What does a debt collection company do?

What does a debt collection company actually do?

All companies, from sole traders to multinationals, have the problem that some of their bills are not paid within the agreed time. If a company is not able to collect a payment through its own reminder systems, because it is unable to contact the defaulting customer or the payment is still outstanding, it can outsource it to specialist service providers known as debt collection companies. A debt collection company attempts to contact the customer and find an amicable solution for the outstanding claim. If no payment agreement can be reached, debt collection companies can take legal steps, such as court collection processes and legal enforcement.

How can I find out if a debt collection company is reputable?

On the one hand, in accordance with the Legal Services Act (Rechtsdienstleistungsgesetz), all debt collection companies in Germany must be registered as legal service providers with the relevant authority, normally the regional or higher regional court, and recorded in the register of legal service providers. Approval as a registered legal service provider is linked to the suitability, reliability and theoretical and practical expertise of the responsible personnel within the company, among other things. You can check the approval online at any time at the Register of Legal Service Providers. On the other hand, the majority of German debt collection companies have joined together in the Bundesverband Deutscher Inkasso-Unternehmen e.V. (BDIU – Federal Association of German Debt Collection Companies). The BDIU sets strict standards for all its members in terms of legal compliance, reputable behaviour and transparency in dealing with consumers. You can find more information and a list of all the association members at www.inkasso.de.

And who are PAIR Finance?

We are a modern digital company aiming to update the debt collection market with an optimum combination of reliability and professionalism for companies and consumers. Our individualised communication and offers of suitable solutions for all consumers allow use to achieve respectful agreements between the company and its customers. As a debt collection company, PAIR Finance is, of course registered under the Legal Services Act and an active member of the BDIU.

Where do the additional debt collection fees come from?

If you have not paid a bill by the agreed deadline or responded to a reminder from the company, you are in default. In accordance with sections 286 and 280 BGB (German Civil Code), the creditor of the bill – who is your contract partner – therefore has the right to compensation for the damage caused to it by the payment default. This also includes costs, for example, for commissioning specialist partners such as solicitors and debt collection companies. The level of default damages a creditor can apply for commissioning a debt collection company is set out by law in Germany. In accordance with section 4, para. 5 of the Introductory Act to the Legal Services Act (RDGEG), the default damages for commissioning a debt collection company is limited to the level of the payment due to a solicitor in accordance with the provisions of the Lawyers Remuneration Act (RVG). Therefore, we charge our services in accordance with the rates set out in the RVG. These default damages are payable by you. We at PAIR Finance believe that those who pay their outstanding debts quickly or conclude a payment agreement should not be charged with debt collection fees in accordance with the statutory rates in the RVG. So the amount we charge at the beginning at the process is regularly substantially below the statutory levels allowed. However, if an agreement cannot be reached and our administration costs continue to rise, we may, under some circumstances, be forced to charge the costs incurred for further processing.