Debt collection in Germany

Germany is one of the most developed countries in the world with an economy based on manufacturing and foreign trade, considered the largest national economy in Europe, the fourth in the world by nominal GDP and the fifth-largest in the world by purchasing power parity, but the effects of the eurozone debt crisis created the context for unpaid debts and debt collection procedures.

Those who need help in debt collection in Germany can rely on our lawyers who can offer assistance during the pre-trial stage and the trial of a debt recovery case.

Legislation on debt collection in Germany

When a debtor becomes incapable of paying debts, the German Civil Code provides that the creditor has the right to address to the competent authority. Depending on the amount of the claim, there are two Courts which may take the case in charge: for claims up to 5000 euro the case goes to the Local Court (Amtsgericht), and for claims higher than 5000 euro, the District Court (Landgericht) is the competent authority, with some exceptions provided by the Law, for example, the Local Court is always competent to judge any disputes between landlords and residential tenants.
In the debt collection procedure in Germany, the first extra-judicial attempt to recover debts is the amicable procedure, in which the creditor notifies the debtor about the unpaid debts, the deadline to fulfill the payment, and the consequences for not obeying the claim in the specified time and situation.
Our debt collection lawyers in Germany can offer detailed information on the legislation related to the procedure of recovering outstanding amounts of money from natural persons and commercial entities.

Debt collection stages in Germany

The debt collection procedure in Germany implies respecting several steps. These steps can vary based on the debtor and his or her willingness to cooperate and refer to:

1. the creditor can start the first stage of the debt collection procedure by asking the debtor to pay;
2. if unsuccessful, the creditor can request the help of a debt collection agency or law firm in Germany;
3. the agency or law firm will first notify the debtor about the amount to be paid and ask him to reach a payment agreement;
4. the agency or Germany lawyers will send the debtor all the documents which attest to the debt;
5. in case the debtor does not reply, the creditor can ask the law firm or agency to file a petition with a German court, a case in which the court debt recovery proceedings will begin;
6. the German court will hear both parties and rule on whether the debt can be collected or not;
7. if successful, the debt collection court order will be enforced, and the outstanding amount of money will be recovered.

As seen above, the debt collection procedure in Germany can be completed by an agency or a law firm. With a vast knowledge of debt recovery matters, our lawyers can guide those who need help in recovering the money they are owed.

The amicable debt collection procedure in Germany

An amicable debt collection is the simplest way of recovering money from a bad payer and implies the creditor to reach an agreement with the debtor and the debt to be rapid in one or more installments. In the case of companies seeking to recover debts, various legal mechanisms can be enforced, however, in the case of natural persons, it depends on the debtor to be willing to pay. No matter the case, the amicable debt collection in Germany can be completed by an agency or a law firm that can recover the money on behalf of the creditor.

The debt collection agency in Germany will still be required to send the debtor a notification and proof of the unpaid amount of money and, at the same time, a proposal for the recovery of the amount of money owed. Based on the positive reply of the debtor, an agreement will be signed, and the debt collection procedure will be successfully closed.

Our debt collection lawyers in Germany can help those who need guidance in debt recovery cases, including in the amicable stage of the procedure.

Court debt collection in Germany

The first judicial step for debt collecting is by submitting a writ before the competent court in which to specify the amount of the debts, the claim, and also the documents that indicate the debts.

The debtor is also informed by the court about the creditor’s proceeding and has the right to appeal against the writ, in writing, within four weeks, case in which the court schedules a court date for a personal hearing of the parties.
When the debtor does not respond to the court’s document of information or when he doesn’t come to the scheduled date for the judicial procedure in court, the claimant is awarded a judgment in the absence or default judgment (Versäumnisurteil).
In the personal hearing which takes place at the court, after the judge summarizes the case, he usually proposes the two parties to come to an agreement. In case the debtor and the creditor can not settle the issue in an amicable way, the court may hear and evaluate the witnesses’ and experts’ statements and render a judgment procedure which usually takes place after two to eight weeks after the trial. In that phase, the judge issues a decision about the case and both parties have the right to appeal against the decision within one month from the day the verdict has been delivered.
The fees charged for the action in court are presented in transparent rules and they depend on the amount of the claim. As a general ruling, the fees must be paid before the court procedure as long as the court will not forward the writ to the defendant when there is not presented proof of payment. In Germany, the Law encourages the parties to come to an amicable settlement in the first personal hearing, by a rule that provides that two-thirds of the court fees are returned when the court does not have to write a verdict.  The Court’s final decision obliges the debtor to comply with the payment and to refund the debts to the creditor.                              When the creditor does not act by this decision, the Civil Law provisions give the creditor’s the right to ask for another set of rulings in order to recover the debts. For example, the enforcement of the court decision and the seizure of assets are measures taken to force the payments.

The enforcement of the court’s decision in debt collection in Germany

Court debt collection proceedings will usually end when the judge issues the court order through which the recovery of the amount of money is disposed of. The order will be enforced by an officer appointed by the court. The bailiff, as this person is known in Germany, will have the right to identify the assets which can be seized in order for the debt to be settled. Then, the bailiff will proceed to the recovery of the debt.
As an EU member state, Germany also respects the EU legislation, including in debt collection cases, meaning that court orders issued in other EU jurisdictions are recognized here through a simplified procedure. This is also available for German court orders which need to be recognized in other EU countries.
If you need help with the enforcement of an EU court decision, you can ask for the support of our debt collection lawyers in Germany.

Debt collection lawyers in Germany

If you find yourself in the unpleasant position of being owed money, you can rely on our debt collection lawyers in Germany who can offer specialized assistance and advice in order for you to obtain a successful outcome.
You can rely on our lawyers in Germany in the following situations:

• in amicable debt collection procedures during which we can contact the debtor on your behalf;
• in preparing the documents which need to be served to the debtor during the amicable procedure;
• in sending notifications and keeping in touch with the debtor and trying to reach an agreement for a simplified debt collection procedure;
• in submitting the claim for court proceedings to start in case the debt cannot be recovered amicably;
• support during the court debt collection proceedings and representation before the court.

If you have any questions related to the debt collection procedures in Germany, please feel free to contact our lawyers who specialize in such matters.