Attempting to conduct debt collection with debtors who are located in foreign countries can add an additional level of complication to the entire process. Every country has their own set of rules and regulations regarding both domestic and international debt collection. It is nearly impossible for anyone who is not a professional to keep track of the policies for all of the different countries that they do business with.
Because Mexico is one of the largest trade partners of the United States, and also because it is located so close, commercial debt recovery agencies are receiving more and more cases involving debtors who reside in Mexico. Despite the United States’ strong open trade relationship with Mexico, it is still a foreign country with a different language, customs, and cultures. There are also a different set of laws governing business and debt collection in Mexico.
Debt Collection in Mexico
Because of reduced requirements, companies in Mexico are far-less forthcoming with financial information than their American counterparts. This can make it very difficult to obtain any information at all about the financial status of the person or company that you are attempting to collect from.
There is also no official dunning process in Mexico, which can make it very difficult to communicate with your debtor. The only real option for official communication is to send a formal letter through a public notary.
Another interesting fact about debt collection in Mexico is that interest and collection costs are not standard there as they are in the United States. While agreed upon interest rates and collection costs are enforceable, many Mexican debtors will use those fees as negotiation chips when attempting to settle a debt.
One aspect of debt collection in Mexico that definitely benefits creditors is that companies cannot get out of debt by closing and then reopening as a new entity. As long as the creditor can show proof that the equipment was simply transferred from one entity to another, they may still have a legal right to claim that equipment.
The Legal Process in Mexico
Should you be forced to pursue legal action against a debtor in Mexico, many of the same common sense laws that exist in the United States also apply in Mexico. The legal process can only be entered after you have made a reasonable effort to collect the debt outside of the courts.
It is typical in Mexico for a legal proceeding involving a debt collection to last anywhere from one to three years. The process usually starts in the lower courts located closest to the debtor’s address.
Lawyers for the creditors are required to present evidence that includes invoices, delivery notes, account statements, credit statements, and a notarized power of attorney. It is important that all of these documents be originals, not copies. It may also be helpful to have any other contracts, purchase orders, and evidence of any communication with the debtor.
Court costs in Mexico are generally charged to the loser of the decision.
While the international debt collection process in Mexico is not nearly as complex as countries like India or China, it is still an entirely different country with different rules and regulations. Many collection agencies are well versed in Mexican debt collection procedures and could handle the entire situation for you on a contingency rate basis.