors by Accounts Receivable Portugal as part of the collection process will vary based on the size of the debt and the overall age of the past due balance. In addition to these costs, Accounts Receivable Portugal charges a flat fee of 40.00 EUR when collecting a debt from debtors. This amount is specified in European Union regulations concerning debt collection costs, and is generally considered a non-negotiable fee when collecting a past due balance.

1.2 Legal Procedures

1.2.1 General

Accounts Receivable Portugal maintains its own in-house team of lawyers who help us consider whether or not legal action is the best way to pursue a debt and ensure its full recovery for our clients. We will evaluate every debtor on a case-by-case basis in order to determine whether the costs justify the legal proceedings, and whether the amount of time spent collecting the debt through the court system will lead to better results for our client.

During this time, our in-house collectors and legal professionals also begin to assess the debtor’s solvency and ability to pay any balance, even if compelled by the court. If a debtor has no assets and is not trading, pursuing legal action will generally not be recommended for our clients as the outcome would likely not favor a repayment of the debt either partially or in its entirety.

1.2.2 Required documents

In order to begin legal proceedings against a debtor who has been deemed to have the necessary assets for a full or partial recovery, Accounts Receivable Portugal will require access to the following documents. These documents are also essential for approval of the court and a greater chance of success:

- Original Power of Attorney, signed by the client
- Copies of invoices showing an outstanding balance
- Copies of account statements showing any credits or payments made by the debtor
- Delivery notices, orders, and order confirmations
- Conditions of sales, if relevant
- Original payments issued to the creditor by the debtor
- Any signed acknowledgement of the debt by the debtor
- Copies of any written correspondence regarding the debt
- Notes regarding any oral negotiations concerning the debt

1.2.3 Legal actions

Accounts Receivable Portugal is able to choose between two distinct types of legal action when pursuing debtors in this country. These two options vary based on the type of legal procedure pursued, the nature of the claim, and how quickly our client wishes the case to be decided by the court. We will, of course, consult with our client before either method is chosen in order to make sure that we are pursuing the best course of action for all parties involved in the lawsuit.

The two types of legal actions that can be taken in Portugal include:

Simple Claim (Injunção)

This is easily the most popular form of legal action taken by Accounts Receivable Portugal on behalf of our clients. This procedure is generally for debts that have not been disputed by the debtor, but that have been verified by the creditor and accepted by the courts. Because there is no dispute involved, the claim is quickly passed through the courts and the judge overseeing the matter is able to quickly grant a judgment for the collection of the debt and any costs deemed appropriate. This is an exceedingly affordable legal procedure, as well, costing far less than defended trials.

Traditional Claim (Acção Declarativa)

This more traditional lawsuit against debtors is used when Accounts Receivable Portugal deems it possible that major opposition will be presented by the debtor when presented with legal recovery actions. This case follows a more traditional format, with both sides required to exchange opinions with the judge. After the judge has received enough evidence, a hearing will be called and a judgment will be issued against the debtor for the debt’s full amount, so long as the amount has been successfully proven by the creditor.

When a judgment is issued as part of a traditional claim, collection cost are immediately assigned to the debtor and added into the amount of the judgment lodged against them. It is also possible for Accounts Receivable Portugal to pursue an execution of the judgment after it has been issued, if the debtor does refuse to satisfy the judgment.

It should be noted that legal action for a traditional claim cannot begin until our client has signed a Power of Attorney document and that document has been submitted to the court. While a notary does not need to verify this document, it does need to be printed by the client on his or her own letterhead before it can be submitted to the court for use in the trial.

1.2.4 Costs

Virtually all debt collection cases fall under civil law in Portugal. Under civil law, the court itself determines the costs of pursuing any debtor through the court system. These costs cannot be negotiated between Accounts Receivable Portugal and our client, nor can they be negotiated between our client and the debtor.

