Collection: You should know these new rules

When bills suddenly double

Debt collection shock due to high costs? Before paying, please be aware of this new regulation

Friday, February 4, 2022 | 10:42 a.m

Debt collection services deal with extrajudicial enforcement of a claim and take over the recovery of the claimed amounts. Such a procedure is initially not unusual for defaulting debtors. Instead of an attorney, many creditors use a collection agency to enforce their claims.

Since 1 October 2021, however, there have been new legal rules for debt collection costs. What will improve in the future and where cost traps continue to lurk.

Collection: what changes?

In the past, debt collectors could charge a fee rate of 1.0 to 1.3, which drove up claims relatively quickly. For claims of up to 500 euros, fees of between 49 euros and 63.70 euros had to be paid. This rate was lowered to 0.5 to relieve especially debtors who try to settle the claim quickly and who pay on first demand. For claims up to 500 euros, this is only 24.50 euros. For collection of undisputed debts, the business fee is reduced to a rate of 0.9. In order to avoid disproportionality, especially for small claims, the collection fee for small claims of up to 50 euros can be a maximum of 30 euros instead of the previous minimum of 49 euros. With a fixed rate for expenses and VAT, small claims often more than doubled.

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In the case of debt collection, in addition to the business fee, there is also an agreement fee for entering into payment agreements, such as installment payments or grace periods. For claims of up to 500 euros, this fee is now reduced by around half.

If creditors issue a double order and order not only a debt collection service provider but also a lawyer, the debtor will usually be billed twice. To prevent this cost overlap in the future, all out-of-court and legal costs can only be claimed for the amount that would have been owed if a lawyer had been retained. With one exception: the debtor only contests the claim after the debt collection provider has been hired, and the creditor therefore also hires a lawyer.

Better information

Most consumers know too little about debt collection and are not sufficiently aware of their rights. Therefore, the legislative changes must ensure more transparency. Since October, they have had to be informed in advance about the costs to a debt collection service provider or lawyer in case of late payment. In addition, before entering into payment agreements, they must be informed that they not only have to pay the main costs, but also the related costs of the entire debt collection process.

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Black sheep

Often, recipients of reminders from a debt collection agency cannot do anything about the demands made. Neither the alleged creditor nor the amounts mentioned are understandable. For better traceability and to reveal dubious debt collection companies, debt collection providers must tell their client exactly which contract is involved and what costs will arise in the event of non-compliance.

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Anyone who is still certain that the claim is unjustified should object in an informal letter and dispute the claim. Do not be confused by the reminder letters that follow. You can also appeal a court order. If a lawsuit is served after an objection is filed, a lawyer should be tasked with defending the claim at trial. If the alleged claim does not exist, the case will be dismissed. The plaintiff fails and must bear all the costs of the legal dispute, including the costs of the engaged lawyer.

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