Corporate & commercial Law

How to collect a debt in italy? A legal analysis

First legal steps to recover a debt in Italy

If the Italian debtor does not fulfill his obligations, the creditor typically needs to follow certain steps before resorting to legal action. These steps may vary depending on the legal and contractual framework. Here are some common actions the foreign creditor may take when he wants to try to recover money in Italy:

  • Legal Notice or Written Request (Mora Letter): In general, before initiating legal proceedings, the creditor should formally notify the debtor of their non-compliance. This notice is often referred to as a “mora letter” or letter of formal demand. In this letter, the creditor requests the debtor to fulfill their obligations within a specified period (usually 15 days) and warns that legal action will be taken if they fail to do so. The debtor, upon receiving the mora letter, may incur legal consequences, including the obligation to compensate for any damage caused by the delay. Interest may accrue on the debt from the moment of default, especially in monetary obligations, as per Article 1224 of the Civil Code. If the debtor becomes unable to fulfill their obligation due to a cause not attributable to them, they are still obliged to perform. The notice interrupts the statute of limitations (prescription) for the debt, as per Article 2943, paragraph 4, of the Civil Code.
  • Demand to Perform (Diffida ad Adempiere): The creditor can also send a formal written notice to the debtor, called a “diffida ad adempiere.” In this notice, the creditor informs the debtor that the contract will be terminated automatically (risoluzione ipso iure) if the debtor does not fulfill their obligations within a reasonable period (typically 15 days), while reserving the right to seek damages.

These steps are important because they demonstrate that the creditor has made reasonable efforts to resolve the matter without resorting to legal action. However, if the debtor still fails to comply after receiving such notices, the creditor may initiate a lawsuit to recover the debt or enforce the contract.

It is important to note that the specific procedures and legal requirements for debt collection may vary by jurisdiction, so it is advisable to seek legal counsel or consult local laws and regulations when dealing with debt collection.

Book a consultation with ILF Italian litigation attorneys; they will analyze your case and we will suggest the best approach in sending a legal notice to your Italian debtor!

Assessment of debtor’s assets in Italy

The assessment of the debtor’s possession should be made both ex ante (before) and ex post (after) to determine whether it is appropriate to take legal action for debt recovery. ILF commercial lawyers will be able to handle this assessment in the preliminary phase to provide you with a solid suggestion on how to attack Italian debtor’s assets.

How can the ILF attorneys be able to obtain this information?

First of all, ILF lawyers will conduct a property inspection to access the consultation of records, notes, and documents deposited in the Land Registry. The inspection can be carried out:

By the name of the person (by providing the person’s name, surname, and tax code, you can access all the assets the person owns and all the formalities related to them).

By property (by knowing the cadastral data of the property, such as sheet, parcel, and particle, you can learn about all the legal events related to the property).

It must also be reviewed information regarding the formalities present in the mortgage database:

Transcriptions: Acts of transferring or establishing rights on real estate properties are subject to transcription. The “referenced party” in the inspection can be indicated as “in favor” (for example, as a buyer in a sale) or “against” (in the example provided, the seller). Through the inspection of transcriptions, you can also review acts establishing encumbrances, such as foreclosures, seizures, or legal requests, on the property.

Inscriptions: Through the mortgage inspection, you can review formalities related to the establishment of mortgages on real estate. This includes voluntary mortgages recorded on the property due to a mortgage loan or judicial mortgages recorded following a court order or executive procedure, as well as tax liens recorded by the Italian Revenue Agency for unpaid taxes.

Annotations: Mortgage inspections also reveal formalities that modify previous transcriptions, inscriptions, or annotations, such as the cancellation of mortgages and foreclosures.

The Italian judicial execution phase: which seizure to carry out

Italian Payment Injunction (Decreto Ingiuntivo)

The injunction order or “provisional order” is a quick, effective, and cost-effective tool available to the creditor for the recovery of their debt. It provides the applicant with an executive title within a short period to seize the debtor’s assets. To initiate a provisional order, the creditor must:

  • Be the holder of a right to credit.
  • Have written evidence of the claimed debt.

The execution phase

Once the creditor has the executive title (e.g., an enforceable injunction), they must decide how to “use” it. The choice of the type of forced execution depends on the debtor’s assets, so it is crucial to conduct a preliminary investigation, as specified in the previous paragraphs. Before proceeding with the seizure (or the search for assets to be seized), the service of a payment order is required. After 10 days from this step, the creditor can decide how to proceed. For example:

If the debtor owns real estate (such as an apartment or land), you can choose real estate execution or the registration of a mortgage (in this case, notification of the payment order is not necessary, as mentioned in paragraph 12).

If the debtor receives a salary, a pension, or has a bank account, you can resort to third-party execution.

