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What does a debt collection procedure cost?

Various costs may arise in the course of debt collection proceedings. First of all, there are the actual collection costs. These are the costs incurred for the activities of the collection agency.

In addition, there are also so-called third-party costs. These are costs that have to be paid to other parties involved in connection with the collection procedure. These include, for example, the costs of address investigations or chargebacks, for a bailiff or a court.

Editorial Team Germany | Dec 22, 2022 7 min
What does a debt collection procedure cost?

Collection costs

Collection agencies provide legal services to their clients and charge the costs for their services. It is precisely these costs that are to be reimbursed by the debtor as damage caused by default. The debtor may have to reimburse costs up to the amount that a lawyer would be entitled to for the same activity. Collection costs are therefore usually calculated in accordance with the German Lawyers' Remuneration Act (RVG).

The amount of the collection remuneration is determined according to

  • the amount owed and
  • the expense of recovering the debt.

 

Out-of-court procedure

With the first demand for payment, the collection agency can charge costs in the amount of a factor 0.5 fee based on No. 2300 (2) VV RVG (the remuneration table pertaining to the German Lawyers' Remuneration Act). This is referred to as a simple case.

If it is necessary for the debt collection agency to take further measures to realise the claim, the remuneration increases to a factor 0.9 fee.

If the claim is wrongfully disputed, the collection fee can rise to a factor 1.3 fee based on No. 2300 (1) VV RVG due to the larger processing effort. For the so-called "unjustified" contestation - i. e. when a claim is contested without a justified reason - we provide a calculation example at the end of this article.

 

Agreement remuneration

For payment agreements, such as instalment payments, collection agencies can charge a factor 0.7 fee based on No. 1000 VV RVG. In this case, the value of the matter is only half of the claim.

Dunning proceedings

Collection agencies can charge a factor 1.0 fee for the application for the default summons according to No. 3305 VV RVG and a further factor 0.5 fee for the application for the enforcement order according to No. 3308 VV RVG. However, it must be taken into account that half of the fee for the extrajudicial activity of the debt collection agency will be offset. Depending on how extensive this activity was, different final amounts may therefore result for the dunning procedure. A concrete calculation example including the expenses flat-rate and court costs incurred can be found at the end of the article.

 

Enforcement

Each measure within the scope of enforcement means further costs for the debtor in the amount of a factor 0.3 fee following No. 3309 VV RVG. Here, too, court and bailiff costs are added.

 

Expenses flat-rate

In any case, a lump sum for expenses in the amount of 20 % of the collection remuneration incurred shall be added following No. 7002 VV RVG. The lump sum for expenses may not exceed 20 euros.

Third-party costs and default interest

Third-party costs are the costs that are paid to other involved entities in connection with the collection procedure and that must be reimbursed by the debtor.
These include, for example:

 

Court costs

These are legally regulated costs levied by the state for the activities of the courts.

 

Address investigation costs

If the debtor's new address has to be determined, costs can vary. These costs depend on the question which company or authority has been commissioned to determine the address and what they charge for it. The most common way to determine an address is to obtain information from the residents' registration office.

 

Chargeback costs

If the account is not covered for an agreed SEPA direct debit or if the direct debit is rejected by the account holder, the collection will fail and the bank will charge costs for the return debit.

 

Default interest

Finally, default interest also accrues in the course of debt collection proceedings. This is also to be paid by the debtor as damage caused by delay according to §§ 280, 286 BGB (German Civil Code). Pursuant to § 288 BGB, consumers have to pay interest of five percentage points above the base rate on a monetary claim. This means that default interest is especially noticeable in the case of older and / or higher claims.

Calculation examples

The following examples show a typical calculation.

Calculation example 1: Collection costs for commissioning and first demand for payment

You ordered shoes for 100 euros - and overlooked the invoice. The payment deadline has expired and you are in arrears. The creditor hands over the order to a debt collection agency. You receive the first demand for payment from them.

Principal claim 100.00 EUR

Costs for the first payment request

RVG charging rate 0.5

24.50 EUR

Flat-rate fee for postal and telecommunication services

20 % of the collection costs

4.90 EUR

Sum of the costs

     

29.40 EUR

Calculation example 2: Cost increase in case of unjustified complaint

Let's take the same case: You have ordered shoes for 100 euros and receive a collection letter demanding this amount plus the collection costs incurred. However, you are sure that you have already paid the invoice. Therefore, you send a complaint to the collection agency.

There, the case will now be examined in detail. The creditor will probably be consulted again and all accounts will be checked to see whether the amount has been received, but possibly incorrectly allocated.

The check shows that you made a mistake - you thought you had paid for these shoes, but it was a different invoice. Your complaint was therefore not justified. The fee factor for the collection costs may be increased up to 1.3 for the additional costs incurred.

Principal claim 100.00 EUR

Collection costs in case of larger effort after unjustified complaint

RVG charging rate 1.3

63.70 EUR

Flat-rate fee for postal and telecommunication services

20 % of the collection costs

12.74 EUR

Sum of the costs

   

76.44 EUR

Calculation example 3: Costs that can arise through and after legal proceedings

Same case: You have ordered shoes for 100 euros, receive a debt collection letter, but ignore it. If there is no response to the collection agency's contact attempts or offers of payment options, the creditor often has to go to court to secure the debt.

If you are still not prepared to pay the debt after receiving an enforcement order, you risk even higher costs due to enforcement measures.

Principal claim 100.00 EUR

Costs for larger effort in debt collection processing

RVG charging rate 0.9

44.10 EUR

+ Flat-rate fee for postal and telecommunication services

20 % of the collection costs

8.82 EUR

Application for a default summons

RVG charging rate 1.0

49.00 EUR

+ Flat-rate fee for postal and telecommunication services

20 % of the costs

9.80 EUR

- Offsetting extrajudicial activity

- 50 % RVG charging rate 0.9

-22.05 EUR

+ Court costs

  

36.00 EUR

Application for enforcement order

RVG charging rate 0.5

24.50 EUR

+ Flat-rate fee for postal and telecommunication services

20 % of the costs

4.90 EUR

Collection costs for enforcement

RVG charging rate 0.3
min. 15.00 EUR

15.00 EUR

+ Flat-rate fee for postal and telecommunication services

20 % of the costs

3.00 EUR

+ Bailiff's costs

amount depending on effort and content of the enforcement
min. 15.00 EUR

15.00 EUR

Sum of the costs

  

min. 188.07 EUR

Please note: The sample calculations contain pure net costs. If the creditor of the claim is not entitled to deduct input tax, VAT will be added to all collection costs. Besides, default interest will be charged.

Our tip

It is therefore worth completing the collection process quickly – so that the costs stay low!

Error found in the fee calculation?

If you find an error in the cost calculation in one of our letters, please contact us directly: send us either an e-mail or a message via the contact form on de.flow.riverty.com. We will take care of it!