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Created on Friday, 07 November 2008 00:44

Last Updated on Friday, 28 December 2012 18:43

No Obligation to Pay Inflated Collection Fees

It happens every day. Your supplier has sent you an invoice, and payment is not forthcoming. Often, a reminder from a collection agency follows – with hefty fees.

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Generally, the debtor must cover the costs of late payment. That also applies to collection agency fees. These agencies set their own fees; there is no uniform standard or legal regulation on this in Germany. However, the courts have ruled on several occasions that they may not demand more than attorneys are permitted by law to do. Legally, attorneys can only demand a very small fee for simple reminders. Having the order to recoup EUR 1,500 will result in costs of EUR 43.85 following the  RVG. It is therefore highly advisable to take a close look at the fees charged by collection agencies.

Should payment not be made despite their reminders, collection agencies have no further possibilities. They are not allowed to sue on behalf their customer in court. They may only remind and exert pressure. Only attorneys have the legal authorization to sue in court on behalf of their clients. The courts generally accept either collection agencies’ costs or attorneys’ fees as default damages, but not both.

Considering the value of collection agencies, attorneys have the saying “pay nothing get nothing”. Of course, attorneys may not guarantee the results of their services (§49b BRAO), but they have more options for enforcing a claim. They have learned which arguments made by the debtor are legally relevant and which are not. Collection agencies tend only to repeat monotonously that you have to pay.