The intercurrent statute of limitation has become a highly relevant topic for creditors in Brazil.
Its recognition can lead to the extinction of actions filed for debt recovery, which is why it is essential to understand how it works and adopt effective strategies to prevent its occurrence.
1. What is the intercurrent limitation of the right to collect? The intercurrent limitation of the right to collect refers to the loss of the right to demand payment of a debt from the debtor. This form of limitation arises when, after the initiation of an execution, no assets or property of the debtor can be located, and the creditor is unable to satisfy the debt. In other words, even after initiating the execution, the creditor may find their efforts to collect the debt frustrated if they fail to act strategically.
2. When does the limitation period begin? Brazilian legislation establishes that the initial period for intercurrent limitation begins when the creditor is made aware of the first unsuccessful attempt to locate the debtor or attachable assets. For the intercurrent limitation period to begin, the judge must first suspend the proceedings for one year. If, after this year, no assets have been located by the creditor, the limitation period will then start (usually, five years for debt collection). Despite the provisions Brazilian legislation, the prevailing case law holds that the proceedings should only be suspended for one year after all standard execution measures have been exhausted, and not after the first unsuccessful attempt to locate attachable assets.
3. Consequences for the creditor: Intercurrent limitation of the right to collect results in a disadvantage for the creditor, as it leads to the termination of the execution and the permanent loss of the right to collect the debt. This means that even if the debtor later acquires assets or has the means to settle the debt, the creditor will no longer be able to demand payment through. Regarding legal fees, the Brazilian Superior Court of Justice has recently ruled that no costs will be imposed on the parties when intercurrent prescription is recognized. Previously, the case law allowed for the application of the causality principle, holding the debtor responsible for the costs of the proceedings and opposing party attorneys’ legal fees.
4. How can the creditor prevent intercurrent prescription? The creditor must adopt an active and strategic approach to prevent intercurrent limitation of the right to collect. It is essential for the creditor to regularly search for assets through judicial systems, as well as request actions from notaries, public authorities, and available databases. Moreover, if asset location efforts prove unsuccessful, the creditor may seek broader measures, such as disregarding the corporate veil. Another essential factor is the constant monitoring of procedural progress. The creditor should track the execution’s developments to avoid prolonged periods of inactivity. Submitting periodic requests, even for the reiteration of pending judicial orders or requesting new actions, is crucial to demonstrating the creditor’s ongoing interest in recovering the debt.
In conclusion, intercurrent prescription poses a significant obstacle to effective debt recovery, requiring creditors to engage in diligent and proactive actions throughout the execution process. A thorough understanding of the timeframes and requirements for its occurrence, combined with the implementation of effective asset search strategies and continuous monitoring of the proceedings, are indispensable measures to mitigate the risk of action extinction and ensure the satisfaction of the creditor’s right.
