Foreign debt collection
What is third-party debt collection?
External debt collection is a legal term for debt collection that a company does not carry out itself. In other words, it is debt collection that is carried out by an external partner. Self-collection is done by or with the help of an authorized debt collection company or a lawyer, often called a debt collection lawyer.
The opposite of third-party debt collection is self-collection, where the creditor is responsible for the entire debt collection process on their own and thus bears full responsibility for the entire debt collection process. In third-party debt collection, the full responsibility is often placed on the actor who assists with the debt collection, and it is thus the actor who is responsible for ensuring that all rules, deadlines and fees are met.
External debt collection is often associated with costs for the lawyer or debt collection company, but these are often covered by the debtor's imposed fees, and thus the creditor is kept free of charge by many debt collection companies. Another advantage of external debt collection is that it can often free up the company's internal resources from the debt collection and reminder process, allowing the company's employees to spend time on other tasks.
Fees for third-party debt collection
The debt collection company or lawyer who helps you with debt collection (third-party debt collection) can charge the debtor a collection fee.
The collection fee is dependent on the amount of the principal and is regulated by law in the Executive Order amending the Executive Order on extrajudicial collection costs in connection with late payment.
The fee ranges from DKK 400 to as much as DKK 6,400 + 1% of the claim exceeding DKK 500,000.
Your debt collection company or lawyer will often also impose all legitimate reminder fees, interest and the like on your behalf.
Who can carry out third-party debt collection?
In Denmark, only authorized debt collection companies, with the approval of the police, are allowed to operate debt collection activities in Denmark.
In Denmark, there are around 100 companies authorized to operate debt collection activities in Denmark, ranging from classic debt collection companies to online services.
In addition to the authorized debt collection agencies, all lawyers with an authorization are allowed to help customers with debt collection (third-party debt collection).
You should be aware, however, that not all lawyers and law firms are involved in debt collection and therefore do not want to help with debt collection from third parties.
Lawyers who deal with debt collection are often called debt collection lawyers.
According to the Lawyer's Key, at the time of writing there are 63 lawyers who have indicated debt collection as their field of work out of more than 500 active lawyers to search among.
Even if a debt collection agency is authorized to help with debt collection, it is far from certain that they will want to help you with your particular case. For example, some debt collection agencies only help large clients with large portfolios, while others specialize in other types of debt collection. But talk to your debt collection agency about your options.
If you still carry out debt collection on behalf of others, you may be fined.
Applicable laws and regulations
In addition to the fact that only lawyers (debt collection lawyers) and authorized companies may conduct debt collection business in Denmark, there are also a number of laws and regulations for debt collection companies that must be complied with when conducting debt collection on behalf of others.
The rules for third-party debt collection and debt collection companies: https://www.retsinformation.dk/eli/lta/2014/1018
