Editor’s note: Nobody wants to end up on the Bad Debtor’s Register, known as Fichero de Morosos in Spain, but this grinding crisis has forced many locals and foreigners alike into default on their Spanish debts. Regular legal-contributor Raymundo Larraín Nesbitt explains the most important things to know about the Bad Debtor’s List in Spain.
Lawyer – Abogado
8th of April 2014
Spain has ‘technically’ exited its seven year recession. However, the financial aftermath continues to look grim for most of the population (with the exception of our political class, of course). As a consequence, over 100,000 people are added each month to Spain’s dreaded bad debtor’s lists.
This article explains how you may be included in one of them (even unbeknownst to yourself!), the severe financial consequences this has (in Spain) and how to remove yourself from a black list.
What is a Bad Debtor’s List?
In Spain companies will include you on non-payment in a bad creditor’s list such as EXPERIAN, ASNEF or RAI which has dire consequences as it adversely affects your credit score and by extension hampers your future borrowing ability.
You may think that the people who are normally included in debtor’s black lists are in most cases professional non-payers or maybe families hit by the brunt of Spain’s financial downturn. However you would be surprised to learn there are multiple cases reported in which a person with a spotless credit track record is included out of spite by a company as a result of a legitimate dispute over a questionable invoice. At other times it may fall down to something as clumsy as a careless oversight on paying a service.
- Your telephone company charges you €800 for roaming fees on a five-day trip to Egypt. Your mobile was switched off all the time. You refuse to pay until they give you an explanation. The mobile company declines explaining and blacklists you immediately.
- Your electric supplier increases your bimonthly invoice by 20% without providing a justified reason. You refuse to pay and are blacklisted as a result.
- You fail to close properly a Spanish bank account, or forget to top it up regularly, and slip into the red. The bank will blacklist you after a couple of months. Lenders take legal action for non-payment spanning between 3 to six months after the first arrears.
Consequences of being included in a Bad Debtor’s List
These consequences are financial and will severely hinder your borrowing ability in Spain, or elsewhere, in the near future. On being included in a black list you may be turned down on some or all the following:
- Personal loan
- Business loan
- Mortgage loan
- Consumer loan e.g. cards from major high street retailers that allow you fractioned or deferred payment over the next months. Kiss goodbye to your “El Corte Inglés” card.
- Credit card application
- Barred membership by selected retailers i.e. gyms, video clubs, golf clubs
Amount of the Debt
There is no minimum amount. Less than €100 warrants you being blacklisted.
Duration of the Inclusion in a Debtor’s List
The duration normally spans six years. After said time your details should automatically be removed by the registry.
What happens if I am not notified of my inclusion in a Bad Creditor’s List?
This is an entitlement. Failure to comply by the registry gives you good legal grounds to request a cancellation and a full withdrawal from the debtor’s registry. In practice this may be more difficult than I make it sound and you may need a lawyer to assist you.
Removal of a Debtor’s Registry
Paying off your debt will not have you automatically removed from a debtor’s registry. You must proactively pursue your own removal or else appoint someone qualified to do it on your behalf i.e. a lawyer. The whole procedure will only be carried out in Spanish language.
The Four Steps to remove oneself from a Bad Debtor’s Registry in Spain
- Pay off the outstanding debt which triggered your inclusion in the debtor’s list in the first place. Keep evidence substantiating the debt is fully settled (receipt, bank transfer, correspondence with the creditor etc.)
- Contact (in Spanish) the registry which have you black listed. Request a cancellation request form (“solicitud de cancelación”, in Spanish).
- Complete the form in Spanish supplying the registry with all the necessary evidence that unequivocally demonstrates the debt is now settled. You will have to send all by registered post (“burofax”) along with a copy of your passport / DNI (national ID card). The register will contact your creditor to confirm the debt has been settled to their satisfaction (there may be interests accrued or penalties that also need to be paid besides the principal itself).
- Once a registry has concluded their own internal investigation they should remove you within the next 30 days.
Conclusion Bad Debtor’s List (“Listado de Morosos”)
Spain’s ongoing delicate financial situation pushes families to the brink. The inclusion in a debtor’s black list may not be an issue if you are non-resident in Spain but becomes a serious matter for those holding resident status as it will seriously hamper their borrowing ability as well as being an overall nuisance in their day-to-day life.
I strongly recommend you to avoid an inclusion in such lists. And if you do happen to get included, a lawyer – for a reasonable fee – can help you to clear your good name by cutting through the red tape and language barrier in an expedient manner.
“I spent a lot of money on booze, birds and fast cars. The rest I just squandered” – George Best.
Northern Irish professional footballer. Winner of the European Cup with the Manchester United in 1968.
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Spanish Mortgage Loans: An Overview – 21st February 2012
Mortgage Collar Clauses Revisited (‘Cláusulas Suelo’) – 8th December 2013
Bank Repossessions in Spain – 21st February 2014
Bad Debtor’s List (‘Fichero de Morosos’) – 8th April 2014
Spanish Creditors Pursuing Debts Abroad – 8th May 2014
Dación en Pago Explained or How to Hand Back the Keys – 8th December 2014
Please note the information provided in this article is of general interest only and is not to be construed or intended as substitute for professional legal advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in criminal prosecution. VOV.
2014 © Raymundo Larraín Nesbitt. All rights reserved.