debt collection recovery debtor claim
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Law Firm Feinen  Köln  Germany

Your partner in debt collection

Information and conditions, conducting and course of court proceedings

We would like to explain our conditions and proceedings at the court as follows:

(information to bankruptcy proceedings here>>).

Here you will find information to the following:

 

- what is a debt collection file? here>>
- our invoicing in such cases (our prelegal service and uncontested claims are free of charge) and basis of our services

- chances to collect the debt in general, amount we can claim for here>>

- course of court proceedings, time scale here>>

- Enforcement proceedings here>>

- interest we claim for here>>

- Your General Conditions in proceedings here>>
- Limitation of time for your claims here>>

- Translations of documents in court proceedings here>>

- if an expert evidence is needed...
- agreements with the debtor out-of-court and in court proceedings here>>

- fees and costs in court proceedings in general here>>

- Your worst case risk in court proceedings here>>

- further clarification on costs and fees related to our mandate, our handling of the case

- fees and costs of different debt collection agency are problematic in court

- conversion of currencies in proceedings here>>

- valid postal address of the debtor is needed


Debt collection cases are defined by the fact that the debtor is able to pay (solvent) and has not contested neither the invoicing, the invoice itself, the amount of the debt nor has he raised any legal objections or assertions in the past like

  • defective of goods
  • wrong delivery
  • delay in delivery
  • malfeasance, malperformance
  • no receipt of the delivery (delivery not arrived)
  • never received an invoice, no correct invoice
  • not the contractual partner, different legal entity is the contractual partner
  • referring to an "agreement" with the client
  • person who ordered was not competent


We assume that your debtor still is solvent and that he has not raised any serious legal objections to the claim. Therefore basis of our service and mandate is that we are able - legally and in fact - to cover our fees by the debtor who is legally obliged to cover our fees.

In debt collection cases as such we generally do not claim any retainer fee for our services, neither in out-of-court proceedings nor in court proceedings. Our clients have to pay no fees for our services ("no cure, no pay"). Therefore it is of no risk to mandate us in prelegal proceedings.

Fees in court proceedings: In Germany the debtor is obliged by law to pay all our fees and costs of court proceedings if he is defeated in a law-suit (successful court proceedings). As well he has to bear all costs of court proceedings including court and attorney's fees if he lose a lawsuit. Hence, all Lawyer's and Court fees and costs are leqally recoverable from the debtor. Because the debtor has to expect substantial costs we regularly succeed in out of court collection.

Only in case of 1. necessary court proceedings (the debtor do not react and the client intends to initiate court proceedings) and 2. the debtor appeal to court or raises legal objections or take legal remedies in court proceedings (like defective goods, delay in performance, malfeasance, malperformance …) or 3. if it is obvious that we cannot cover our fees by the debtor because of lack of assets of the denbtor to enforce in we have to reserve to charge our fees.

The same applies if the debtor refuses to pay our fees and the client does not wish to collect them further on from the debtor by legal means.

You will find more and detailed information about our fees and invoicing here: http://debtcollectioningermany.com/fees.html. There the legal table for Lawyer's and Court Fees is published (extract). German Law Firms are subject to the German Federal Law regarding Lawyers Fees (Rechtanwaltsvergütungsgesetz, RVG, http://bundesrecht.juris.de/rvg/index.html ). The amount of the fees depends on the amount in controversy (amount of the claim). The fees are related to a legal table/schedule. Here you can find the legal table: http://www.brak.de/seiten/pdf/RVG/Gebuehrentabelle.pdf. The same applies for the court fees which are subject to the Federal Law regarding Court Fees. Success fees (contingency fees) are not legal in Germany and Law Firms are legally bound to charge at the RVG. It is absolutely common to ask for a retainer.

Therefore we have to charge our fees in case if it is obvious that we would have difficulties to enforce our fees after having obtained a judgement because the debtor do not dispose of assets to enforce in or assets like bank accounts, property, real estate, are lacking or not known.

