As international business continues to expand, the recovery of cross-border debts has become a growing concern for many creditors. It is not uncommon for individuals or companies that default on obligations in their home countries to possess valuable assets in jurisdictions such as the United States, ranging from real estate and luxury vehicles to bank accounts and financial investments.
Although pursuing these assets across borders may initially appear daunting, the U.S. legal framework offers effective mechanisms to support foreign creditors. Among the most powerful tools are the Discovery process and the recognition of foreign judgments.
Understanding discovery
Discovery is a cornerstone of the U.S. common law system. It refers to a pre-trial phase in litigation during which parties are legally entitled to obtain evidence, including documents, depositions, and other records, under court supervision. What makes Discovery particularly compelling for foreign creditors is its extraterritorial reach. Under 28 U.S. Code § 1782, parties involved in legal proceedings outside the United States may request assistance from U.S. courts to compel individuals or entities within the country to produce relevant evidence. In practice, this means that even in a case being litigated in, for instance, Brazil, one can lawfully seek documents or testimony located in the U.S. to support the proceedings abroad.
What information can be obtained?
Subject to judicial approval, Discovery may grant access to a broad range of materials, including:
– Bank statements and account records
– Corporate contracts and commercial agreements
– Emails and internal communications
– Financial statements and accounting documents
– Depositions from witnesses or involved parties
– Records of real estate or registered assets held in the debtor’s name
Such evidence often plays a decisive role in tracing hidden assets, establishing financial capacity for repayment, exposing fraudulent transfers, or substantiating claims in debt recovery efforts.
Key requirements for section 1782 requests
Although Section 1782 offers a powerful avenue, several conditions must be met:
– The individual or entity from whom discovery is sought must be located in the United States;
– The applicant must demonstrate that the requested evidence is relevant to an ongoing or reasonably anticipated legal proceeding outside the U.S.;
– The request must be reasonable and respectful of fundamental rights, avoiding undue intrusion into privacy or bank secrecy;
– The court will evaluate whether the request promotes international judicial cooperation in a fair and proportionate manner.
Ultimately, the decision lies with the federal judge in the district where the information holder resides.
Recognition and enforcement of foreign judgments
Another pathway for international creditors is the recognition and enforcement of foreign court decisions. Although the United States is not a signatory to any international convention that mandates automatic enforcement of foreign judgments, individual state courts may recognize such rulings, including decisions issued by Brazilian courts.
Once recognized, the foreign judgment acquires the same enforceability as a domestic U.S. judgment. This enables creditors to:
– Freeze or garnish funds held in U.S. bank accounts
– Seize or liquidate real estate and high-value assets
– Enforce claims against financial investments and other holdings
While state laws vary, courts generally require proof that the foreign judgment is final, issued by a competent authority, and that the proceedings respected due process and do not violate U.S. public policy.
Challenges and strategic considerations
Employing these legal instruments effectively requires experienced legal counsel, both in the creditor’s home jurisdiction and in the United States. The process may entail considerable costs, including legal fees, certified translations, and administrative expenses, as well as time to obtain judicial decisions.
Nonetheless, when significant debtor assets are located in the U.S., the benefits often justify the investment. For creditors engaged in medium- to high-value claims, these strategies have become essential components of international recovery efforts.
Future challenges
Recovering debts from debtors who hold assets in the United States is not only feasible, it is increasingly a well-established legal strategy. Tools such as Discovery and the recognition of foreign judgments empower creditors to take meaningful action across borders. With the right legal support, these mechanisms transform the challenge of international debt recovery into a structured, enforceable process.
Need tailored legal strategies for international debt collection?
TCM Group International offers a unique combination of legal acumen and global reach, assisting creditors in enforcing claims across jurisdictions. Contact us to explore how we can support your case with strategic, results-driven solutions.
