Two very different movies: with paper and without paper
Without documents, collecting requires an ordinary lawsuit: proving the debt exists, witnesses, expert reports — years. With a pagaré (promissory note) that meets the requirements of the LGTOC, the law presumes the debt: the instrument “carries enforcement with it” (CCom art. 1391, sec. IV). That is the difference between arguing over whether you owe and arguing over how you pay.
The mechanics of the commercial executive proceeding
- The complaint with the instrument. The original pagaré is the star evidence; that is why it is kept like gold.
- Enforcement order (auto de exequendo). The judge orders enforcement: it directs a demand for payment on the debtor (CCom arts. 1392 et seq.).
- Immediate seizure. If payment is not made on the spot, sufficient assets are seized to cover principal, interest and costs. The debtor has the right to designate assets in a certain order; if they don't, the plaintiff designates them.
- Service and defenses. The debtor may raise limited defenses (payment, alteration of the instrument, the 3-year statute of limitations, usurious rate…).
- Judgment for auction (sentencia de remate). If the action succeeds, the seized assets are sold at auction and the creditor collects from the proceeds; any surplus belongs to the debtor.
What if there was real collateral?
A mortgage and a pledge give the creditor priority over the encumbered asset: it collects first, ahead of ordinary creditors. The non-possessory pledge (prenda sin transmisión de posesión) also has its own enforcement procedure (CCom, Book 5, Title 3 bis). It is exactly why collateral that is well constituted and registered —RUG, the Public Registry— is worth more than ten promises: in the worst case, it defines who collects and in what order.
What protects the debtor (there are rules for the creditor too)
- Non-seizable assets: the law excludes from seizure what is indispensable (the family homestead, basic work tools, among others).
- Usury reviewable on the court's own motion: notoriously excessive rates may be reduced by the judge even if the debtor does not ask — we explain it in the maximum legal interest on a loan.
- Collection with limits: threats, violence or deception in out-of-court collection are unlawful and have their own reporting channels. Collecting is a right; harassing is not.
The smart move before the lawsuit
For both sides, the lawsuit is plan C. If you are going to default, renegotiate before the due date and in writing (a write-off, an extension, a restructuring with a new schedule). The rational creditor prefers to collect on a restructured basis than to pay lawyers and auction; the debtor buys time without destroying their position. What nobody forgives is silence: disappearing turns any credit into litigation.