Need to Collect a Debt in Mexico? Try a Formal Demand!
Do you have debtors in Mexico? As a creditor, secured or unsecured (though always better to be secured), recovering monies from foreign debtors may come with obstacles that you may not encounter when recovering monies domestically.
In a recent article, “Alternatives for Debt Collection Prior to Litigation in Mexico”, the author, Mr. Romelio Hernandez, advises that one obstacle creditors often face when doing business with companies in Mexico, is actually navigating the Mexican courts.
“Creditors who have had experience in Mexican courts know that the road to collecting a debt can be a daunting and frustrating task. In many cases, the legal process can be inefficient and ineffective, which leads to tough decisions regarding litigation in Mexico.”
Fortunately, Mr. Hernandez offers suggestions on how to collect a debt, when “being nice” is no longer working, but you are not quite to the litigation step.
One option? A formal demand. Think of it as a super charged demand letter. The formal demand includes the same information as what we often see in a demand letter, but it is actually submitted through the courts or a notary.
Mr. Hernandez provides a list of features which include the claim amount and the “presumption of imminent litigation”, which in a demand letter, may be the “consequence of not paying the debt” aka “the next legal action.”
There is a challenge that comes with the formal demand, a challenge that we don’t often see here in the U.S., and that is obtaining a Power of Attorney to execute the document & engage in the litigation on your behalf.
“One big hurdle for a foreign company engaging in litigation in Mexico is proving to the court that its representative has proper authority to act on their behalf during the case. This requires a complex POA subject to legalization, where even full details of the incorporation and legal standing of the company are required.”
Although it is not without its obstacles, Mr. Hernandez reassures us that the process of making the demand is actually quite simple:
“The process of making a demand is fairly simple and straightforward – The notary or court official will accompany the creditor’s representative and witness or make a personal demand upon the debtor. The official will hand the debtor any demand letters, notices, and supporting documents provided by the creditor (or issued by the court), and will take an active role in asking the debtor about the debt. He will then prepare a minute of what transpired, focusing on the debtor’s response while accepting or rejecting the debt.”
One last piece of advice? Make sure you have supporting documentation for your claim! Of course, you already knew that, because you’ve previously read the importance of backup documentation here on the NCS Blog.
BREAKING WEATHER NEWS: A storm may be brewing if you don’t provide supporting documentation when making a claim. That’s the “weather” coverage NCS brings to you in this week’s blog post “Can Supporting Documentation Make or Break Your Claim?”
Regardless of whether you are pursuing a UCC, mechanic’s lien or collection, these are documents you should always have handy:
- A copy of the Contract or Agreement (including Security Agreement)
- A copy of the Purchase Order(s)
Short list huh? Well, hang tight, we’re not done. Let’s delve a bit deeper, and uncoverthe important documentation based on service type.
In order to secure mechanic’s lien rights, you have to take the proper steps. Step 1 is often the preliminary notice. Although all states don’t require a preliminary notice, many do – check out this week’s infographic to learn more! “Serve a Notice to Protect Your Mechanic’s Lien Rights in These States”
Upcoming Free Webinars with Jerry Bailey
11/17/15 @ 1:00 PM – “Lien Foreclosure: Understanding the Mechanic’s Lien Foreclosure”
11/19/15 @ 1:00 PM – “Collateral, UCC Proceeds, Commingled Goods and Accessions”