What is a debtor?
A debtor is a person or legal entity that has a debt or outstanding debt to another company or individual. In legal and accounting terms, the word "debtor" is used as a synonym for debtor. The company or individual to whom the debtor owes money is called a 'creditor'. The word "debtor" comes from Latin and simply means "debtor".
In the case of a loan relationship, for example with a bank, the terms borrower and lender are used for the parties - not the terms debtor and creditor.
How is a debtor treated?
A debtor is typically only dealt with when the due date has passed and the debtor has therefore not paid on time and has violated their obligations to the creditor. According to the Debt Collection Act and the Interest Act, it is not possible to send reminders, impose interest or costs, or send a debt collection notice before the payment deadline has passed.
As a creditor, you have many options for dealing with debtors if you haven't received your payment on time. For example, you can start a reminder procedure where you send reminder letters with or without a reminder fee. It's important to be aware of the applicable requirements for deadlines and maximum reminder fees.
In addition to reminder letters, you can also charge the debtor a compensation fee of up to DKK 310. The compensation fee helps compensate for the non-payment and thus the extra cost of sending a reminder to a debtor. If the reminder procedure does not have the desired effect, you can start a debt collection process. This is done by sending a debt collection notice.
After the debt collection notice has been sent, the case can be handed over for collection - either by the creditor themselves (self-collection) or by a lawyer or debt collection agency, also known as third-party collection.
Who processes a debtor?
There are several parties that can deal with a debtor when a payment is missed. It can be the creditor themselves, the creditor's debt collection agency or the creditor's debt collection lawyer. Most debt collection agencies and lawyers can assist with everything from reminder processes and debt collection processes to, if necessary, enforcement proceedings.
In Denmark, you must be an authorized debt collection company to work with debt collection and debtors. This is to ensure that the right people and companies are handling Danish debtors. There are around 95 authorized debt collection companies in Denmark that are allowed to work with debt collection. You can find the list of these on Politi.dk.
In principle, all Danish lawyers can deal with debtors and thus perform debt collection. Lawyers who work with debt collection often call themselves debt collection lawyers. You can find a list of lawyers specializing in debt collection at www.advokatnoeglen.dk/. However, it is important to note that although all Danish lawyers are licensed to work with debt collection, not all lawyers choose to offer debt collection as a service in their law firm.
When is a claim against a debtor time-barred?
Few companies realize it, but if you have a claim against a debtor, the claim is time-barred according to the Limitation Act. If a claim against a debtor is time-barred, you have no legal options to pursue your claim - and the claim is lost. After this, neither reminder processes nor debt collection can be used.
Most claims a company has are so-called simple claims - such as an invoice. These claims expire after 3 years. If the company has claims that are signed by both parties, such as a loan document, a settlement, an installment agreement or similar, the claim is time-barred after 10 years.
It is possible for the creditor to interrupt the limitation period. This is done with the help of the bailiff. In principle, this can be done indefinitely. We recommend that you talk to your debt collection agency or lawyer about whether it is worthwhile to interrupt the limitation period in the specific case with your debtor. Many factors can play a role here, such as the debtor's finances, other debts and the like.
Read also: Statute of limitations for money claims
Also read: Objection - debtor disagrees, what do I do?
Do you need help managing your debtors?
At Collectia, we have more than 150 years of experience in professional debtor management - from sending reminders, to debt collection, to enforcement.
Our online platform makes it easy for you to create, track and close your cases.
At Collectia, we have many years of experience in professional handling of debtors - from sending out reminders, to debt collection, to the bailiff court. Our online platform makes it easy for you to create, follow and close your debt collection cases.
