Reminders, threatening letters, telephone harassment:
What are your creditors allowed to do if you can no longer pay instalments or outstanding invoices due?
Generally as a first step you will receive a series of reminders. These letters sometimes arrive in quick succession. If this produces no results, your creditors (i.e. the people you owe money to) will often pass the matter over to collection agencies or lawyers. In their reminders they use dramatic wording in order to increase the pressure. They may threaten to attach your wages or bank accounts, post a negative SCHUFA entry, send the bailiffs or an arrest warrant or various other legal steps as well as additional costs and interest. The debt itself also increases with every letter.
It is very frightening when lawyers or collection agencies threaten to bring criminal charges. But, as a rule, these fears are completely unjustified. Non-payment of invoices and loan instalments is only a criminal offence if you did not intend to and could not pay from the very outset.
Some collection agencies try to put even more pressure on you by threatening to come to your house or engage private investigators. Other creditors use the method of telephone debt collection. They ring you up regularly (particularly in the evenings and at weekends.) This is very annoying, of course, and increases the pressure.
What can you do?
- First of all you should find out whether the debt concerned must be paid in order to secure your livelihood. Your (monthly) rent and fuel bills, for example, have to be paid. This may also apply to other contracts which you do not want to cancel (e.g. the phone).
- It is very important to reduce your expenditure in order to make sure you have the minimum to live on. In such cases you may be forced to reduce the payments of instalments to creditors or stop them completely. This means you have to cancel direct debit orders or standing orders.
- Do not pay just because you are frightened! Don't be intimidated. Whether or not your wages can be garnished depends on how much you earn and how many dependants you have.
- The agreement of minimum instalments (e.g. 10 € per month) frequently does not reduce the overall debt. By paying, however, you are accepting the excessive costs and interest.
- You should not allow collection agency staff to visit you at home! Only "official" bailiffs or enforcement officers are entitled to visit you at home (and only by appointment).
- Do not give any information over the phone. Say that you are unable to pay! - Say that you do not want to be rung up again! - Hang up!
- Write to your creditors and explain your financial situation.
Obtain advice Use our list of debt advice centres if you need an adress
What can your creditors do?
The creditor is allowed to protect his debt. He will normally do this by taking legal default action. In this case the court will send you a default summons (Mahnbescheid) (this comes in a yellow envelope with an endorsement of service.
IMPORTANT: The court has not verified the information given by the creditor.
For you, this means:
- Read the information in the default summons carefully!
- Check whether the amount owed is correct!
- If the amount is incorrect or if you do not know why you have received the default summons, you must lodge an OBJECTION within 2 weeks.
- To do this, you can use the form sent with the default summons. All you need do is put a cross in the box depending on whether you object to the claim as a whole or just in part (e.g. only the excessive interest or collection costs).
- Send your objection to the court that sent the default summons. The address is printed on the form.
- BUT: Do not lodge an objection simply to gain time or because you just can't pay at the moment. This just leads to more costs. If you have lodged an objection to a claim for payment, the creditor is obliged to prove that he has a justified claim against you. In some cases this may lead to a court case.
If the claim in the default summons is justified, you do not have to do anything. You will receive an enforcement order (Vollstreckungsbescheid) from the court. You have 2 weeks to appeal against this order, too.
If the creditor is in possession on an enforcement order, he is entitled to authorise a bailiff to carry out attachment measures. However, the law dictates that debtors must be left with a minimum to live on.