Every cost associated with legal action in Portugal is issued on a percentage basis, and is generally relative to the size of the debt itself. The age of the debt and the complexity of the case also determine the costs associated with legal proceedings. Several different fees may apply, including lawyer’s fees, document fees, and a number of other charges. These fees make it nearly impossible to predict how much a typical court case will cost in Portugal, and it is therefore the policy of Accounts Receivable Portugal to issue cost estimates only on a case-by-case basis when our clients feel they have no choice but to pursue legal action against a debtor.

It’s also worth mentioning that court costs for a traditional claim can easily escalate if the debtor raises a particularly strong objection to the proceedings, or strongly disputes the validity of the debt being pursued by Accounts Receivable Portugal. In this case, it may be necessary for our client to hire a number of experts and enlist the help of witnesses in order to ensure a successful case. Those costs will vary based on the client, the witnesses or experts, and the duration of the trial, and should be considered a special case when considering the cost of a legal proceeding.

1.2.5 Expected timeframe

Traditional claims in Portugal are easily the slowest legal proceedings a creditor can pursue, taking at least six months to complete. If a simple claim is filed against the debtor instead, creditors can expect the process to take just a few weeks from start to finish. As is always the case with legal proceedings, the timeframe will vary widely, based on the judge’s availability and the availability of lawyers to defend the case. Cases with greater complexity will take longer to resolve, and the opposite is also true.

1.2.6 Interests and costs in the legal phase

Accounts Receivable Portugal can settle a debt during the amicable phase either with or without interest added into the balance. If a payment plan is chosen, costs may be lessened or eliminated entirely. During legal action, however, interest is always added to the total outstanding balance of the debt. The judge overseeing the case typically calculates this interest rate, and it is not considered a point of negotiation either by Accounts Receivable Portugal, our client, or the debtor who we are pursuing through legal action. Interest may also be eliminated entirely if the judge has reason to believe that such an action will help the debt be paid off sooner.

1.3 Insolvency Proceedings

1.3.1 General

While many countries now focus more on corporate restructuring than the liquidation of corporate assets, Portugal remains committed to insolvency as a way of paying out all creditors with an equal dividend based on the liquidation of corporate assets. This liquidation process can be started either by the debtor company itself or by a creditor who needs to force the collection of its debts from the debtor. The debtor company may also have the income of one of its managers or shareholders garnished, if the courts declare that individual bankrupt. This varies depending on corporate liability and Portuguese regulations, however. Our professional legal team will advise as to the best course of action when a company is insolvent and its debts remain outstanding.

1.3.2 Proceedings

As soon as Accounts Receivable Portugal has learned that a debtor has applied to begin insolvency proceedings, and we know the process associated with that proceeding in the court, our legal team will begin preparing a document that our client must review, complete, sign, and send to the court. This document is issued to our client largely to make them aware of the insolvency action, and to inform them of their next course of action. Any document issued to the client in this case will fully instruct them in the process of filing a claim. Accounts Receivable Portugal will help with this process, but our client must perform a few essential duties in order to successfully lodge a claim for any potential dividend. We are not permitted to lodge the claim on our client’s behalf, however.

It should be noted that Portugal, unlike many other European countries, requires a signed Power of Attorney to be submitted by the creditor who is filing for a claim against the debtor company, even if a company like Accounts Receivable Portugal is not filing any such claim on the creditor’s behalf. This will be noted in the overview sent to our clients, and is noted in the Insolvency Procedures of Portugal.

1.3.3 Required documents

Clients will have to manage the filing of any claim on their own and, while they prepare that claim, they will need to make sure the following documents are included. These documents serve to verify the validity of the debt and ensure the best chance at having the claim accepted by a court-appointed trustee or liquidator:

- Original Power of Attorney, signed by the client
- Copies of any outstanding invoices
- Copies of delivery notices, order confirmations, and orders
- Original methods of payment used by the debtor to pay toward the debt’s balance
- Any signed document acknowledging the debt, preferably signed by the debtor

1.3.4 Expected timeframe and outcome

After a debtor company has filed for insolvency, this will be published in the Official State Gazette on a monthly basis. The date of this publication will establish the deadlines for filing a claim against the debtor, which lasts 30 days. The duration of an insolvency procedure can last between two and nine years.

To get started today, call us at321-710-3530 to speak with an associate
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