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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 5 min

What does a debt collection procedure cost?

What are debt collection costs and why are they charged?

Debt collection costs are the costs of the work carried out by a collection agency to recover an outstanding debt.

The amount depends on two main factors:

The amount you owe
The work required to recover the debt

Collection agencies provide legal services to their clients and charge collection fees for these services. Depending on the circumstances, you may have to reimburse these costs as part of the damage caused by late payment. The amount may be limited to what a lawyer would be entitled to charge for the same activity.

For this reason, collection costs are usually calculated based on the German Lawyers' Remuneration Act (RVG).

Out-of-court procedure

The first step is usually a demand for payment from the collection agency.

For the first demand for payment, the collection agency can charge a 0.5 fee factor based on No. 2300 (2) VV RVG. This is referred to as a simple case.

If the collection agency needs to take further steps to recover the debt, the fee can increase to a 0.9 fee factor.

If you dispute the claim without a justified reason, the fee can increase to a 1.3 fee factor based on No. 2300 (1) VV RVG because the case requires more work.

We explain what this can look like with a calculation example below.

Court dunning proceedings

If an outstanding debt remains unpaid, the case may move to court.

For an application for a default summons, collection agencies can charge a 1.0 fee factor under No. 3305 VV RVG. A further 0.5 fee factor can apply for an application for an enforcement order under No. 3308 VV RVG.

However, half of the fee for the collection agency's out-of-court work is offset. Depending on how extensive that work was, the final amount for the dunning procedure can therefore vary.

Our calculation example below also includes the expenses flat-rate and court costs that may arise.

Enforcement

If enforcement measures are necessary, each measure can result in additional costs for the debtor.

These costs can amount to a 0.3 fee factor under No. 3309 VV RVG. Court costs and bailiff costs can also be added.

Expenses flat-rate

A lump sum for expenses can also be added to the collection remuneration. Under No. 7002 VV RVG, this is 20 % of the collection remuneration incurred.

The lump sum may not exceed 20 euros.

What types of collection fees can be added to my outstanding balance?

In addition to collection costs, third-party costs and default interest can arise during debt collection proceedings.

Third-party costs are costs paid to other parties involved in the collection process. Depending on the circumstances, you may have to reimburse these costs as well.

They can include:

Court costs: These are legally regulated costs charged by the state for court proceedings.

Address investigation costs: If your current address needs to be found, the cost can vary. It depends on which company or authority carries out the search and what they charge. One common way to find an address is to request information from the residents' registration office.

Chargeback costs: If there isn't enough money in your account for an agreed SEPA direct debit, or if you reject the direct debit, the payment may be returned. Your bank can charge a fee for this return debit.

Default interest: Default interest may also accrue while a debt remains unpaid.
Under Sections 280 and 286 of the German Civil Code (BGB), default interest can form part of the damage caused by late payment. Under Section 288 BGB, consumers have to pay interest of five percentage points above the base rate on a monetary claim. This means default interest can be more noticeable when a claim has been outstanding for a longer time or when the amount owed is higher.

Who pays the debt collection costs?

Depending on the circumstances, you may have to reimburse debt collection costs as part of the damage caused by late payment.

The amount may be limited to what a lawyer would be entitled to charge for the same activity.

Third-party costs and default interest may also have to be paid.

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.

A few simple ways to keep track of your payments

Keeping an eye on payment deadlines and outstanding amounts can make it easier to stay in control of your finances. A clear overview of your payments can also help you spot issues early and take action before additional costs arise.

If you use BNPL, you can also learn more about common misconceptions about BNPL and responsible use.

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!

Identity

Please understand that for reasons of readability we only use the grammatically masculine form when referring to persons. This always refers to people of any gender identity.