The draft amendment to the Execution Law opens the door to completing the reform of the relationship between creditor and debtor, by addressing shortcomings in collection and developing tools for recovering rights, while preserving the principle of not imprisoning those unable to meet obligations under the covered contractual agreements. This approach deserves support, because it aims to strengthen the effectiveness of enforcement, and allows building on the economic and social benefits that can come from keeping a defaulting party able to work.
The core benefit of this direction is that freedom allows the defaulting party to look for work or restart their project and negotiate a settlement, whereas imprisoning them may halt their source of income and expand their debts, an outcome that serves no creditor waiting for their money. Therefore, enabling the debtor to regain financial capacity can become part of protecting the creditor’s rights, provided it is tied to clear follow-up and commitment. A merchant who keeps operating retains the chance to collect their dues and sell their goods, and a worker who keeps their job remains better able to pay installments and cover their family’s basic expenses.
From here, the more useful question becomes: how do we turn the opportunity afforded by non-imprisonment into actual repayment? How many defaulting parties were able to return to work, and how many settlements preserved economic activity that was threatened with halting? These results deserve measurement alongside collection rates and enforcement timelines, so we can determine what has been achieved and what needs development, and avoid reducing the assessment of the experience to isolated complaints or conflicting impressions.
This doesn’t diminish the importance of complaints about delay and slow recovery of funds, as the creditor may be a small merchant relying on collecting dues to pay wages and buy goods. But addressing these concerns begins with distinguishing between the unable and the capable who refuse to pay, and developing means of detecting and reaching assets, which is the direction the draft moves toward by strengthening early attachment and disclosure of income sources and assets in commercial debt cases.
These proposals gain importance from directing enforcement procedures toward the debtor’s actual financial capacity, which allows protection from default and pursuit of funds from which repayment can be made. Also, organizing settlements by keeping an initial payment of no less than 15% and proposing monthly installments of no less than 2% of the remaining debt aims to provide a clearer path to repayment, while aligning commitments with actual income remains essential to ensure the settlement’s continuity.
The development of collection also extends its effect to checks, with a need to separate non-imprisonment in enforcement from the amendment concerning the criminal protection of checks, and to consider the issue date when determining the legal ruling. Lifting criminal protection from covered checks doesn’t cancel their value or the right to claim them, and it may encourage assessing a party’s ability to pay before extending credit, reducing reliance on the threat of imprisonment as a guarantee of payment.
In this context, developing credit information, accelerating enforcement, and providing appropriate guarantees become important factors for the continuation of deferred sales, especially for small enterprises. The effect of these changes on the acceptance of checks and the cost of dealing in them deserves follow-up, without assuming that a return to imprisonment will solve problems of trust and liquidity, since market confidence needs collection procedures that can be relied upon, and a more precise assessment of risks before debt arises.
The draft also allows discussing precautionary measures, including electronic bracelets and travel bans, which requires controlling their use so they serve enforcement while preserving employment opportunities and repayment. With the development of electronic procedures and shortening of deadlines, the amendments can help narrow the gap between the establishment of a right and its recovery. The more productive direction, then, is to complete the benefits of not imprisoning defaulting parties by reforming collection tools, and to measure success by rights recovered, projects that continue, and settlements that are implemented.
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