Chances of winning the case are depending on the objections the debtor present possibly in court proceedings and we do not know exactly until he presnts his statement in court proceedings. We have also to wait whether the debtor defend himself in court proceedings at all.

Chances of collecting the debt are depending on the financial situation (assets, income, salary, wages, real estate, bank accounts, open claims against customers?) whether it is possible to enforce a judgment after court proceedings.

We can assess prospects concerning the legal position only in case we receive full information.

Further on prospects to collect monies are depending on the fact whether the debtor still is solvent. We always check information whether the debtor is insolvent at present (no guarantee). You possibly can order a credit information/check by an international credit company in addition. We will inform you if we have doubts that the claim cannot be enforced by law.

Please note that we do not know the financial standing of the debtor better than you. We do not know about the assets and income and status of his bank account. Such information we can obtain in enforcement proceedings, not before starting court action.

We can claim for all amounts and damages the client can calculate exactly and for which it is possible to present proof by documents. Please note that in Germany the courts are very rigorous in reference to the calculation and documentation of the claims.

If we do not expect serious further reaction of the debtor in out-of-court proceedings court proceedings are to recommend by lack of other legal possibilities to proceed further on.

Purpose of legal action at the court is to obtain an enforceable judgment (or writ of execution, order to pay a debt). The judgment adjudges the debtor for payment of exactly the amount applied for (nothing more). A judgment is basically enforceable for 30 years.

It is the own concern of the creditor to enforce the judgment afterwards f. i. to order a bailiff to attach known assets of the debtor or attach (a known) bank account. The court is not competent to enforce a judgment.

A different department (enforcement department) of the court decides in cases of attachment of bank accounts (garnishment) if applied by the creditor or the creditor applied for affidavit of means (the debtor has to disclose all assets in written).

Therefore firstly it is to obtain a judgment, secondly we have to enforce the judgment by legal means like garnishment (attachment of the bank account), order a bailiff to enforce the money, attachment of property, real estate a.s.o.

Every company is legally obliged to declare bankruptcy if it is not solvent any longer; Consequence: the company will be winded up. Therefore bankruptcy of the debtor is always possible but not in our hands (information to bankruptcy proceedings here>>).

 

Course of court proceedings:

We regularly recommend to initiate legal action by databased/electronically proceedings ("order to pay a debt", court summons). We send the application form to the court. The court issues and serves the order (time frame: around 2 weeks). We are required to pay the court fees to the court. We will be informed by the court whether the court order is issued and served.

It would probably take up to 2 weeks the debtor receives the documents from the court. The debtor is legally entitled to object to the court order within 2 weeks after service (deadline). If not the writ of execution will be issued and served by the court. The debtor has 2 weeks more to object once more. In case of objection of the debtor the case will be pass over to regular (adversary, contentious proceedings) court proceedings and we have to present a detailed statement of claim (pleading) containing all facts about the basis of the claim, providing all documents, invoices, delivery notes, proofs and witnesses. Therefore we have to review the documents and to provide the court with a statement of the legal position. Furthermore we have to outline the whole history of facts, booking (conclusion of the contract), kind and method of performance of the contractual obligation, invoicing a.s.o. Further on we have to go to court (court hearing) and to prepare several pleadings in court proceedings.

Time scale in electronically proceedings (no objections of the debtor): 8-10 weeks


Furthermore it is possible to initiate regular court proceedings by sending a statement of claim (written pleading) to the court presenting all information about the business relation (order, delivery) and calculating the amount of the debt and presenting all documents supporting our legal position (invoices, reminders, important emails, agreements...).

Regularly the court set a respite for a defence for the debtor, 2 weeks to announce defence readiness, further 2-3 weeks to substantiate the defence in detail and in written. At the same time the court will appoint a date for a first court hearing.

Please note that for legal action it is absolutely necessary to dispose of the correct and valid postal address of the debtor because the court has to serve the action and all pleadings. Otherwise legal proceedings are not possible as well as the enforcement of a judgement afterwards.

