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Debt Collection Germany

Debt Collection in Germany

Updated on Thursday 19th January 2017

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Procedure of debt collection in Germany

The procedure of debt collection in Germany is divided into an amicable procedure and a legal procedure. The first procedure is more convenient as there are no costs involved, while in the second stage the trials costs must be paid by the creditor in the first place and only if the judgment is in his favor, the costs can be input to the defendant.

In the beginning, if invoices become due, the creditor is sending a written request for payment. If the invoices are not paid after this step, the creditor is trying to contact the debtor through the phone. During the phone call, the procedure of payment can be decided: through installments or by delaying the term of payment.
 

In case the above procedure fails, it’s necessary to contact a debt collection agency which will start the process by contacting the debtor in writing and trying to reach a settlement with him. In this stage, many debtors choose to pay because of the implication of a third party.

Required documentation for debt collection in Germany

The legal procedure requires some specific documents: the contract signed between the creditor and the debtors, invoices and a statement of account indicating payments and credit notes which have been booked regarding the pending invoices. In case of an ordinary lawsuit, the delivery notes, the contract, orders, order confirmations are also mandatory.
It’s not mandatory to be represented by an attorney in front of the local court if the claim is below 5,000 EUR. In front of any other court, the presence of a legal person is mandatory.

Lawsuits for debt collection in Germany

In case the debtor is traceable and the debt consists in money, the legal dunning procedure is applicable. For non-German clients the responsible court is Berlin-Wedding. The process takes around 8-12 weeks.
 
The lawsuit usually starts with a written pre-procedure. The plaintiff and the defendant exchange reviews and proofs by letter until all the relevant information are gathered to start a trial. A hearing is scheduled and both parties must be present. The judge sets a date to communicate the final judgment.  The involved parties (creditors and debtors) are informed about the process in in writing. 
Appeals are possible if submitted at the second instance, if the decision is contested also here, amendments of facts are not possible, the third instance court is only checking if the statutes were applied correctly. The whole process takes around one year and even more if the case is more complex and appeals are raised.
 
 

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