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Tax refunds - Spend it on your debts - and take control of your financial situation - MyCollectia
Sebastian S.
May 23, 2023

Money back in taxes? - Spend it on your debts - and get your financial situation under control

March is a good month for most people. Not only is spring soon on its way, but March 15 is also the date many Danes look forward to with excitement. March is also the date many Danes look forward to with excitement. 15. March, the annual tax assessment for last year is published - and thus how much money you should get back in tax - or have to pay.

Here at Collectia, we would like to give our suggestions on - how you can use the money that you may get back from SKAT in perhaps the best way for yourself and your finances.

Many people are looking forward to getting money back in their taxes, which they can use to buy clothes, electronics or other consumer goods that they may not have been able to afford in the past year. However, this is not an approach we would advise everyone to take. Especially if you have debts to pay. In this case, we would recommend that you consider whether all or part of the extra money should be used to reduce your debts - with the bank or with other creditors.

5 good reasons to spend your excess tax on debt

1: Your debt will increase if you do nothing!

No matter who you owe money to - a bank, mortgage company, local businesses or a debt collection agency - your debt will increase if you don't do anything about it.

A creditor or debt collectors may add more than 8% interest per year to your debt, and most of them use this interest addition when you do not repay your debt.

2: Avoid other fees

If your case is sent to a lawyer or a debt collection agency for collection, interest, collection costs, collection notice and reminder fees will be charged on your claim on an ongoing basis.

The longer you do nothing to reduce your debt, the higher the risk that your outstanding debt will be attributed to these collection fees.

3: Avoid the bailiff court

If you do not pay your debt and the case is sent for collection by a debt collection agency or a debt collection lawyer, there is a risk that the case will be sent to the enforcement court.

If the case is sent to the enforcement court, additional fees will be applied to your claim.

In an enforcement court, there is a risk that your belongings, car, property, etc. may be foreclosed.

4: Avoid RKI

If your case is sent to a debt collection agency or lawyer, there is also a high risk that your claim will be registered in the RKI, Debitorlisten or other debt register for bad payers.

Being on a debt register can have major consequences for your everyday life. Many companies, including telephone companies and other subscription companies, carry out checks on their customers, including at RKI and Debitorlisten.

If your debt collection case ends up in a debt register, you may not be able to take out a mobile phone subscription or similar services.

5: Get more freedom in everyday life with an installment plan

If you are in debt - to a company or a bank - and your case has been sent to a debt collection agency, a lawyer or a debt collection agency, there are many ways to get out of debt.

Most people are not able to pay the entire claim at once, and most debt collection companies and lawyers who deal with debt collection will understand this. Therefore, an installment plan can be a very good solution for those who cannot pay the full amount now. An installment plan is a good solution for you who would like to reduce your debt, would like to avoid ongoing other expenses and would like to have peace and freedom about your financial situation.

Dialogue is the way out of debt

No matter who you owe money to - a company, a bank, a debt collection agency or a debt collection lawyer - our best recommendation is that you as a debtor contact them and start a dialog.

It can often be difficult and confusing to contact a creditor, a creditor's debt collection company or a creditor's lawyer - and letters and calls often end up being ignored. But this is far from the optimal solution, as it can result in even more costs for you as a debtor, interest charges and, in the worst case, the enforcement court and RKI.

Most people will be sympathetic to your financial situation and are often willing to talk about an installment plan, deferment of debt or similar. The most important thing is that you make contact and enter into a dialog to find a solution - even if you do not have the full amount to settle the debt right now.

Don't cheat yourself - remember your deductions

Fortunately, your bank and your employer have made it easy for you, as they usually declare your interest expenses and income to SKAT. This means that there is often not much that you have to declare to the tax authorities yourself.

However, you should always remember to check your tax return - and especially your deductions, as there can be a lot of money to be made.

Especially this year (2020 / 2021), you need to pay attention to your mileage deduction, as SKAT does not record this.

Why do we provide financial advice?

Collectia, as a professional debt collection company since 1998, has helped thousands of debtors with their debts through professional advice on their debt and financial situation.

As a debt collection company, we at Collectia not only have an obligation to collect our clients' (Danish companies) claims home - we also have a great social responsibility and obligation to help our debtors well through their financial challenges - which are often just a temporary period in their lives.

Part of that job is to help settle their debts in the fastest way possible, so that the debtor avoids the bailiff court, RKI and ongoing charges of interest, fees, reminder fees and the like.