What power do debt collection agencies actually have?

Everyone is happy about a letter, as long as it is not an invoice or advertisement. Much more unpleasant still is a letter that comes from a collection agency. Once you receive such mail, you know it. These companies are elusive, demanding a lot of money and threatening tough sanctions. If you have a collection agency in sight, fast action is required. How far these companies may go to collect their claims and what you should look out for in such a case, you will find in our article.

On what principle debt collection companies work

On what principle debt collection companies work

Collection service providers are companies that specialize in collecting open invoices. Usually, they pick up on receivables from companies or service providers and then worry about a supposed debtor paying for them. By the sometimes horrendous surcharges collection agencies generate their profits. In principle, such an enterprise can hire anybody who offers services or goods. For customers of a collection agency, the advantages are obvious: as a biller, you do not have to deal with lengthy dunning procedures if the money is not received within the payment period. This practice has increased in recent years, and the sums that collection agencies charge for additional fees are often very high.

If you do not pay your bill on time, you may be threatened with a letter from such a business without a payment reminder or reminder. In the event that a clearly formulated payment date or period is noted on the invoice. For many public transport companies, it is now standard practice for them to assign their claims against black traffic drivers directly to debt collection agencies. But even a gym or craftsman can resort to such a measure. As a rule, more goodwill can be expected here, as they are very interested in not losing you as a customer.

Collection agencies use the methodology of putting their debtors under pressure from the start. This includes a relatively tight payment period and the creation of a threatening backdrop. As an alleged debtor, they are threatened directly with various measures, which can range from negative Schufa entries to a salary or account deposit, to a court order. This is intended to intimidate you with the aim of quickly transferring the defaulted amount, including any additional costs, to the collection agency. Whether the actual claim underlying such a letter is justified or not usually does not matter to a collection agency.

How to behave properly with legitimate claims

How to behave properly with legitimate claims

Once you have a debt collection company as a creditor, you should act quickly and under no circumstances lose track. First, determine if the allegedly overdue claim is justified. If you have actually forgotten an invoice and owe money to a company, you should transfer the sum. You will hardly be able to avoid the additional costs incurred by the collection agency – at least in part. In the majority of cases these amounts are exaggerated and disproportionate to otherwise usual dunning costs, which amount to only a few euros. In the opinion of the consumer center Hamburg, a fee of EUR 450, which is to be claimed, for example, is equivalent to EUR 27 as a cost allowance. However, it is more likely that debt collection agencies charge significantly more. If the collection agency refers to the Lawyers’ Compensation Act (RVG), it can charge up to 112.50 euros for the above-mentioned example sum.

By paying and earning the markup as “apprenticeship”, you can do it quickly and without any further risks from the world. However, you should contact the other side and seek an amicable settlement. With a little luck, the collection company will meet you a bit in their additional demands. This solution is proposed by consumer law expert Thomas Hollweck and justified by the fact that also debt collection companies ultimately want to avoid a lengthy legal process. How far you come with it, not least depends on the willingness to compromise the respective collection company. Finally, in this constellation, we initially assume that the process is based on a legitimate main claim. If the receivables exceed your financial circumstances, you can usually talk to reputable collection agencies about installment payments.

This is how you deal with unjustified claims

This is how you deal with unjustified claims

If you are reminded by a collection agency to pay an unjustified claim, you should always take your own steps. A prerequisite for this is, for example, a faulty invoice or even invoiced goods or services that you have never used. An invoice may be considered defective if it was not properly written or delivered. However, behind a wrongly charged costs can also be a subscription trap stuck. If you have not paid a basic fee for your internet connection for one month, because this did not work, this may also lead to a letter from a debt collection agency. If you have agreed to do so, in such a case, a mistake on the part of the customer service can lead to a reminder letter from a collection company. It is always of the utmost importance that you react immediately and do not lose any time.

If the main claim of a collection letter is wrong, you should object in a timely, written and comprehensive manner. Describe in detail in your opposition why the claim is not justified in your view and you reject it. For a possible later required proof, it is advisable to send such a contradiction in writing by registered letter with acknowledgment of receipt, by fax with confirmation of delivery or by email with read receipt. All three options together provide you with the best evidence of legal challenge. Also contact the biller from whom the collection agency has received his alleged claims against you. On your part, set a deadline in which you expect the opinion of the other party. If it is a reputable collection agency, it will inquire with your client at the latest after your detailed statement and inform you about the result. The originally set payment period will be extended if there is a need for clarification. What will hurt you in any case is the neglect of any action or reaction.

