Loan recovery in Germany refers to the process of pursuing and obtaining repayment of a loan that has not been repaid by the borrower by the terms and conditions of the loan agreement. It typically involves legal and collection efforts to recover the outstanding debt. Loan recovery in Germany is solutioned as any other case of debt collection, and creditors can request the services of debt collection agencies or law firms. With vast experience in various cases, our debt collection lawyers in Germany can also help in loan recovery situations. If you need debt collection services in other countries, such as the Netherlands, we can put you in touch with our local partners.
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Legislation applicable to obtaining a loan in Germany
Obtaining a loan in Germany is governed by a comprehensive set of legislation and regulations designed to ensure fairness, transparency, and consumer protection. The primary legal framework includes the German Civil Code (Bürgerliches Gesetzbuch – BGB), which outlines the fundamental principles of contract law and governs the rights and obligations of both borrowers and lenders. The Consumer Credit Act (Verbraucherkreditgesetz – VKrG) specifically regulates consumer loans, requiring lenders to provide borrowers with detailed information about loan terms and the right of withdrawal. Germany also enforces robust anti-money laundering (AML) laws to prevent illicit financial activities and strict data protection regulations, including compliance with the General Data Protection Regulation (GDPR). Additionally, usury laws cap maximum interest rates, and consumer protection laws ensure borrowers are provided with clear and transparent loan terms. Financial market regulations, contract law, securities and collateral laws, and banking regulations further contribute to the legal landscape that governs loan acquisition in Germany. This intricate legal framework aims to safeguard the interests of both borrowers and lenders while promoting responsible lending practices.
If you are looking for any assistance in understanding the legislation applicable to loans, please consult with our debt collection lawyers in Germany.
Loan recovery outside a German court
There are two debt collection methods available in Germany: the amicable or extrajudicial procedure and the legal proceedings which are completed in a court of law. Loan recovery in Germany can be started amicably by the financial institution, however, most of the time, these will request specialized services from an agency or debt collection lawyers in Germany. The stages of amicable loan recovery in Germany are:
- the first contact with the debtor during which he/she is informed about the outstanding amount of money;
- then, the agency or lawyer must send at least 2 or 3 dunning letters to the debtor in which he/she is asked to pay the remaining amount of money;
- the agency or law firm can also try to contact the debtor by email and/or phone during this stage of the loan recovery;
- if the debtor answers, an amicable settlement can be established and new terms for the debt can be created;
- if the debtor fails to answer, the amicable procedure can be transformed into a legal proceeding which means a judge will rule in such a case.
Mediation is often met in debt collection in Germany, especially when it comes to commercial loan recovery. It must also be noted that most credit contracts are insured in Germany, however, financial institutions have the right to recover the money they are owed.
Our debt collection lawyers in Germany can explain the rights of both creditors and debtors and can assist in amicable procedures related to loan recovery.
Court loan recovery in Germany
As mentioned above, if the amicable loan recovery fails to render any results, it is the creditor’s right to take the case to court by filing a petition in this sense. Debt collection with a German court is often lengthy, however, the results are definitive.
Loan recovery in court can be completed in two ways: in an accelerated procedure which implies obtaining an enforcement order that, if not appealed in a few weeks by the debtor, can be enforced immediately, or in a civil proceeding which implies the following steps:
- the claimant will first need to file a petition in which the case is presented to the court;
- the judge will then send a notification in which the action against him/her is brought to the attention of the debtor;
- both parties are then invited to submit evidence to sustain their cases, in this case, the defendant can present his/her situation;
- in debt recovery cases, the court will hold at least one hearing, however, more hearings can be held;
- the judge will issue an order for payment proceedings and an enforcement order for the debt to be recovered.
It is important to note that the seizure of assets is a possibility if the debtor fails to comply with the enforcement order issued by the judge.
How can our German debt collection lawyers help you?
Our debt collection lawyers can provide invaluable assistance with loan recovery in Germany through their legal expertise and knowledge of the local legal system. Here’s how they can help:
- Assessment of debt: Our lawyers can review your case and assess the debt’s validity, including any legal requirements or documentation necessary for pursuing the process of loan recovery in Germany.
- Demand letters: They can draft and send formal demand letters to the debtor, outlining the debt’s details, payment terms, and consequences of non-payment. These letters often serve as an initial step to encourage voluntary repayment.
- Negotiation: Our lawyers can engage in negotiations with the debtor to reach an amicable settlement. This may involve discussing payment plans, interest rates, or other terms that are agreeable to both parties.
- Legal action: If negotiation efforts prove unsuccessful, our German debt collection lawyers can initiate legal proceedings on your behalf. This may involve filing a lawsuit and representing you in court during the litigation process.
- Enforcement: If a court judgment is obtained in your favor, our lawyers can help with the enforcement of the judgment, including seizing assets, and bank accounts, or initiating wage garnishments to satisfy the debt.
- Compliance: Our lawyers ensure that all debt collection activities comply with German laws and regulations, including debt collection and data protection laws.
- International debt collection: If the debtor is located outside of Germany, our lawyers can navigate international debt collection procedures and engage with legal professionals in other jurisdictions, if necessary.
- Communication: Our German loan recovery lawyers handle all communication with the debtor, relieving you from the stress of direct interactions and ensuring that all communications adhere to legal standards.
- Legal advice: Our lawyers provide expert legal advice at every stage of the debt collection process in Germany, guiding you on the best course of action and the likelihood of success.
- Cost recovery: In many cases, legal fees and costs associated with debt collection can be added to the debt.
Engaging our experienced lawyers for debt collection in Germany can significantly increase your chances of successful recovery while ensuring that you remain in compliance with local laws and regulations. Their expertise and familiarity with the legal system can expedite the process and protect your interests throughout the journey of loan recovery in Germany.
Germany’s national debt rate
The data on Germany’s national government debt is refreshed every quarter. Please find below the statistics:
- In March 2023, Germany’s national government debt amounted to 2,814.8 USD billion, marking an increase from the preceding quarter when it stood at 2,742.0 USD billion.
- As of March 2023, the government debt constituted 65.7% of the country’s nominal GDP.
For assistance in loan recovery, you can rely on our debt collection lawyers in Germany, so do not hesitate to contact us. We will explain every phase of the amicable or court procedure, but most of all we will try to settle any debt collection case in the shortest time possible.