What is the procedure for debt collection?

The debt collection procedure.

The company with which you have an outstanding debt has commissioned PAIR Finance with acting in its interests and agreeing a payment solution for the outstanding debt either out of court, through legal proceedings or following court proceedings. We make every effort to find a suitable payment solution with you without going to court. We also want to keep the costs of the process as low as possible for you. Even if you have any objections, please attempt to contact us by e-mail or telephone. This makes it possible for you and us to clarify any issues as quickly as possible before further costs, e.g. court expenses, are incurred.

The court collections process.

If, despite all our efforts, we are not able to reach an amicable solution out of court, the cases goes to the court collections process. This means that PAIR Finance applies to the competent collections court for the issue of a payment order against the debtor. This is then issued by the court by post. This generally incurs court costs of €32, plus additional costs for our administration work, which are set out in law. The debtor now has two weeks to object to the payment order. If the objection is made without proper reasons, the resulting legal dispute can considerably increases the subsequent costs. However, the debtor can pay the outstanding debt in full during these two weeks and bring the process to a conclusion. If neither a full payment nor an objection is received within two weeks, an enforcement order is issued in response to a further application. This forms the basis for legal enforcement.

The process after legal proceedings

The enforcement order allows the creditor to appoint the court officer, who will then obtain asset information about the debtor, in which the debtor must list all the assets they own and any incoming payments, such as wage or salary entitlements The court officer then gains access to wage and salary payments and any bank accounts held by the debtor, which can then be attached. The court officer can also seize non-fixed assets in order to settle the debt. If, at this point, there are insufficient assets to settle the outstanding amount, the creditor has a total of 30 years to apply for and execute further enforcement measures against the debtor’s assets. These additional measures by courts and court officers are associated with significant additional costs, which are all payable by the debtor. Don’t let it come to that.

Development of costs in the reminder and collections process

Late payments result in various costs to companies. In accordance with section 286, para. 1 BGB (German Civil Code), the creditor of the account has the right to compensation for the damages it incurs as a result of payment default. These include, for example, costs for involving specialist partners such as solicitors or debt collection companies. In Germany, the Legal Services Act governs the costs in situations like these. The Section 4 para. 5 of Introductory Act to the Legal Services Act (RDGEG) in combination with the Lawyer Remuneration Act sets out the maximum costs.
Even though PAIR Finance has optimised processes to ensure communication with the debtor is as efficient as possible in order to minimise costs, any delays taken in reaching agreement in the process can lead to rapidly increasing costs for the debtor.