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Debt Collection Germany

Debt Collection in Germany

Updated on Tuesday 01st August 2017

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Debt-Collection-in-Germany.jpgMany investors in Germany wonder when and how they are entitled to start a debt collection procedure. First of all, one of the most important thing in such a situation is to be familiarized with the legal framework in Germany so that you can respect your trade partners’ rights but also to know how to recover your loss when they haven’t honored an agreement.

The second thing to keep in mind is that before a proper debt collection procedure may start, it is recommendable to try to directly contact the debtor. You can do this by sending several friendly reminders and a final notice before actually starting a legal procedure against him. Our law firm in Germany is ready to help you recover your due money by helping you apply the German law to your particular situation.

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.
 
Some investors prefer to collaborate with a debt collection lawyer in order to simplify the procedure of the documentation. One of our attorneys in Germany can help you gather all the papers necessary in order to be able to defend your case in court.
 
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 details 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. 
 
According to the German law, appeals are possible if submitted at the second instance. Sometimes even the second decision might be contested. In this situation, amendments of facts are not possible anymore, because the third instance court is only checking if the statutes were applied correctly. The whole process is quite time consuming. It takes around one year and in very complicated cases it can last even more. When appeals are raised it becomes difficult to estimate the complete duration of the procedure.
 
Please feel free to contact our German lawyers who can help you during the debt collection process with professional counseling in legal matters, with an active participation in the preparation of your documentation and with legal representation before any court of justice in Germany.

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