If claims against you are demonstrable out of thin air and your disagreement with the collection agency does not work, you should seek assistance. This can provide you with a lawyer, a debt counseling service or even the consumer protection center in your area. Lawyers can be found on the Internet, offering you an initial consultation free of charge. If you represent a lawyer and get in touch with the collection agency, it may be more effective than your layman’s opposition. You can also carry out a non-binding “debt collection check” via the Verbraucherzentrale Hamburg, which you can find here. This will give you an examination of whether the claims against you are legal or which costs you ultimately have to bear. Keep in mind that as a consumer, you can still be prosecuted 3 years after a purchase or contract, in the event of discrepancies regarding your invoice or payment.

By submitting an objection in writing after receipt of a defective invoice, you secure yourself in all cases. After receiving a bill with any ambiguity, contact the supplier or seller promptly by asking for clarification or correction. If, despite ongoing correspondence after the originally set payment period, a debt collection procedure, this is usually invalid. You will only be in default if you miss the payment term AFTER a correctly justified invoicing.

How to act in a court order

How to act in a court order

Such a title sounds very uncomfortable at first, it does not represent more than a standardized procedure. Such a collection agency can initiate against you, in order to increase the pressure additionally. However, you can easily counteract a court order by objecting to the competent district court within 14 days. All you have to do is return the enclosed pink form. Please note that you completely contradict the claims. In order not to give your debtor an enforceable title, this formality is particularly important. If you only object to your opposition, you may be able to retain residual claims against you. Even if parts of a claim are legitimate, you should still object in its entirety and contact the collection agency for an out-of-court settlement.

If you object in time to a court order, you avoid a negative entry in the Schufa as well as a possible enforcement by the bailiff. These measures are not possible against you without judicial judgment. Threats of this kind should only further intimidate you and cause you to pay.

Collection agencies can not order imprisonment

In order to enforce their demands, collection agencies usually announce far-reaching consequences. These can range from seizure or display due to fraud sometimes even to the threat of detention. However, a number of reasons have to come together to go to jail for unpaid bills. Your creditor must first have obtained a writ of execution by the court. On top of that, you will not continue to pay your debts, enforcement will be unsuccessful and you will continue to refuse to provide asset information despite your request. Until all these things come to fruition, you have plenty of opportunities to prove that the claims against you are baseless.

So you distinguished serious from dubious collection agencies

So you distinguished serious from dubious collection agencies

If the claims you have made against you are without foundation and you object, you can already see some of the reaction of the collection agency. A credible company will seek clarification and show you how it came about. As a rule, collection agencies acquire the claims without knowing the details or backgrounds. If you receive information on the original principal claim as well as a breakdown of the additional costs incurred, this is an indication of a reputable company. Under the law, debt collection agencies are required to provide you with clear information about which services they are claiming. They will receive an extension of the time limit after such information and will also have the opportunity to comment on the claim.

The opposite will be the case if a dubious collection agency tries to get your money. Then you will receive further letters, which are to try harder and harder to pressure you into payment. Legally intolerable intimidation attempts such as wage or pledge stocking, execution by a bailiff or even a threatened complaint for fraud are relevant arguments with which you confront a rather dubious collection agency. In any case, you can also find out about the existence of a collection agency if you have serious doubts. Search for this on the Internet or check the details of the sender in the so-called legal services register.

As long as you have nothing to blame and the claims are unfounded, you can basically ignore letters from debt collection agencies. Object once, document the correspondence and, if necessary, contact a debt counseling service, a consumer law attorney or one of the Consumer Protection Centers. In extreme cases, you are also free to file a complaint against a collection agency or to complain to the Federal Association of German Debt Collection Companies (BDIU).

A specific upper limit for surcharges by a collection agency, the legislature has not been specified. For claims that are originally within the range of up to 500 euros, the additional costs by such a company should not be more than about 45 to 50 euros. Added to this are the other expenses, some of which, according to NDR.de, do not constitute reimbursable costs in the sense of legal prosecution. These include, for example, the expenses you have incurred for determining your identity, fees for account management, the reasonableness of your residency or any costs incurred for your credit rating.


In the event that you get mail from a collection agency, you should not react prematurely or in a panic. Often, a threatening backdrop is set up that is intended to intimidate you rather than to match reality. Such companies have no power of enforcement, even if they sometimes occur. Keep calm and find out the reason for such a procedure. Always ask for information about the background of alleged claims against you. This not only gives you some time, but may even expose rip-offs.

If you have a legitimate claim, you will not have much left to pay for it. Check the extra costs and seek an amicable settlement, perhaps to save even more. If the claim is based on an unfounded bill, you should respond with contradiction and tenacity. If the demands are unfounded against you, you must clearly and clearly contradict. Reputable debt collection companies usually engage in dialogue and can substantiate their claims to you credibly. If you are dealing with a dubious company, you should take action and seek expert advice. Always observe the observance of all (contradictory) deadlines as well as the careful documentation of correspondence. The best advice, however, is to take care of the payment of open invoices in good time and thus to prevent potential debt collection claims from the outset.

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