Investor Academy Part 7: Why Legal Processes Take Time and Can Benefit Investors
At Indemo, we noticed that investors pay close attention to how their NPL cases move through the stages displayed in the app. When a stage remains unchanged for several months, it can easily create the impression that the process is stalled or that nothing meaningful is happening behind the scenes. In practice, however, the early phases of an NPL, especially those related to creditor replacement, notarial procedures, and court recognition, are among the most complex and work-intensive parts of the entire lifecycle.
Because much of this work involves legal formalities, document checks, communication with registries and courts, and tactical decisions taken by the servicing company, it remains invisible from the outside. A single stage in the interface may in reality contain dozens of technical steps. To provide more clarity on what is actually happening during this period and why timing differs from case to case we prepared this article explaining full debt purchase and recovery cycle, how legal procedures influence pacing, and why a long stage does not reduce the value or performance of the asset.
Creditor Replacement Stage – Why It Can Take Time
The temporary “creditor replacement” stage may appear purely technical in the app, but in practice it is the key step after buying a debt in order to move it onto the main legal track.
In some situations, creditor replacement takes only a few months; in others, due to procedural, legal or administrative requirements, it may extend to nearly a year. To understand how this works, it is helpful to look at the full debt purchase and listing cycle:
● Before any acquisition from a bank or fund, each debt undergoes structured legal due diligence. The servicing company verifies collateral, documents, factual information, and checks for critical risks.
● The servicing company and the seller then sign a purchase and assignment agreement (cession) as a notarial deed.
● The notary notifies the Land Registry of the sale and requests re-registration of the mortgage lien from the seller to the servicing company.
● Only after these steps are completed are the debts listed on Indemo through “Notes”.
From the first day after purchase, the servicing company begins working in parallel on three exit routes:
● judicial foreclosure;
● out-of-court settlement;
● sale of the debt or of the underlying property at a higher price than the portfolio acquisition price.
Alongside the notarial cession and Land Registry re-registration, another key procedure must be completed: subrogation – the formal creditor replacement in court records. This procedure is exactly what is now reflected in the new temporary stage, “Debt Purchase Registration”.
Only once subrogation is finalised does the court formally recognise the new creditor as a legitimate party to the case. From that moment, the servicing company can return to the main foreclosure track: filing a foreclosure claim, having it accepted by the judge, and progressing through subsequent stages at a faster pace.
It is important to note that absence of frequent stage updates in the interface does not indicate inactivity. A substantial part of the process is not visible in the app: communication with notaries, registries and courts, document requests and corrections, responses to judicial observations, and other procedural steps. From the outside this may look like “the same stage stuck for months”, while in reality extensive tactical and operational work is being carried out throughout this period.
How the legal process is linked to the value of the debt as an asset
Investors often focus on stage updates in the app, but this can be misleading. The success of an NPL investment has little to do with how often a stage changes and far more to do with acquiring the debt intelligently and resolving it quickly and profitably. Buying at the right discount and with the right risk profile is a major part of success. In many situations, the best returns come from alternative exit scenarios such as out-of-court settlements, selling the debt, or selling the property, but not necessarily from going through every court stage step by step.
A key point is that from the moment capital is invested and the case appears on the platform, time generally works in favour of the creditor. It can be compared to a rare collectible: as the process moves forward and the creditor gets closer to taking over the collateral, the position usually becomes more valuable.
Every day interest, penalties and recoverable costs are accruing, and the legal position of the creditor is getting stronger, not weaker. This improves negotiating power in settlements, increases the chances of success at auctions, and raises the probability of selling the debt at a higher price on the secondary market.
With the launch of Flow 2.0, the app now displays 24 high-level stages. In reality, the foreclosure process contains more than 100 internal technical steps. The legal team tracks and reports all of them to the servicing company. When it seems that a stage “is not moving”, the team may actually be completing dozens of sub-steps: sending and receiving documents, preparing responses, negotiating with buyers, planning alternative exits, and more. All of this influences the value of the debt as an asset.
A potential buyer on the secondary market looks precisely at this “invisible” part of work: how far the case has progressed, what has been done under each scenario, and how strong the current creditor position is. The more real progress inside these details, the higher the potential selling price or the better the terms of another exit.
In other words, behind those 24 visible stages there is ongoing legal and operational work that may not appear in the interface, but it is exactly this work that increases the value of the debt and turns it into a more active, “working” asset.
The time buffer of NPLs as a product
Among the questions investors ask most often is how the length of an NPL resolution impacts returns and whether time itself can ‘eat into’ the yield.
The main metrics to consider here are as follows:
● the relationship between the stage and the price-to-value (PTV) — the discount to the market value of the collateral
● the relationship between the stage and the price-to-debt (PTD) — the discount to the total debt amount owed at listing
● the expected resolution time versus the built-in time buffer in the model
All debts purchased and listed on the platform go through a strict model where the price is tied to the stage, PTV and PTD levels. Each stage has a maximum allowed PTV and maximum allowed PTD, and the model always uses the more conservative limit.
For example: even if PTV is very attractive at 30%, but PTD is 90%, the debt will not be purchased because it is too expensive relative to the total debt amount.
The model ensures that even in a worst-case scenario, taking around 5 years to complete all Flow stages starting from step 1, the product can still deliver a target return above 7% per year.
A simple example:
A debt purchased for €60,000, secured by a property valued at €100,000 (a 60% PTV).
Even if the case takes 4.5 years to resolve, it can still achieve an annual return above 7.5%.
This represents a conservative scenario: slow courts, starting from stage 1, and no alternative exits working out. In reality, full 5-year cases are possible but statistically rare, because the servicing company works on three parallel recovery paths from day one, and the debt amount grows daily.
The lower the PTV and the lower the PTD, the more time buffer the case has.
When the secondary market is launched in 2026, pricing logic will be aligned even more clearly with the stages visible in the app, helping investors understand how to think about fair value when buying or selling. Most importantly, investors will be able to see how the fair value of the asset increases as the case progresses — effectively, day by day.
This should provide additional clarity and confidence that slow-moving stages in the interface do not indicate inaction, and that the NPL product is designed with both the legal process and the time buffer in mind. At Indemo, we are always happy to walk investors through these aspects in detail, ensuring they have all the information they need to feel confident and secure in their decisions.
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This content is a marketing communication. It shall not be treated as investment advice, independent research or offer, recommendation or invitation to invest in the investment opportunities referred to herein. The content is not aimed at promoting services or products to persons based in jurisdictions where the distribution of said information would be illegal.
Investing in financial instruments involves risk, and there’s no guarantee that investors will get back invested capital. Moreover, past performance does not guarantee future returns. Indemo SIA shall not be responsible for any direct or indirect loss from using the provided information.