Recovery process

A collection process is a generic term for the entire process of recovering unpaid invoices or other debts between a debtor and a creditor. This process is also commonly referred to as debt collection or debt collection process.

The debt collection process covers all actions, from the first reminder letter to any legal action in the bailiff court.

In this article, we focus on the concept of the collection process and what it can include. Hopefully, you as a creditor can get some inspiration or new knowledge to run debt collection more efficiently.

How do I start the recovery process?

Any debt collection process must start with a debt collection notice - see section 10 of the Debt Collection Act.

This is a mandatory part of the process and if the debt collection notice is not given correctly or with the right deadline, the remaining collection process is invalid. The debt collection notice is also required if the creditor wants to start a judicial debt collection process with the help of the bailiff.

What does the recovery process involve?

No two debtors are the same, and therefore neither is the collection process.

Some companies find that a debtor pays on first contact, while others find that the debtor does not respond to letters, calls or other inquiries. In such cases, legal action may be necessary to recover all or part of the debt.

Therefore, we cannot provide a fixed description of what a recovery process looks like, but we can describe the tools that can be part of an effective process.

A recovery process can include the following elements:

Sending reminders
Collection notice
Imposition of interest and collection costs
Call to debtor
Installment plan offer
Physical presence at the debtor's premises
Demand for payment for the purpose of judicial collection
Legal debt collection with the help of the bailiff
Attachment of any assets with the help of the bailiff
Establishing a repayment plan via the bailiff's court
Registration in debt registers, such as the Debtor List or Experian's RKI

The above are just examples of elements that can be included in a collection process. Some of the elements do not need to be in this order or can be omitted in whole or in part if the creditor wants a shorter process.

However, the debt collection warning cannot be deselected if the debt collection process is to be started. However, it is possible to send reminders both before and after the debt collection notice.

The debt collection process for businesses, lawyers and debt collectors

Basically, there is no difference between the debt collection process that a company (creditor) can handle themselves and the process that lawyers or debt collection companies follow.

The big difference lies in how the process is handled and how deadlines are met.

As a creditor, you will often find that the debt collection process with a law firm or debt collection company is far more professional and often shorter than what you can achieve yourself.

In addition, collection actions taken by a lawyer or debt collection agency often have greater authority than if the creditor is handling the process themselves.

Legal actions in the debt collection process

Legal action may come into play if the debtor does not respond to inquiries from the creditor or the creditor's collection agency.

In principle, legal action can be initiated already after the debt collection notice, but it can often be a good idea to carry out an out-of-court procedure first, as it is usually cheaper and faster than legal action.

It is up to the creditor or the creditor's debt collection company to assess whether legal action is necessary during the collection process.