terça-feira, 20 de novembro de 2012

Debt Collection in Brazil - Non Receipt of Overdue Payments

Note: This is a reply I've sent to a client many years ago.  The client sold DVD players to Brazil, but did not receive payment. 

The client neither elected arbitration in his agreement with the Brazilian party, nor asked for a negotiable instrument as an additional collateral for the payment.   Mortal errors to his claims.  

Dear Mr. Goodwill

 After going through your case, I'm happy to present you some considerations.

Please allow me to make a brief introduction to the relevant aspects of your case:

Had you a negotiable instrument signed by the importer, such as a promissory note, it would allow us to file a debt collection lawsuit (execução). This would take less time,  2-3 years maybe. But, unfortunately, this is not the case. 

In your case, we must file a lawsuit in order to obtain a judicial declaration of the debt, and only later move on to the phase of debt collection.

 Such court procedures in Brazil can, unfortunately, take long years to be completely settled. In the Sao Paulo State, above all, court procedures usually take at least 3 years, even the relatively simple ones. Usually, they will take no less than 5 years.

 Thus, I believe that the amicable composition is the best option right now. This can be achieved through negotiation, with the aid of some pressure mechanism made available by Law, such as the public registration of the company's debt before public notaries (Protesto).

 It should also be noted that many Brazilian companies have defaulted their import payments due to the Real (the Brazilian currency) devaluation before the dollar.  

 After all, the dollar appreciation causes the merchandise to become more expensive and makes the taxes due over the imports automatically become higher.

 This has lead many buyers to simply leave the goods at the port, unclaimed. 

 If this is the situation, the debt collection may be simpler, for we may obtain a warrant to seize the goods at the port.

 On the other hand, if the default has been made on purpose or due to financial difficulties, then the Judicial Claim of the debt may be the next necessary step.

 After the initial contact with the debtor, we will have a more clear definition of which situation they are in.  Even if we choose the amicable way as a starting point, your right to claim the debt before the courts remains unaltered.

 In case you have any other doubt, please contact me through e-mail or phone. 


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