Collection laws
The Debt Collection Act, or the Executive Order on the Debt Collection Act, sets out the applicable debt collection rules for debt collection companies and creditors who are responsible for reminding customers for non-payment or who handle the debt collection process in their business.
In other words, the Debt Collection Act contains the framework and rules that apply when a debt collection company or you as a creditor are responsible for debt collection (self-collection).
The purpose of the Debt Collection Act is to ensure that the debtor (debtor) is treated properly, so that, for example, not too many fees are imposed or the debtor is not deprived of his or her rightful time limits to pay his debt.
The current Debt Collection Act is from 2014, but is updated regularly. The Debt Collection Act does not apply to lawyers who carry out debt collection as part of their debt collection activities, or to banks, mortgage credit institutions and public authorities, cf. section 1(2) of the Debt Collection Act.
What is important to know about debt collection law?
Debt collection, the debt collection process and the framework for debt collection are regulated by the Debt Collection Act. This means that debt collection companies and creditors who carry out debt collection activities must follow the sections and provisions of the Debt Collection Act.
Of course, we always recommend that any type of debt collection company follows the Debt Collection Act and its provisions and has a good knowledge of the legal text.
We also recommend that you keep up to date on the content of the Debt Collection Act and make sure to obtain new knowledge in the area when necessary.
However, there are a few paragraphs that we here at Collectia particularly want to highlight for you as a creditor, as they are often most relevant in the daily work with debt collection.
Paragraph 9
§ 9 ( good debt collection practice ): Debt collection operations must be carried out in accordance with good debt collection practice. Good debt collection practice has a long history of jurisprudence behind it, but basically it is about showing a certain orderliness in the recovery and not exposing the debtor to "unreasonable pressure, damage or inconvenience."
Paragraph 10
Section 10 deals with the creditor's/debt collection company's approach to the debtor. Section 10 specifies that debt collection may not be initiated until a demand letter has been sent, also called a debt collection notice or notice of debt collection. In some companies, the letter is also called a section 10 letter.
Pursuant to section 10(2) of the Debt Collection Act, the demand letter/debt collection notice must clearly state all necessary information so that the debtor can identify the claim, typically with reference to an unpaid invoice. Next, the demand letter, cf. section 10(3) of the Debt Collection Act, must specify a deadline for the debtor to pay at least 10 days from the date of sending of the demand letter. In other words, the debtor must have a new payment deadline to pay the claim.
If the above two points are complied with, i.e. a clear indication of the claim and a payment deadline of 10 days, the demand letter is valid, and you can then proceed to the debt collection process if the debtor does not pay his or her debt within 10 days of the letter being sent.
Article 12
Section 12 of the Debt Collection Act specifies that you may not contact the debtor in person at the debtor's workplace or home where there is no public access, unless you have notified this in writing. It is also specified which weekdays and public holidays and which periods of time this may take place.
Need help with debt collection?
If you need help with your debt collection, you as a creditor can choose to handle the collection yourself or have an approved and authorized debt collection company handle the process.
Authorization is discussed in chapter 2, section 3 of the Debt Collection Act.
Here at Collectia, we have helped customers in most of the Nordic region with their debt collection cases - and we are happy to help you too.