If the debtor owns movable property (such as a collection of paintings), you can proceed with movable property execution.

If the debtor owns registered movable property (such as a ship, a car, or an aircraft), you can proceed with special movable property execution (Art. 521 bis c.p.c.), which differs from normal movable property seizure due to the unique nature of the seized property. It is also possible to register a mortgage on registered movable property (Art. 2810 c. 2 c.c.).

The registration of a judicial mortgage in Italy

If the creditor has obtained a court order that has not been contested or has been confirmed after opposition, they have an enforceable title suitable for registering a judicial mortgage. While for proceeding with a seizure, it is necessary to serve a payment order, registering a mortgage only requires the title.

The judicial mortgage is a real right of security based on, for example, a judgment or an enforcement order. The following are eligible for registering a judicial mortgage:

  • Judgments that contain a sentence for the payment of a sum of money or the performance of another obligation or for damages to be liquidated subsequently (Art. 2818 c. 1 c.c.).
  • Arbitration awards condemning the payment of a sum of money or the performance of another obligation (Art. 2819 c.c.).
  • Other judicial orders to which the law attributes this effect (Art. 2818 c.2 c.c.), such as an enforcement order (Art. 655 c.p.c.).

The mortgage gives the creditor the right to:

  • Seize the property on which it is established (ius distrahendi).
  • Be satisfied with preference over the proceeds of the forced sale (ius praelationis).

For example, if the debtor owns an apartment, the creditor registers a mortgage, and later another creditor proceeds with a seizure. The creditor with the mortgage (i.e., with a registered mortgage) has the right to be satisfied preferentially (i.e., before the seizing creditor) from the proceeds of the sale initiated by the seizure. The mortgage grants them the right of preference (provided it was registered prior to the transcription of the seizure).

A mortgage can also be registered on a property that is not exclusively owned by the debtor. For example, if the apartment is only 50% owned by the debtor, it is still possible to register a mortgage.

Moreover, the mortgage guarantees the right of follow-up, meaning the power to exercise the guarantee even if the ownership of the property has passed to others.

According to Article 2810 of the Italian Civil Code, “capable of being mortgaged are:

  • immovable property that is in trade with its appurtenances;
  • the usufruct of the same property.

Fixed costs to collect a debt in Italy

“Stamp Duty” cost for the application for a payment injunction in Italy

When starting a legal proceeding, the plaintiff or petitioner must pay the unified fee; its value is determined by the amount at stake and the nature of the case. For the injunction decree process, the value of the unified fee is reduced by half.

In addition to the unified fee, you must also pay a stamp duty of €27.00 as a lump-sum advance payment (Art. 30 D.P.R. 115/2002), which is not required for proceedings before a justice of the peace for claims under €1,100.00.

PAYMENT INJUNCTION STAMP DUTY (art. 13 c. 3 DPR 115/2002)

Debt valueStamp duty
till to € 1.100,00€ 21,50
from a € 1.100,00 to 5.200,00€ 49,00
from € 5.200,00 to € 26.000,00€ 118,50
from € 26.000,00 to € 52.000,00€ 259,00
from € 52.000,00 to € 260.000,00€ 379,50
from € 260.000,00 to € 520.000,00€ 607,00

Stamp duty costs for the seizure in Italian debt recover procedure

Regarding the enforcement phase, the costs vary depending on the type of procedure. You should also consider the costs for the writ of execution (which includes the notification costs and the attorney’s fees).

Judicial real estate auction: the stamp costs amounts to  €278.00, in addition to a lump-sum advance payment of €27.00. There are also costs for notification, transcription in the land registry of the seizure (€299.00), notarial fees (Art. 567 c. 2 c.p.c.), costs for the appraisal, the custodian, the sale delegate, and advertising the sale.

Judicial personal property auction: for disputes with a value below €2,500, the unified fee is €43.00, and for disputes with a value exceeding €2,500, the unified fee is €139.00, in addition to the lump-sum advance payment of €27.00. There are also notification costs and additional expenses in the case of the seizure of cars/motor vehicles (e.g., registration at the motor vehicle registry, etc.).

Enforcement against third parties: the unified fee varies based on the amount being sought in the seizure (e.g., up to €1,100, it is €43.00), in addition to the lump-sum advance payment of €27.00. There are also notification costs.

Naturally, in case the enforcement is successful, all the expenses mentioned above will be reimbursed to the proceeding creditor. However, this is not the case in instances of unsuccessful enforcement. For this reason, before initiating an enforcement procedure, it is advisable to assess and verify the debtor’s financial capacity.

Debt collection legal procedure in Italy is a very complex process and we suggest to book a free consultation with ILF litigation attorneys before taking concrete steps.

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