Due date If you settle the payment by the due date, the matter is considered closed. If the payment is delayed, this constitutes a contractual violation, which gives rise to a liability for damages. In practice, this means the right to charge interest for late payment. The interest begins to accumulate once the set due date is exceeded. According to law, this interest is the present reference rate + 7%.
Payment reminder Although the interest for late payment begins to accrue from the due date, the first reminder subject to a charge can be sent no earlier than 14 days after the due date. There can be several reminders for one invoice as long as the reminders subject to a charge are separated by a period of 14 days or more. A reminder can be submitted verbally or in writing. The maximum payment reminder charge is €5/reminder.
1st demand for payment If the sum specified in the reminder is not settled by the due date, the debt collection procedure is initiated. Recovery actions are launched no sooner than 14 days after sending the payment reminder. The first collection letter is called a demand for payment, and the resulting recovery charges €14, €24 or €50 depending on the outstanding balance.
2nd demand for payment If the sum specified in the 1st demand for payment is not settled by the due date, recovery actions continue with the second collection letter. This second letter, also called a demand for payment, is sent when at least 14 days has elapsed from the 1st demand for payment being sent. For the 2nd payment demand, the creditor can claim at most a half of the maximum amount of the charges for the first payment demand, i.e. €7, €12 or €25 depending on the outstanding balance.
Notice of possible judicial recovery After the second demand for payment, the debtor is informed that the matter will be transferred to the judicial recovery process. This third collection letter is the debtor's last chance to pay the unsettled invoice and accrued late fees and collection costs before possible court proceedings.
Application for a summons If the invoice, the accumulated interest or the collection fees are not paid despite the recovery actions, the creditor may draft an application for a summons and deliver it to the local Court. The costs resulting from the compilation and processing of the application are €115, €145 or €175 depending on the unsettled amount of the original invoice.
The District Court then issues a summons with a 14-day deadline within which the debtor has to respond to the claim in accordance with the instructions given in the summons. If the debtor fails to respond, the District Court issues a judgement by default allowing the claimant’s action, which causes a payment default entry in the debtor's credit information register.
If you disagree with the claims presented, you need to respond to the summons by submitting a statement to the District Court in accordance with the instructions given. The District Court reviews the case as a civil action and asks the creditor for a statement regarding the matter. If necessary, the issue is finally decided in court. The District Court pronounces its judgement based on the statements and evidence provided. Contesting the claim may result in additional litigation costs. In civil actions, the District Court costs of proceedings is 260 euros.
Judgement of the District Court The purpose of the application for a summons is to secure a judgement in the matter, which in this case means that the recovery operations will continue by the enforcement authorities.
If the debtor does not respond to the claim within the given time limit, the Court issues a judgement by default allowing the claimant's action. The judgement causes a payment default entry to credit information register.
If the summons is contested, the Court reviews the case as a civil action. If necessary, the issue is finally decided in court. The District Court pronounces its judgement based on the statements and evidence provided.
Recovery proceedings The District Court's judgement serves as grounds for enforcement. The debt is transferred to recovery proceedings and the debtor informed of the matter with a notification sent by the enforcement authority. The notification specifies the debt to be collected, and contains payment data and contact details of the enforcement officer in charge of the matter.
Recovery proceedings add to the collection fees as per the recovery authority's own tariffs. If you are unable to pay the debt by the due date specified in the enforcement notification, the recovery authority conducts an enforcement inquiry and begins to distrain distrainable assets or garnishable income against the debt.
If no such assets or income exists, the authority declares the lack of means and returns the case to the debt collection agency. The creditor may refile the enforcement request until the judgement on which the collection proceedings are based expires in 15-20 years.
Public fees, such as healthcare fees, taxes, insurance premiums and their accrued interests and collection costs are directly distrainable, and can be transferred to collection without a court ruling.