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When it comes to debt recovery, it is essential to know exactly “when a credit becomes time-barred“. The following article describes:
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The statute of limitations, aka prescriptive period, is the mechanism according to which if the creditor does not exercise his/her right within a certain period of time, his/her right ceases to exist. The general principle regarding prescription is provided by article 2934 of the Italian Civil Code, but let’s immediately give some practical examples:
In the following paragraphs we will examine in detail other prescription periods, but we should start by noting that the law always provides for a period within which action must be taken… otherwise the credit “expires“.
In order to check whether a debt claim is time-barred, it is first necessary to determine how much time has elapsed from the day on which the debt became due (e.g. from the payment date stated on the invoice) to the current day. After that, the ratio between the duration of this period and the period prescribed by law must be established.
Please note! The credit is only extinguished if the creditor has remained inactive. We will address this aspect more thoroughly in the next paragraph.
Before analyzing the different types of credit and their respective prescription periods, we will first discuss the procedure to be followed by the creditor to prevent the prescription of a credit.
Essentially, the creditor must clearly express his/her desire to obtain payment from the debtor. This expression of will (i.e. intimation of payment) can take place through:
Should the formal notice be issued, the timer is reset to zero. That is, a new prescriptive period begins to run (from the beginning). Conversely, if the creditor does nothing to recover his debt, it could be assumed that he has lost interest in it.
Simple telephone reminders are therefore not sufficient, rather it will be necessary to issue a formal notice of default, for example, sent by a lawyer by registered letter with return receipt or CEM. The formal notice should always contain the exact amount claimed and the reasons for the credit.
A judicial action is also considered to effectively interrupt the prescription (summons, appeal for injunction, etc.), as well as the hypothesis in which the debtor has expressly recognized his/her debt.
We shall now analyse the various prescriptive periods.
The general rule is that regarding contractual credits (which are time-barred in ten years), but here we examine the other prescriptive periods. It goes without saying that it is of utmost importance to classify the credit/debit so as to ascertain how much time is left to act, thereby avoiding the prescription.
The following are time-barred in 5 years:
Short or presumptive prescription hypotheses are those based on the presumption that a given credit has been paid or that it is in any case extinguished once the short terms (6 months, 1, 2 and 3 years) indicated by the law have elapsed.
They are time-barred in 3 years:
They are time-barred in 2 years:
Time-barred in 1 year:
These are prescribed in 6 months:
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