After all court proceedings can last up to around 2 months if the debtor do not object in proceedings and 6 months (to 1 year) if the claim is legally disputed in total).

Time scale in contentious proceedings (no objections of the debtor): 6-10 weeks

Please note that a court hearing only takes place if the debtor object in proceedings.

If the debtor do not object in court proceedings we will obtain a judgment by default within around 6 weeks- 2 months.

 

Enforcement proceedings:

If we obtain a judgment or writ of execution we have to enforce the judgment by legal means like order a bailiff for attachments, garnishment ... . It is not the competence of the German authorities to enforce a judgment - it is the concern of the creditor to enforce the judgment by himself.

We can order a bailiff to seize/distrain assets of the debtor. Therefore the bailiff can take away assets of the debtor. If the debtor refuses to open the door an additional court order is needed that the bailiff can enter the rooms of the debtor by force of the authorities (police). Therefore the bailiff has not the authority to enter the debtor's premises and remove his property if the debtor rejects.

In addition it is possible to order the bailiff to force the debtor to compile a declaration of his assets (from "pocket money" up to real estate) - affidavit of means.

This declaration of assets is deposited ("registered") at the court. The registration at the court persists for a time-period of 3 years. All banks and other potential business partners or companies (up to catalogue companies, credit agencies) have access to this information. In consequence the debtor is unworthy of credit and will not obtain any credit and is no more able to establish serious business connexions. Because of the serious consequences all debtors are regularly anxious to avoid this measure.

We can
- attach a bank account of the debtor here in Germany
- order a bailiff to take away assets of the debtor 
- bring the debtor/manager to an affidavit of means
- seizure of claims (debtor’s claims against his customers)
- seizure of real estate
- file for bankruptcy (regularly not to recommend)
Please inform us whether you know a bank of the debtor’s company or other assets in Germany.

It is possible to enforce a judgment of the first instance immediately but for that purpose we possibly have to pay a deposit (of f.e. 110% of the claim) to the court. This condition will be fixed by the court based on the legal provisions. This is because the judgment is not final in so far an appeal of the debtor is possible. It is to recommend to wait whether the debtor lodges an appeal to the Higher Court or not. The time limit for that is 1 month after service of the judgment.

Please note that special proceedings follows concerning fees and costs of court proceedings (fixing of costs). We have to present our invoice of our legal fees to the court. The court will then approve and fix costs and fees according to the sentence of the judgment by a separate court order. This court order is enforceable like the judgment. It could take some weeks until we obtain this court order.

We can start enforcement proceedings immediately, 2-3 days in maximum. Nevertheless we have no influence on the handling of the bailiff. We cannot expedite proceedings of the bailiff. This can take 2-5 weeks.

We can commence the process of garnishment of the bank account of the debtor immediately. Only an enforceable judgment / writ of execution is needed. The garnishment takes legal effect when the bailiff serves our application.

A bailiff is not appointed by the Court but always "independent", the bailiff has the status of an "authority" by Law.

Costs of the bailiff are depending on the action he takes, how often he has to go to the debtor, which kind of enforcement measure is applied for; costs regularly are around 20-100 Euros.

Interest: We have to claim for interest according to German law. The rate of interest is 8% (business cases) or 5% (cases with individuals) above legal basis-rate of interest stipulated by the German Federal Bank (Basiszinssatz). Therefore the interest rate will be 8 or 5 percentage points above the prime rate. The legal basis-rate of interest vary (http://www.basiszinssatz.de). Otherwise we need proof of the legal basis how to calculate the interest. We have to convert (see: http://www.bankenverband.de/waehrungsrechner) US-Dollar or other currencies into Euro to the current market price at the day we send a dunning-letter to the debtor.

Please note that it is problematical to claim for fees and costs of a debt collection agency before German Courts. Regularly such costs are not accepted by the German courts.

