Months are coming where economic uncertainty will be the dominant tone. High inflation, rising prices of raw materials, skyrocketing energy prices… These are factors that can jeopardize the viability of many companies and increase delinquency.
In this sense, it is foreseeable that recovery companies will see their volume of work increase in the coming months. A sector – that of extrajudicial collection – that in Spain, unlike the countries around us, is not regulated by law. We talked about all these issues with Joaquim Coller, manager of the National Association of Collection Management Entities (ANGECO)
How is the regulation of recovery in Spain and what could be done to improve it?
The recovery is not regulated in Spain. In fact, we are the only country in our environment that does not have a specific regulation in this regard, so any progress in this field would be very good.
In this sense, we are currently at a very important moment for the sector, since regulatory changes are taking place that can mark a before and after for the industry in Spain.
The most important of these is the transposition of the European directive on credit administrators and buyers, since it is a magnificent opportunity to take advantage of this transposition to expand the terms specifically referred to in the directive and to provide the sector in Spain with more wide.
Why is this regulation important?
Good regulation will favor the proper functioning of the credit cycle, it is essential for general economic development, since if it does not work correctly, access to credit is substantially hindered, reducing economic growth.
What requirements must be met for a company to go to a third party for debt collection?
In Spain, any company can transfer the credit or its management to a third party in order to collect the debt, without having to comply with certain legal requirements to do so.
Generally, companies go to collection companies once the first attempts to see the debt satisfied have failed, due to the guarantee they offer, since they carry out their actions professionally and respecting the rights of all parties involved in the process, thus supplying the current lack of specific regulation of the sector in Spain.
The economic context is expected to be complicated for the coming months. What are your forecasts?
The various analysts point out that the trend in interest rates is clearly upward; An example of this is that the European Central Bank has raised rates by 125 basis points and anticipates further increases. Additionally, there is a change in the trends of the Spanish real estate market and a certain overvaluation of prices. The Governor of the Bank of Spain, Pablo Hernández de Cos, has described the current macro-financial situation as “very complex”.
This context of uncertainty may lead to an increase in non-performing loans, but the collection sector is prepared to absorb the portfolios that may be transferred to it, thus helping companies that need it and, in turn, also helping debtors of those companies to find a solution to their delicate financial situation in order to reintegrate them into the credit system.
What assessment do you make of the legal modification introduced in the bankruptcy reform that has changed the debt collection period, reducing the duration of the debtor’s payment plan from five to three years in cases of the Second Chance Law?
The objective of this modification is to set when it is going to be paid and what part of the debt the debtor is going to pay to the creditors, thus helping to restructure outstanding debts.
The payment plan seeks to satisfy the right of collection of creditors in a certain period. Thanks to the payment plan, creditors have a calendar that tells them when they will collect their credits.
Therefore, the shortening of the term for debt collection from five to three years represents a benefit for the creditor, since it translates into a speeding up and facilitation of the collection process. In addition, it also benefits the debtor, since it shortens the time in which he fully rejoins economic traffic through the second chance mechanism.
From this perspective, it seems to us to be a good measure since, in addition, it has exceptions that give it flexibility, such as the possible extension to five years, in some cases in which creditors make concessions or more burdensome efforts in favor of the debtor or when your risk of recovery is greater.
