Spain's collection agents practice public humiliation
Debtors may be visited by collectors disguised as monks, bagpipe players, bullfighters, or even Zorro.
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.Skip to next paragraph
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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."
The laxity of the law may stem in part from Spain's cultural climate. Luis Salvaterra, general director of the Spanish branch of Intrum Justitia, a leading European collection company, said in an interview published on the firm's website that, "In Spain, there is a culture of debt, and delays in payment are, to a certain extent, intentional, designed to provide financing at the cost of the provider."
Professor Brachfield goes even further. "You have all these picaresque novels like "Lazarillo de Tormes'," he notes, referring to the romanticization of rascalish characters devoted to petty thievery and skipping out on their debts. "That tradition has created tolerance for the character of the professional debtor. He's not a delinquent; he's a charming, amusing figure."
The failure of the courts to force debtors to pay and the expense of mounting a lawsuit convince many businesses to look to the costumed agencies for relief. The phenomenon is not new – the first such agency, the Cobrador del Frac, whose agents wear tuxedos, has been in business for more than 20 years. It has proved peculiarly effective in a culture where honor still matters. In fact, the success of the Cobrador del Frac has spawned a slew of rival companies: Town Criers, Buddhas, and even Pink Panthers.
The Monastery of Collection is one of them. Of its 28 employees, four regularly dress as 16th-century monks, though in special situations – such as a recent collection against the municipal government of Madrid for failure to pay its cleaning services – the company will send out extra monks. The monk idea came from Spanish history: in the Renaissance era, certain orders of monks would go out on horseback and collect tithes owed the Catholic Church. "Plus," says the agency's head manager Miguel González, "monks have a certain moral authority."
Not all debtors get the monk treatment. "The first thing we do is work up a report on the debtor's environment – his work situation, his financial situation, his family, his social standing. We use that information to determine the most effective strategy," explains Mr. González. "But the end is always the same: We have to find his weak spot. That's where we'll attack."