General Conditions are regularly not integral part of the contract if they are sent by invoice or delivery note for the first time (but sufficient: attached to an order, confirmation of order).

Limitation of time (statute of limitation): Please note that a claim based on purchase is legally statute-barred after 3 years starting from conclusion of contract (order, confirmation of order). It is not longer possible to sue the debtor at court after 3 years (end of the year). If you claim for a different cause in law (loan) please contact us.

Hence, the regular limitation period is 3 years for all claims based on civil law. Exceptions are stipulated in the law.

The limitation period starts end of the year in which the claim come into existence regularly by concluding a contract, not the date of delivery.

Example: if the claim came into existence on 30.07.2006 the limitation period starts on the 31.12.2006 and ended on the 31.12.2009. If the last day is not a working day the period defers to the following working day.

The expiry of period of limitation shall be suspended in cases of negotiations between the parties about the claim or the facts which are the basis of the claim or initiation of court proceedings. The limitation period is extended by that time period. That is what we cannot assess without further information.

Non-European clients: Furthermore the debtor can claim for a deposit of security for costs of court proceedings (court fees and Lawyer's fees occur by Law). If applied for the court has to order to furnish a deposit to the court. The deposit would be refund by the court in case we succeed in court proceedings.

Court proceedings regularly take 3-4 months in minimum, in case of necessary taking evidence (witnesses or an expert evidence) up to 5-7 months or more in case of extended and detailed objections.

It is regularly not necessary that the client or a member of the company attends to the court hearing, except it is necessary that an informed person should answer questions of the judge concerning details of the facts (like conclusion of contract, agreements, defects a.s.o).

Please note also that in case the judge need an expert evidence (f.e. concerning the applicable law, different allegations related to facts important to decide the case) the court requires advance payments for the expert expenses too.

Therefore it is definitely not possible to calculate exactly costs of court proceedings.

Last we would like to point out that in court proceedings all documents are to translate into the German Language by an court authorized translator.

For any remittance to your bank account we need the full information of your bank details (esp. IBAN, SWIFT-BIC, ABA). The client should inform us about any fees for bank transaction to add these costs to the statement of claim.

Agreements with the debtor out-of-court or in court proceedings:

The situation: We learn from the debtor that he is willing to pay but allegedly not in the position to remit the amount of an instalment/part payment at present or to settle the debt in total.

Possible (further) reaction and proceedings:
- To go to court to achieve an enforcable judgment to be able to put more pressure on the debtor and/or to try to enforce the judgment by all legal means (order a bailiff, affidavit of means, garnishment of bank accounts, garnishment of property, if known...). Consequence: the client has to invest more costs, esp. court fees and our fees (because we have to charge for our fees because we have to assume that we can not cover our fees by the debtor), fees for enforcement proceedings without any security that it is possible to cover the principal claim, these costs and fees at the end.
In this case it is to recommend to request beforehand more credit information from D&B, Hermes or Creditreform to possibly obtain information about assets or bank accounts.
Furthermore it is possible that the debtor will go bankrupt because he becomes unable to pay all debts. In this case any further payments are not to expect.
- To propose or accept an instalment agreement.
- To propose or accept an part payment to settle the matter in total.
- To propose or accept an instalment agreement but to go to court immediately. It is often recommendable to go to court as soon as possible to obtain a judgement (writ of execution). By an enforceable judgement we are able to put pressure on the debtor in future although the debtor is possibly prepared to pay (installment plan). In case the debtor does not keep his obligation to pay or he is in arrears with payments it is possible to enforce the judgment immediately by means of execution (bailiff, garnishment/attachment of bank accounts, assets ...). Therefore we are not losing time by initiating and conducting court proceedings at this (late) time.

Please note that It is not possible to obtain and enforce a judgement within 2 months.

In case of the client´s approval we will prepare an instalment agreement whereby the debtor is obliged to acknowledge the debt in total (including all costs and fees) combined with a forfeiture clause in case of default in payment (arrears of instalment). Notary certification is not necessary. We dispose of forms.

