Spain's collection agents practice public humiliation

Debtors may be visited by collectors disguised as monks, bagpipe players, bullfighters, or even Zorro.

By Lisa Abend | Correspondent of The Christian Science Monitor

from the April 30, 2007 edition

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Madrid - Jose Romero remembers the farmer from Alicante. The man owed money – a lot of it – and Mr. Romero sent one of his agents to collect the debt. When the collector arrived, the farmer told him to wait while he went in the house to get the payment. A few minutes later, the farmer came out with his rifle, shooting and yelling "Take that, Zorro!" The collector ran for the car, his black cape flapping behind him.

It wasn't a scene from a movie. Every day in Spain, collectors disguised as monks, bagpipe players, bullfighters, and, yes, Zorro, attempt to get the recalcitrant to make good on their debts.

Costumed collection is a growing phenomenon in Spain, where a boom in consumer spending and variable-rate mortgages have left many deep in debt and creditors seeking more effective collection.

A recent Equifax-Iberia study shows a steady growth in defaults in Spain – with 12 percent more unpaid transactions in March over the same month a year ago, and 50 percent more than the same month five years ago.

While personal debt has increased dramatically all over Europe, Spain has the fourth highest default rate among the 25 European Union nations. That rather miserable standing is fueled, say financial experts here, by Spain's notoriously lax debt laws and certain quirks of the Spanish culture.

Although a law was passed in 2005 to crack down on those who delay or default on payments, few of those defaulters are prosecuted or otherwise affected.

"In the United States, if you don't make your car payments, the repo man comes and takes away your car," says Pere Brachfield, professor of credit management at Barcelona's School of Business Administration. "Here in Spain, that would be impossible. Even if you never made a single payment in the 26 months of your loan, nothing would happen."

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