Checklist for Debt Collection in Brazil

5 years (ordinary period), counted from the date of default; if the contract provides for installment payments, the limitation period begins to run from the due date of the last installment.

However, it is essential to examine the specific circumstances of each case to determine the applicable statute of limitations.

The interruption of the statute of limitations occurs:

(i) when the judge, even if lacking jurisdiction, orders the summons, provided that the interested party duly promotes it;

(ii) through a formal protest or a bill of exchange protest;

(iii) by submitting a credit instrument in probate or bankruptcy proceedings;

(iv) through any judicial act that places the debtor in default;

or (v) through any clear and unequivocal act, even extrajudicial, that demonstrates the debtor’s acknowledgment of the right.

The action must be brought at the debtor’s domicile, except in exceptional circumstances.

By means of a simple power of attorney authorizing the Brazilian lawyer to act on their behalf, which can generally be signed through a link provided by the lawyer.

Not mandatory, recommended before initiating legal action in order to attempt, one last time, to resolve the dispute extrajudicially.

Conducted before initiating legal action to assess whether the proceedings are justified, as they involve potentially significant costs, as well as to verify the existence of assets registered in the debtor’s name.

Documentary evidence of the credit and all documents in the creditor’s possession, including documentation relating to extrajudicial payment requests, whether or not the debtor has responded, such as emails, WhatsApp messages, etc.

The average duration of a lawsuit depends on the type of proceeding adopted. Thus, the average is as follows:

• Enforcement of an extrajudicial enforceable instrument: 2 to 4 years
• Monitória action: 3 to 6 years
• Ordinary collection action: 5 to 7 years

They may be authorized if the creditor demonstrates the existence of the debt and provides indications of the risk of asset dissipation by the debtor.

When initiating legal action, a foreign creditor may be required to make a deposit equal to 10% of the credit amount if they do not hold an enforceable title, which will be refunded at the end of the proceedings in case of a favorable outcome. However, the creditor may be exempted from making such a deposit if there is an international treaty between Brazil and their country on the matter.

The costs associated with court fees vary depending on the State in which the action is filed and are proportional to the amount of the credit.

They apply automatically from the moment of default, and the contract may establish default interest of up to 12% per year in consumer relations, with no limit in commercial relations, taking practical circumstances into account. In the absence of such a provision, the statutory rate (Selic) applies.