Fees and costs in court proceedings:

In case of court proceedings the court requires to pay the court fees related to a legal table, which is binding by law. The client has to provide us with the court fees in advance. The amount depends on the sum in dispute (amount of the claim, amount controversy). Without paying first the court fees no court proceedings can be initiated.

You find more information concerning legal fees and costs here>>

It is to point out that in Germany the unsuccessful party in court proceedings has to pay all fees and costs of the court and attorney's fees, particularly the fees of the attorney of the opposite party (in case of dismissal of the action).

Hence, in case of you beeing defeated in the lawsuit in total, you would have to pay the fees of the debtor's Lawyers (if being mandate anyone) according to the legal schedule. In case of a dismissal in percentage the costs are to be paid at the corresponding rate. Consequence in court proceedings: if the court judge that only a part of the principal claim is justified (f.i. only 10.000,00 from 15.000,00 Euro = 75%:25%) you are defeated in the lawsuit to the corresponding percentage. Therefore you have to bear costs and fees of legal proceedings to the percentage not been accepted by the court.

Therefore the worst case risk for a lawsuit is calculated by
- our fees
- fees of the Lawyer of the debtor (same amount as ours)
- court fees

Please keep in mind that it is not foreseeable whether the debtor defend himself in court proceedings. In that case we would obtain a judgment by default. Here proceedings end fast.

Hence the creditor/client has to pay all costs and fees in advance - the court fees and our Lawyer's fees and it is the problem of following enforcement proceedings by a bailiff or attachment of bank accounts (garnishment) to turn the judgement to payment.

Please note also that in case the judge need an expert evidence (f.e. concerning the applicable law, different allegations related to facts important to decide the case) the court requires advance payments for the expert expenses too.

Therefore it is definitely not possible to calculate costs of court proceedings exactly.

Clarification on costs and fees related to our mandate:

1. In debt collection cases as as defined we generally do not claim any retainer fee for our service, neither in out-of-court proceedings nor in court proceedings. In general, our clients do not have to pay any fees for our service, since we assume to be able to collect our fees from the debtor. Due to German legal provisions the debtor is obliged to pay costs and attorney fees, which incurred in connection with his delay of payment.

Only in case that the debtor raises serious legal objections (defective goods, delay in performance …), or objects in court proceedings by legal relevant arguments or take legal remedies or if it is obvious that we cannot cover our fees by the debtor, because of lack of assets, we have to reserve to charge our fees. Our fees are related to a legal table and they depend on the sum in dispute (amount in controversy).

Our service is to review the documents and to provide you with a statement concerning the legal position, prospects of court proceedings or/and a recommendation for further proceedings. Therefore the processing of the file means considerable work for us, which we cannot offer without any chances to be paid. We kindly ask for your understanding.

2. In case that court proceedings become necessary the court requires an advance payment of the court fees. We kindly ask for your understanding, that those fees cannot be covered by our office, thus we have to ask the client to provide us with the court fees in advance. The court fees relate to a legal table, which is binding by law. The amount depends on the amount in controversy (amount of claim).

In case the debt is contested or the debtor objects in court proceedings we cannot consider the case as a debt collection file any more.

In this context it is not of importance whether the debtor's arguments are legally justified, but that we have to argue in court proceedings. We have to review the documents and to provide the court with a statement of the legal position. Furthermore we have to present a statement of claim to the court and the whole history of facts, booking (conclusion of the contract), kind and method of performance of the contractual obligation, invoicing a.s.o. Further on we have to go to court (court hearing) and to prepare several pleadings in court proceedings.

Therefore processing of the file means considerable work for us which we cannot afford without being paid. We kindly ask for your understanding.

We need all documents concerning the debt and a statement of the client in respect of the debtor's objections. Our task is to refute all objections with our client´s assistance.

Please note that we charge our fees even it is obvious that we will have difficulties to enforce our fees after having obtained a judgement, because the debtor do not dispose of assets to enforce in or assets like bank accounts, property, real estate, are lacking or not known.

