Rules and legislation you should know

The Debt Collection Act §9 states that debt collection companies must practice good debt collection ethics. This means that we must treat our customers and their customers respectfully and professionally and must not use methods such as: coercion, threats, etc.

Our main task is to recover your money while keeping the good customer experience in focus. Our experience clearly shows that respectful recovery promotes payment and maintains good customer relations.

Yes, according to §3 of the Executive Order on extrajudicial recovery costs, the customer must be notified before the case is transferred to debt collection. The notice must appear in the last reminder letter sent to the customer.

The notice must clearly state that failure to pay within the stated payment deadline may result in the case being referred to debt collection and that this may result in additional collection costs for which the customer is liable.

You are required to give the customer at least 10 days to pay from the date the notice is sent.

If you still do not receive payment from the customer and the case is transferred to debt collection, an additional notice must be sent to the customer, cf. section 10 of the Debt Collection Act. This notice is often called a debt collection notice or demand letter and will usually be subject to collection costs, which your customer is liable for. It will also state what further action may be taken in the event of continued non-payment, e.g. that the case may be taken to court or that bankruptcy will be filed, which may result in additional costs for which the customer is liable.

If the customer does not pay on time, an interest fee may be charged for the time the customer continues to fail to pay their debt. This interest charge is called a process interest or default interest. The interest rate is set according to the National Bank of Denmark's lending rate plus a surcharge of approximately 8%.

You are not obliged to send reminders with a reminder fee, but you may require the customer to pay a reminder fee of up to a maximum of €100 per letter. A maximum of three reminder fees can be charged for the same case and there must be a minimum of 10 days between reminders.

A collection fee of DKK 100 may be added to the transfer to debt collection, which the customer must pay.

On invoices, the limitation period is generally 3 years, which means that you cannot claim a refund if 3 years have passed since the invoice was issued. If a due date is agreed in the terms and conditions, the 3 years are calculated from the date of payment. In the case of damage cases, it is from the date of damage.

If the amount is legally determined or the customer has signed a debt declaration or promissory note, the limitation period is 10 years.

If a case goes to court, the costs depend on whether the case goes to the enforcement court or the civil court, as well as the value of the case.

If the case goes to an enforcement or civil court, the costs will be charged to the customer.

Collectia pays for all legal fees and charges you at the monthly settlement. These fees are passed on to the customer, so you will get your money back if the customer pays the full amount.

Have your customers received reminders for bills that they haven't paid or responded to? Then they may have a payment reminder, i.e. be registered as a bad payer. A payment remark is registered in RKI or other similar debt registers, such as Collectia's own Debitor List etc. Young people under 18 must not be registered with payment remarks.

As a general rule, the customer must have received 3 written reminders that they have not responded to in order to get a payment reminder. In the last reminder, you must notify the customer that he/she will be registered in a debt register, giving them a last chance to pay back their debt within 10 days, unless otherwise stated. However, you don't need to notify the registration if there is a foundation (e.g. debt declaration, judgment, etc.).

Payment default rules depend on who the customer owes money to

• Does the customer owe money to the public sector?
  Then the amount must be over DKK 7,500 before the customer can get a payment remark.
• If the customer owes money to a financial institution e.g.e.g. the bank?
  Then the amount must be over DKK 1,000. kr before the customer can get a payment remark.
• Does the customer owe money to a private company?
  Then the amount must be over DKK 200 before the customer can get a payment remark.

How do you get a payment default?

As a general rule, a payment default must be removed as soon as the customer has paid his or her debts. 

If the customer does not pay his or her debt, the customer may be registered for a maximum of 5 years. Even if the payment remark expires, the customer's debt remains if it has not been paid.