Debt collection laws and regulations - what you need to know about debt collection rules

Collectia has been an authorized debt collection company since 1998, and our 150 employees work hard every day to recover our clients' receivables - regardless of the size and scope of invoices.

As an authorized professional debt collection company, nothing is more important to us than complying with the applicable legislation in the field of debt collection and recovery.

In this post, we highlight some of the laws and regulations around debt collection; what you can and can't do when it comes to debt collection, recovery and dunning procedures.

The law on debt collection - debt collection law

Before diving into the rules governing debt collection, it is important to highlight the applicable laws in this area.

When it comes to debt collection, there are basically two laws that are important to know: the Debt Collection Act and the Interest Act. Both laws specify which actions are required for debt collection - as well as the interest and fees that can be charged on a claim (invoice claim).

Collection Act §10 - letter of demand

The Danish Debt Collection Act contains a total of 31 sections, but the one most often referred to is section 10 of the Act.

Section 10 of the Debt Collection Act states that before you, as a creditor, can take any action to recover a debt, a letter of demand - also known as a debt collection notice - must be sent.

Section 10(2) of the Debt Collection Act points out the importance of the letter of demand clearly stating the necessary information to the debtor so that the debtor can identify what the claim relates to. The law does not elaborate further on identification - but in practice it is often enough to refer to the original invoice - including the invoice number.

Section 10 (3) of the Debt Collection Act also states that you as a creditor must give your customer at least 10 days to pay the demand letter.

If you are unsure how to fill in a letter of demand / debt collection notice, you can find a free template for a letter of demand here:

Download free letter of demand template

Reminder letter

As a creditor, you also have the possibility to send reminders - also known as reminders - if a customer does not pay your invoices. Reminders and the reminder fees imposed are regulated by the Interest Act.

As a creditor, you have the option of adding a reminder fee of DKK 100 to your reminder letters.

If you apply a reminder fee to your reminders, please note the following:

You can only send the reminder after the due date on the invoice has passed
You can send a maximum of 3 reminders with a reminder fee attached
You may impose a maximum reminder fee of DKK 100 per reminder letter
You must give your customer at least 10 days to pay
You must not send the next reminder before the 10-day payment deadline has expired

As a creditor, you should be aware that, unlike the demand letter, reminder letters - and the reminder fees - are all voluntary and should be seen as an option, not an obligation.

You can find a free reminder letter template right here:

Download free reminder templates

Same rules for debt collectors and creditors?

At Collectia, we are often asked whether there is a big difference between what a debt collection company may and must, compared to an ordinary trader.

There is basically not. A debt collection company and a trader must basically comply with the same basic rules and requirements for debt collection, sending reminders and contacting the debtor.

However, the advantages of choosing a debt collection company are many. One of them is that you as a creditor do not have to deal with the rules, requirements and regulations that apply to debt collection and recovery - the debt collection companies, which are authorized by the police, are obliged to do so.

Often, as a creditor, you don't even have to send a debt collection notice to the debtor - the debt collection company often does that for you.

Apart from the basics, the same requirements and rules apply to a debt collection agency as to you as a trader. However, there are a number of advantages to choosing a debt collection company to handle the process.