3. In case we find an agreement out of court or the debtor is prepared to accept payments by an installment plan all payments are legally (stipulated in German law) credited firstly against the interest, secondly against costs and fees and at the very end against the principal claim.

We will deduct our fees from the first payment. At the end the debtor paid the debt in total, principal claim, interest, costs and our fees.

4. In case the debtor pays the debt - but only the principal claim (no costs, interest, fees) - to our client directly after having received our dunning letter (after our appointment) the client is prepared to trace the debtor further on to pay our fees as well. The client will confirm that we are authorized to sue the debtor at the court for the difference/remainder of Lawyer's fees, since he is legally obliged to pay our fees as well with regard to the delay of payment.

5. Please note that in case of direct contact between you and the debtor you should consider our fees. Hence we appreciate to mention that our Law Office is involved in the matter and the debtor is legally obliged to pay our fees because of delay of payment. Otherwise we have to reserve to require the fees or an advance on fees from you as our client to act further on.

6. We have legally to claim for interest according to German law. The rate of interest is 8% (business cases) or 5% (cases with individuals) above legal basis-rate of interest stipulated by the German Federal Bank (Basiszinssatz). The legal basis-rate of interest vary (http://www.basiszinssatz.de). The interest rate will be 8 or 5 percentage points above the prime rate. Otherwise we need proof of the legal basis how to calculate the interest.

7. Please note that it is problematical to claim for fees and costs of a debt collection agency before German Courts regularly do not accept costs and fees caused by order of a debt collection agency (no Lawyers).

8. For any remittance to your bank account we need the full information of your bank details (esp. IBAN, SWIFT-BIC, ABA). The client should inform us about any fees for bank transaction to add these costs to the statement of claim.

Further important information:

1. General Conditions are regularly not integral part of the contract if they are sent by invoice or delivery note for the first time (but sufficient: attached to the order, confirmation of order).

2. Limitation of time (statute of limitation): Please note that a claim based on purchase is legally statute-barred after 3 years starting from conclusion of contract (order, confirmation of order). It is not longer possible to sue the debtor at court after 3 years (end of the year). If you claim for a different cause in law (...loan), please contact us.

3. Please note that court proceedings require a valid postal address of the debtor (to serve action and the documents).

4. Please note that we have legally to convert (http://www.bankenverband.de/html/reisekasse/waehrungsrechner.asp) US-Dollar or other currencies into Euro to the current market price at the day we send a dunning-letter to the debtor.

5. Risk of debt collection in case of subsequent bankruptcy proceedings of the debtor: It is possible that we can collect the debt in total or collect some instalments and later on the debtor goes bankrupt.

It is possible that the administrator/receiver in bankruptcy rescind the payment(s) by legal ground of "disadvantage of the other creditors". The legal background is that in case (and from this moment on) of inability to pay/ illiquidity ("case of bankruptcy") the debtor privilege (only) the client if he pay solely and exclusively to him and not to the other creditors. The administrator/receiver in bankruptcy appointed by the bankruptcy court is legally entitled to claim back such payments to the debtor's assets.

In consequence the client has to pay back/refund the payments to the administrator/receiver in bankruptcy.

The client accept these conditions. In case the client close the file definetely (f.i.: too small debt, small rates, instalments) possible payments of the debtor are to our favour.The client requires to pay out the credit if the debt is collected. Please do not hesitate to contact us if there are further questions.

Michael Feinen
Rechtsanwalt
Law Firm Feinen

Anwaltskanzlei Feinen
Law Firm Feinen
0049221-16844589 Tel.
0049-30520048045 / 0049221-16844619 Fax
kanzlei@rechtsanwalt-feinen.de
www.debtcollectioningermany.com
Skype call: "debtcollection"

Copyright: Michael Feinen 2000-2017
23.02.2017
02/23/2017
23, February 2017
23.02.2017