What is debt collection?

Getting paid for your services is crucial to running a healthy business and ensuring your company's continued development. But sooner or later, business owners will encounter bad payers. This is where debt collection comes in. Debt collection is an abbreviation of debt collection, which means that an external company initiates a collection process by contacting the debtor.

How do I send an invoice for collection?

You can quickly create your cases via our easy-to-use online platform. Simply upload an image of your unpaid invoice and our smart scanning engine will take over and create the case for you.

Debt collection process - how a debt collection case proceeds

An effective debt collection process is crucial for debt collection to be effective and thus manage to get the money back to the creditor.

Here we focus on the debt collection process from start to finish: who is allowed to handle a debt collection process, how to start a debt collection process, what steps should be taken and what options are available in a debt collection process. We also take a closer look at what to do if the debt collection process does not result in a payment to the creditor.

This article is intended as information for those who want to learn more about the debt collection process and want useful tips and tricks on how to start, structure and manage your own debt collection process as a creditor.

If you need debt collection, you are of course always welcome to contact us.

See prices

Collection process - The collection process of a debt collection case with a debt collection agency

Who can handle a debt collection process in Denmark?

In Denmark, the creditor, the creditor's debt collection company or the creditor's debt collection lawyer may handle all or part of the debt collection process.

Basically, there is no difference between what the creditor, creditor's debt collection company or debt collection lawyer can and cannot do, but the crucial difference is how it is done, how often things are done and who does it.

In Denmark, you must be authorized by the police to run a debt collection company. The authorization is to ensure that the company complies with applicable laws and regulations and that the owners and people behind the company have no previous convictions, debts to the public sector or similar.

There are more than 100 authorized debt collection agencies in Denmark; the list can be found on Politi.dk. Please note that not all debt collection agencies can help you with your debt collection case - some debt collection agencies specialize in collecting flight compensation, for example.

Apart from debt collection companies, all licensed lawyers are allowed to collect debts on behalf of a creditor. Note that not all lawyers offer debt collection in their law firm either. If you offer debt collection as a service in your law firm, many lawyers refer to themselves as debt collection lawyers.

In Denmark, there are over 4,600 lawyers, and thus 4,600 lawyers who can help you with debt collection - but only 59 have stated that they help with debt collection, according to the Danish Bar and Law Society's Advokatnøglen. However, the actual number is estimated to be higher. Section 2 of the Debt Collection Act deals with the authorization of debt collection companies.

If the creditor carries out the collection process themselves, this is legally referred to as self-collection.

How do you start a debt collection process?

A debt collection process must be started with a debt collection notice, also referred to as a debt collection letter, debt collection notice, demand letter or section 10 letter.

If the debt collection notice has not been sent, the debt collection process has not been legally started and all subsequent processes are not legally compliant.

It is not a requirement that the creditor prepares and sends the debt collection notice themselves - it can be the creditor's debt collection company or the creditor's lawyer who sends it.

The creditor is allowed to send the debt collection notice themselves and then hand the case over to their lawyer or debt collection agency. However, it is important that the creditor informs their debt collection partner that the debt collection notice was sent by the creditor themselves.

The purpose of the debt collection notice is to inform the debtor that if payment is not made within a minimum payment period of 10 days, the debt collection process will be initiated. It is important that the debt collection notice contains:

Clarity on what the debt collection notice is about. A reference to an invoice is often enough.
A 10-day payment deadline to pay the invoice amount including any reminder fees and interest.
Clarity that the letter is a debt collection notice. The wording "Debt collection notice" is sufficient.

We recommend that you use a debt collection notice/demand letter template to ensure that the debt collection notice is prepared correctly.

The debt collection notice is regulated in Section 10 of the Debt Collection Act. Hence the name Section 10 letter.

Free debt collection notice template

What tools are there in the debt collection process?

In the debt collection process, there are many options and therefore many tools that the creditor, a debt collection agency or a lawyer can use to get the creditor's money back. Among the most commonly used tools are:

Reminder letters
Imposition of reminder fees
Imposition of interest
Imposition of collection costs
Imposition of compensation fee if the debtor is a business
Calls and SMS to debtor
Instalment facility
Physical presence at the debtor's premises
Registering with debt registers, such as RKI or Debitorlisten
The bailiff court for the attachment of the debtor's property

Which tools are necessary in a specific case depends on a wide range of factors - but most importantly, it depends on the debtor's willingness and ability to pay as well as the amount of the debt.

At Collectia, we have many years of experience in debt collection, combined with advanced AI. This means that we can prepare the collection process that we believe is best - and where the chance of getting the creditor's money back is greatest.

Basically, the best debt collection process is the one where the creditor gets their money back as quickly as possible.

For example, it is not necessary to use all tools if the debtor pays on first contact. Conversely, it can also be advantageous to skip a number of steps if it is assessed that some steps do not lead to payment.

We usually recommend imposing the possible fees, interest and reminder fees - and calling the debtor. A call to the debtor often enables an assessment of the further course of action. For example, if the debtor is willing but unable to pay, an installment plan may be a solution.

What legislation applies to the debt collection process?

If you are involved in a debt collection process, you are covered by the Debt Collection Act and the Interest Act. It is important that you are familiar with the content of the law and its framework.

