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Debt Collection Agencies in Germany

Debt Collection Agencies in Germany

Germany is one of the most important countries in the European Union from an economic point of view, nevertheless, companies and citizens here can also face difficult times which lead to the impossibility of complying with their financial responsibilities. Most of the time such cases lead to the recovery of debts which is handled by specialists represented by lawyers and debt collection agencies in Germany. The Civil Code is the main legal framework that covers the activities undertaken by debt recovery agencies in Germany. It also sets out the regulations and the steps under which a debt can be collected from a bad payer.

Below, our debt collection lawyers in Germany explain how debt collection agencies work in this country. We also offer debt collection services to those in need of legal assistance when trying to recover outstanding amounts of money.

Recovering a debt with the help of a German debt collection agency

The person or company representative seeking to recover money from a debtor is called a claimant or creditor. He or she has the right to appeal to the services of a debt collection agency in Germany once the debt has been registered or the company or person has reasonable doubts about the possibility of payment of the debtor.

 Quick Facts  
Licensing requirement  Licensed under the Legal Services Act (Rechtsdienstleistungsgesetz – RDG) 

Types of debt collected 

– Consumer debts;

– Commercial debts;

– Unpaid invoices.

Legal framework 

Civil Code (Bürgerliches Gesetzbuch – BGB), Insolvency Code (Insolvenzordnung – InsO) 

Data protection compliance  Regulated by the Federal Data Protection Act (Bundesdatenschutzgesetz – BDSG) 
Prohibited practices 

– Harassment;

– False representation;

– Unauthorized charges.

Communication channels 

Letters, emails, phone calls, in-person visits 

Debt collection timeline 

Varies based on case complexity and debtor cooperation 

Interest and fees 

Limited by law, subject to agreement between agency and client 

Debtor rights 

Right to dispute the debt, right to verification of the debt 

Legal actions 

– Legal proceedings;

– Asset seizure;

– Garnishment.

Foreign debt collection 

Possible, subject to international agreements and regulations 

Debt collection methods 

– Negotiation;

– Mediation;

– Litigation.

Debtor notification requirements 

Notice of debt verification, notice of legal actions 

Debt collection agencies association 

Bundesverband Deutscher Inkasso-Unternehmen e.V. (BDIU) 

Language proficiency  Multilingual staff available for international cases, contact our debt collection agents in Germany for their services.  

debt collection agency in Germany can help with the following procedures:

  • it can check the credit history of the debtor report to the creditor and propose the next steps;
  • if the creditor considers it correct, the debt collection agency can start gathering evidence for the recovery of the debt to begin;
  • the debtor will then be contacted by the debt collection agency and an amicable settlement can be reached;
  • the debt collection agency has the obligation to send to the debtor all the evidence connected to the unpaid amount of money;
  • if no settlement can be reached or the debtor fails to reply, the debt collection agency can start the court procedure.

It should be noted that German debt collection agencies must comply with certain regulations when trying to recover any outstanding amounts of money from debtors. One of these refers to the timeframe in which they are allowed to contact the debtor. Our lawyers can explain the legal procedures related to debt collection in Germany.

Types of debts in Germany

Debt collection agencies in Germany are enforced to resolve various cases. Among the most common debt collection cases in Germany are those related to:

  1. commercial contracts which can be business-to-business (B2B) or business-to-customer (B2C) contracts;
  2. unpaid bills can also be collected by German debt collection agencies, at the request of providers;
  3. debts of a German citizen or company arising in a foreign country can be collected in Germany with the help of a debt collection agency;
  4. German debt collection agencies can also help local companies seeking to recover debts from a foreign client or business partner;
  5. other types of debts, such as unpaid amounts of money resulting from contracts with banks can be recovered by debt collection agencies in Germany.

The main types of debt collection cases in Germany, however, result from commercial contracts. These are also cases in which our debt collection lawyers can assist.

The steps for debt collection in Germany

The recovery of a debt in Germany will usually start with an official notification sent to the debtor. This is also the first step in the amicable procedure. If the debtor replies and a settlement for paying the debt is agreed, the procedure stops here.

In case the debtor fails to pay or respond, the German debt collection agency will file a petition with a local court. Based on the evidence submitted by the claimant, the court can issue an enforcement order for debt collection and can dispose of the seizure of assets of the debtor in order to resolve the case.

The main legal procedures for debt collection in Germany 

There are two main ways in which German debt collection agencies can act in order to recover debt: an amicable procedure and a legal or court procedure. The order of these actions is to first try and recover any debt in an amicable way followed by the court procedure.

