Chile: The Most Debt Collection Friendly Country Of Latin America?

Chile is in several aspects an exception in Latin America. Chile has been politically and economically stable for decades. It is perhaps also the only Latin American country which has truly successfully countered extreme poverty. Its capital, Santiago de Chile, is a start-up hub and is considered one of the most investor friendly cities in Latin America.

From experience it also seems to be the most debt collection friendly country in Latin America. What are the reasons behind this?

The first reason is that the country has a truly open economy for foreign trade and investment. Economics politics are focused on attracting foreign businesses and investors and Chilean businesses are used to international commercial relationships. Reputation and prestige in that respect contribute to creating a climate of positive payment behavior.

150906 Chile 5A next reason is that Chile has liberal monetary politics. The country doesn’t have foreign exchange controls like for example Argentina and Brazil, or for that matter, the most notorious country in South America, Venezuela. International payments are not subject to extraordinary foreign currency exchange restrictions which favorite debt collection success for foreign creditors considerably.

The next reason might be somewhat subjective, but Chilean businesses do seem to have a culture of a more positive payment behavior compared to neighboring countries like Brazil or other large Latin American economies like Mexico. This generally makes it easier to negotiate payment of debt or overdue invoices.

Chile’s middle class has grown substantially in the last few decades. And its poverty level has diminished. Because of that, the average salaries and thus purchase power of the population have improved and hence financial sources to pay foreign consumer debt or business debt have been increasing. This is obviously positive for foreign creditors who are looking to collect in Chile.

150906 Chile 2Unlike the majority of other countries in Latin America, Chile is relatively well accessible. It has a decent infrastructure and it doesn’t have politically troubled areas and hence distinguishes itself from amongst others Mexico, Brazil, Argentina, Colombia and several countries in Central America.

The next reason might be subject to personal opinion and may heavily depend on one’s point of view, but Chile’s judicial system is relatively understandable for foreign businesses and is certainly more accessible for foreign creditors than the judicial systems of the majority of the other countries in Latin America, like Brazil, Argentina, Colombia, Mexico, Venezuela, to just mention the most notorious. This gives foreign creditor the necessary leverage to indeed go legal if extrajudicial debt collection is not successful, and Chilean businesses or individuals realizing that might push them to pay amicably or settle.

Chile is in several ways an exception which also seems to be the case with respect to debt collection on behalf of foreign creditors. Reasons include the fact that Chile is an open economy, it does not have extraordinary foreign currency controls, Chile has a culture of more positive payment behavior than other countries in Latin America, the purchase power of the population has increased, the country is relatively well accessible, and Chile’s judicial system is quite understandable for foreign creditors.

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