In particular, we recommend that you pay special attention to:

Section 9 of the Debt Collection Act - Good debt collection practices
Section 10 of the Debt Collection Act - contacting the debtor
Rent Act

What does a typical debt collection process look like?

Few debt collection processes are the same, because no two debt collection cases or debtors are the same. However, common to all debt collection processes is that they all start with a debt collection notice. Without the debt collection notice, the debt collection process cannot begin.

However, a typical debt collection process can look like this:

Day 1: Sending a debt collection notice
Day 11: Reminder letter with a reminder fee
Day 22: Calling the debtor
Day 25: Imposition of interest
Day 35: Installment plan offer
Day 45: Arbitration court

The above debt collection process should not be seen as our recommendation or a picture of how our debt collection processes work - but should be seen as a typical debt collection process that we experience that many do.

The collection process has had no effect - what do I do?

From time to time, many creditors and debt collectors find that the collection process has no effect - the debtor does not pay the amount owed or does not comply with the installment agreement in an installment plan. In such cases, the enforcement court is an option. This escalates the debt collection process from being an extrajudicial process to judicial debt collection. Judicial debt collection means debt collection where the bailiff's court is involved.

Starting a legal debt collection process requires a form to be filled out for the bailiff court. This form is legally referred to as a payment demand. The payment demand is filled out by the creditor, the creditor's debt collection company or the creditor's lawyer and sent to the bailiff court.

In the payment claim, all relevant information about the case is filled in; creditor information, debtor information, information about the amount, etc.

It is a requirement that a debt collection notice has been sent and that the debt collection notice sets a payment deadline of 10 days before the payment claim is submitted to the enforcement court. In other words, legal debt collection in the enforcement court cannot be started without the debt collection notice being sent and all the formalities surrounding it being completed.

The bailiff then summons the debtor to court as well as the creditor or the creditor's representatives (lawyer or debt collection agency). In the bailiff court, it is possible to attach the debtor's possessions and establish a repayment plan. The agreement in the bailiff court is legally valid and the claim against the debtor does not expire after 3 years, as a normal invoice claim, but after 10 years.

Frequently asked questions about the debt collection process

No two debt collection cases are the same, and often neither is the debtor. That's why very few debt collection processes are the same.

However, we get a lot of general questions about debt collection processes. We have tried to shed some light on the general debt collection process above and have chosen to answer the many questions below.

Should I send reminders before the collection process?

No, it is not necessary for you to send reminders, with or without a reminder fee, prior to sending the debt collection notice and thus starting the debt collection process.

Dunning is an option that you can and should take advantage of, but it's not a requirement.

Reminders can easily be used as a tool in the overall debt collection process. Remember, you are allowed to send a maximum of 3 reminders with reminder fees of 100 DKK. Reminder letters with reminder fees must give the debtor a payment deadline of at least 10 days. No reminders may be sent during the 10 days.

Reminder letters are often a good idea, and if you want to make use of them, we have a free reminder template for you to use.

Free reminder template

Should I start an out-of-court debt collection process before the bailiff court?

No, there is no requirement to do so.

In principle, you can skip the extrajudicial debt collection process and send the debtor directly to the enforcement court. However, it is still a requirement that you have sent a debt collection notice before the judicial debt collection process.

If a debt collection notice has not been sent prior to the legal debt collection process, the bailiff court will reject the case.

We often recommend trying the out-of-court debt collection process, as this often proves to be the cheapest solution and the shortest process. However, some cases may be of such a nature that out-of-court debt collection is deemed pointless. Fortunately, this rarely happens.

Can I go to the debtor?

In principle, there are no rules on how often you can contact a debtor.

However, you should be aware that you are not allowed to collect the amount owed if the debtor has been given a new payment deadline - for example, on a debt collection notice or reminder letter.

Of course, we do not recommend that your inquiries take on the character of harassing behavior, as this often leads to nothing. But we do recommend that you follow up and stay in contact with the debtor on an ongoing basis. We have found that the more frequent and persistent you are in the debt collection process, the greater the chance of recovering your outstanding debt.

Is time important in a debt collection process?

Yes, time is of the essence in a professional debt collection process.

Because the faster you start the debt collection process and the more often you contact the debtor, the more often we see our customers' claims recovered.

How long can a debt collection process last?

Basically, most common invoice claims expire after 3 years. Some claims expire after 10 years - these are often not invoice claims, but promissory notes, loan documents and the like.

You can download our free promissory note template here.

In principle, the debt collection process can continue right up to the statute of limitations. After the 3 or 10 years have passed, it is no longer possible to collect your money and the collection process must be terminated. The claim is lost.

However, it is possible to interrupt the statute of limitations, both the 3-year and 10-year statute of limitations. This is done with the help of the bailiff or a debt declaration. Remember, you can find a free template for a debt declaration.

Free debt declaration template

Create your debt collection case today

Creating your first debt collection case is incredibly easy. Simply register here on the website, which will only take a few minutes. After registering, upload a photo of your unpaid invoice and we'll take care of the rest!

Quick and easy
Sign with MitID

See our solutions

Become a customer

Choose a solution and complete registration

Create a case

Create a case via Customer Web or take a picture of the invoice with your mobile phone

Payment

Payment to you will be made as the case is recovered.

Recovery

Recovery process starts