THE EXECUTIVE PROCESS AS A MECHANISM FOR DEBT COLLECTION

Signing a contract does not always guarantee payment. When the debtor defaults, time works against the creditor. Therefore, it is essential to consider legal alternatives to protect our money. A first, preventative, and fundamental step is to include guarantees; that is, in case of default, what guarantees can ensure the creditor recovers their capital.

It is always best to take precautions to ensure the return of our money; however, even if specific guarantees have not been established, with a solid strategy it is still possible to collect the debt. For this purpose, one of the most efficient alternatives offered by Bolivian law for debt collection is the executive process.

What is an enforcement proceeding?

An enforcement proceeding is a shorter legal process than ordinary proceedings. If the claim is properly filed, it is admitted through an initial judgment, which is a ruling by which the judge recognizes that the presented instrument has the force of an enforceable instrument for collection.

This judgment orders that the defendant be summoned to raise objections within ten days, if they deem it appropriate. The judge will convene a hearing to resolve the objections and subsequently issue a final judgment.

If the judgment is in favor of the plaintiff, they may exercise their legal rights to enforce their right to collect, based on both the instrument and the final judgment.
To initiate an enforcement proceeding, it is necessary to have an enforceable instrument.

What is an enforceable instrument?

Enforceable instruments are documents that prove the existence of a liquidated debt (the amount is determined or easily quantifiable) and a due and payable debt (the obligation can now be demanded because the term or condition has been met).

Article 379 of the Code of Civil Procedure lists the following enforceable instruments:

1. Public documents.

2. Private documents signed by the obligated party or their representative, voluntarily acknowledged before a competent authority or a notary public.

3. Negotiable instruments and commercial documents with executive force according to the Commercial Code.

4. Accounts approved and acknowledged by a final and enforceable court order.

5. Credit documents for common expenses in horizontal property regimes.

6. Credit documents for leases of property.

7. Admission of a liquidated and due debt before a competent judicial authority.

8. Settlement not judicially approved but executed in a public deed or acknowledged private document.

9. All cases in which the Law grants the creditor the right to initiate enforcement proceedings.

In practice, if a contract is signed with notarized signatures, it becomes legally enforceable (section 2). This is why it´s so important to sign contracts before a notary public to protect the creditor´s rights in case of default. Even if the contract was signed without notarized signatures, the debt can still be collected, but this oversight will make the process more time-consuming when time is of the essence.

How can I ensure my contract is enforced?

As mentioned earlier, it´s best if the contract includes real or personal guarantees. However, if these weren´t established, the law allows for the following to be requested from the beginning of the enforcement proceedings:

• Attachment of bank accounts

• Lien on real estate

• Seizure or attachment of personal property

Once a final judgment is obtained, the attached assets are auctioned until the debt is satisfied. If no bidders appear, the plaintiff can take possession of the asset as payment.

As a conclusion, the enforcement process is one of the fastest and most effective ways to enforce contracts and recover capital in the event of non-compliance. Prevention is key: it is always advisable to seek legal advice before signing any contract. Time and proper guidance when collecting a debt make the difference between recovering the money and losing it.

José Hugo Antelo Eguez

Litigation and Corporate Lawyer