Protest of an instrument: when and how to use it
The protest of an instrument is a collection tool that publicly records the non-payment of a debt. Used judiciously, it can encourage settlement without a lawsuit.
What the protest of an instrument is
The protest is a formal act, carried out at a notary's office, that evidences the non-payment or non-acceptance of an instrument or debt document. It is usually used as a means of collection and to place the debtor in default. In general, it is an alternative that precedes or complements other credit recovery measures.
When the protest is usually used
The protest tends to be considered when there is a document representing the debt and payment did not occur on time. Some examples of situations usually involve this tool.
- Unpaid trade notes (duplicatas) arising from sales or services
- Outstanding checks and promissory notes
- Other instruments and debt documents that are accepted
- Collections seeking to formalize the default
Effects of the protest
The protest can produce significant effects, such as publicizing the default and possible repercussions on the debtor's credit assessment. For this reason, it usually works as an incentive to settle. At the same time, it requires care from the creditor regarding the existence and validity of the debt, in order to avoid improper protests.
Protest and judicial collection
The protest does not necessarily replace other measures, but it can be a stage within a collection strategy. In some cases, it precedes a possible enforcement action. The choice between protesting, negotiating, or going to court depends on the specific case and the type of instrument.
Frequently asked questions
Can any debt be taken to protest?
Not always. In general, the protest involves instruments and debt documents that meet legal requirements. Its feasibility depends on the type of document and the situation, which is why it is usually assessed on a case-by-case basis.
Can a protest be cancelled after payment?
As a rule, yes. Once the debt is settled, it is usually possible to arrange for the cancellation of the protest, subject to the notary office's procedures and the applicable legislation. The details may vary according to the situation.
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