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Claiming debts in Germany: What you need to know

Debts
Claiming debts in Germany: What you need to know

In Germany, companies are characterized by always being up to date with payments. In this sense, the average payment period for German companies is 45 days. This is because German business owners try to maintain their good payment history, which is why they usually pay their debts on time.

However, and despite the fact that this is the usual trend, it may happen that there are companies that delay in fulfilling their obligations and do not pay outstanding invoices or debts. In this scenario, you can always claim the debt, although it is advisable to take into account the particularities of the German regulations to claim debts in Germany, and be able to recover the money for non-payments. 

When do debts expire in Germany?

In Germany, debts have a statute of limitations of 3 years. Taking into account that the statute of limitations is not too long, it is not advisable to postpone claiming the debt for too long. It must also be taken into account that when the limitation period is interrupted, it begins to run again after each interruption.

In other words: one should not trust too much that the German debtor company will make the payment, especially due to a possible German recession, and the planned procedure to recover the non-payment must begin as soon as possible.

Claiming debts in Germany

German legislation is stricter than European regulations when it comes to debts. Thus, while the European Union establishes a period of 60 days to pay debts, German regulations stipulate a period of 30 days. After 30 days, the creditor may claim late payment interest.

Furthermore, the German Civil Code allows the imposition of a compensation fee for the costs of recovery and the damages that the delay in payment of the debt would have caused to the creditor. 

The friendly procedure to obtain the collection of a debt in Germany 

Before considering going to court to resolve these types of issues, it is best to exhaust the friendly route. In fact, resorting to friendly negotiation is an essential requirement to be able to go to court later.

In any case, the starting point must always be to resolve German non-payments amicably, avoiding the filing of judicial measures. To do this, it is necessary for the creditor, through the advice of a law firm expert in claiming debts in Germany, to contact the debtor and demand payment.

It is common in Germany to claim the debt through a videoconference meeting, telephone, email and in writing by filing a friendly prior request. Furthermore, as happens in Spain, the creditor gives the debtor a period of time to pay off his debt. 

However, while still in the friendly phase, the creditor can announce the taking of judicial measures to exert pressure on the debtor. In Germany, this announcement is often enough for the debtor to pay what he owes, preventing the process from dragging on over time.

In summary, during this phase the creditor and debtor try to reach an agreement, often establishing a payment plan that includes the payments that the debtor will have to make until the entire debt is paid off. In this phase, as is evident, it is essential to have the advice of lawyers specialized in debt collection in Germany to recover non-payment or claim an invoice, exhausting the friendly route and achieving the best results.

The judicial route to obtain the collection of a debt in Germany

When the friendly route is not successful and the creditor and debtor do not reach an agreement, it is time to go to court. There are several procedures to claim a debt in Germany: 

  • “Mahnverfahren” procedure: this is a monitoring process for undisputed and small-value debts. That is why it is a simple, cheap and fast process. In fact, within a period of 2 months you can obtain the “Vollstreckungsbescheid”, provided you have proven the existence of the debt, a judicial payment order that obliges the debtor to pay the debt and the procedural costs.
  • Ordinary declarative procedure “Klageverfahren”: when the debt has been contested by the debtor, this procedure can be initiated without having to go through the previous procedure. In this case, the parties must provide evidence and, after several court hearings, the judge will issue a ruling. This process takes longer, but it is advisable if it involves claims for very high non-payments, ensuring full recovery of the debt to be claimed in Germany.
  • European order for payment procedure: when the debt has arisen between creditors and debtors of different Member States of the European Union, this procedure can be initiated. Although it is always preferable to be able to litigate within German jurisdiction, to speed up debt recovery, rather than doing so through the European order for payment process.
  • Debt recovery in Germany, that is, debt collection in Germany, can be done through different procedures that can be somewhat complex for laypeople.

This is why, when it comes to claiming debts in Germany, at Forcam Lawyers we recommend having the advice of lawyers specialized in debts in Germany, from the first phase of the amicable process, to act with guarantees and be able to collect the debt German debt more quickly.