Claimants can request the help of a debt collection agency from the beginning of the procedure in order to maximize their chances and recover the money they are owed as soon as possible. You can also rely on our debt collection lawyers in Germany for assistance with the debt recovery procedure. If you need debt collection services in other countries, we can put you in touch with our local partners. 

Court-based debt recovery procedures in Germany 

  1. Mahnverfahren (Dunning Procedure): The Mahnverfahren, or Dunning Procedure, is an expedited debt collection process in Germany. It begins with the creditor submitting a formal payment request known as a Mahnbescheid to the debtor. This document outlines the outstanding debt and grants the debtor a limited period to respond to or settle the debt. If the debtor fails to respond within the specified timeframe, the creditor can proceed to enforce the claim through court. The Mahnverfahren is a streamlined and cost-effective method designed to prompt quick resolution without the need for a full-fledged legal action.
  • Ordinary Declarative Procedure (Klageverfahren): The Klageverfahren, or Ordinary Declarative Procedure, is the standard legal process for debt collection in Germany. It involves the creditor filing a lawsuit (Klage) against the debtor in a competent court. The court then reviews the case, allowing both parties to present evidence and arguments. If the court rules in favor of the creditor, it issues a judgment specifying the amount owed and the terms of payment. The Klageverfahren is a more formal and comprehensive method compared to the Mahnverfahren, providing a thorough legal resolution for debt-related disputes.
  • European Order for Payment Procedure: The European Order for Payment Procedure is a cross-border debt collection mechanism applicable within the European Union, including Germany. It provides a simplified and standardized process for uncontested claims. The procedure starts with the creditor filing a European Payment Order, detailing the debt and the grounds for the claim. If the debtor does not contest the order within a prescribed period, it becomes enforceable across EU member states. This procedure is particularly useful for creditors seeking efficient resolution of straightforward debt claims involving parties from different EU jurisdictions, promoting consistency and effectiveness in cross-border debt recovery.

Our German debt collection agency is well-equipped to navigate the intricacies of debt recovery, offering tailored solutions to meet diverse client needs. For cases requiring a swift resolution, our expertise lies in efficiently managing the Mahnverfahren (Dunning Procedure), ensuring a prompt response from debtors through streamlined processes. Additionally, when a more formal approach is necessary, our team is adept at handling the Ordinary Declarative Procedure (Klageverfahren), guiding clients through the legal intricacies of filing lawsuits and obtaining enforceable judgments. Furthermore, for those dealing with cross-border debt recovery within the European Union, our agency is versed in the European Order for Payment Procedure.

Enhanced creditor protection in Germany

German law establishes a swifter payment deadline than the European standard, and it also empowers creditors with additional measures to address the financial repercussions of delayed payments through the imposition of compensation fees. Our German debt recovery agency offers comprehensive assistance regarding debt collection. It will also help you comply with the German debt recovery regulations. 

Debt expiry in Germany

In Germany, debts are subject to a relatively short statute of limitations, lasting for a period of three years. Given the brevity of this limitation period, it is unwise to defer the pursuit of a debt claim for an extended duration. Additionally, it’s essential to consider that the limitation period restarts after each interruption.

To put it differently, placing too much reliance on the assumption that a German debtor will spontaneously fulfill its payment obligations may be imprudent. This caution is especially pertinent in the context of potential economic challenges, such as a looming German recession. Consequently, it is advisable to initiate the planned debt recovery procedure without delay to mitigate the risks associated with prolonged inaction.

Taking proactive steps early on becomes crucial, as it ensures that legal avenues for debt recovery are pursued promptly, safeguarding against the potential complications arising from the passage of time and economic uncertainties. Our experts can assist you if you are looking for services related to debt collection in Germany.

Stricter timeframes and late payment consequences in Germany

In matters of debt, German legislation is more stringent compared to European regulations, like:

  • European Union payment period for debts: 60 days;
  • German regulations payment period for debts: 30 days;
  • Late payment interest claim entitlement in Germany: Beyond the 30-day period.

Moreover, the German Civil Code provides the legal basis for imposing a compensation fee. This fee covers the costs associated with the recovery process and compensates for any damages incurred by the creditor due to the delayed payment of the debt.

For complete information on how debt collection agencies in Germany can help you recover a debt, do not hesitate to contact our lawyers who also specialize in offering debt recovery solutions.