Two very different movies: with paper and without paper
Without documents, collecting requires an ordinary lawsuit: proving the debt exists, witnesses, expert reports — years. With a pagaré (promissory note) that meets the requirements of the LGTOC (Mexico's negotiable-instruments law), the law presumes the debt: the instrument “carries enforcement with it” (CCom art. 1391, sec. IV). That is the difference between arguing over whether you owe and arguing over how you pay.
The mechanics of the executive proceeding
- The complaint with the instrument. The original pagaré is the star exhibit; that is why it is guarded like gold.
- Enforcement order (auto de exequendo). The judge orders enforcement: a demand for payment is served on the debtor (CCom arts. 1392 et seq.).
- Immediate seizure. If payment is not made on the spot, sufficient assets are seized to cover principal, interest and costs. The debtor has the right to designate assets in a certain order; if they don't, the plaintiff designates them.
- Service and defenses. The debtor may raise limited defenses (payment, alteration of the instrument, the 3-year statute of limitations, usurious rate…).
- Judgment for auction (sentencia de remate). If the action succeeds, the seized assets are sold at auction and the creditor collects from the proceeds; any surplus belongs to the debtor.
What if there was real collateral?
A mortgage and a pledge give the creditor priority over the encumbered asset: it collects first, ahead of unsecured creditors. The non-possessory pledge (prenda sin transmisión de posesión) also has its own enforcement procedure (CCom, Book 5, Title 3 bis). That is exactly why collateral that is properly created and registered — RUG, the Public Registry — is worth more than ten promises: in the worst case, it defines who collects and in what order.
What protects the debtor (there are rules for the creditor too)
- Non-seizable assets: the law excludes the essentials from seizure (the family homestead, basic work tools, among others).
- Usury reviewable on the court's own motion: manifestly excessive rates may be reduced by the judge even if the debtor does not ask — we explain it in the maximum legal interest on a loan.
- Collection with limits: threats, violence or deception in out-of-court collection are unlawful and have their own reporting channels. Collecting is a right; harassing is not.
The smart move before the lawsuit
For both sides, the lawsuit is plan C. If you are going to default, renegotiate before the due date and in writing (a partial write-off, an extension, a restructuring with a new amortization schedule). The rational creditor would rather collect on a restructured loan than pay for lawyers and an auction; the debtor buys time without destroying their position. What nobody forgives is silence: disappearing turns any loan into litigation.