What Alternative Options Do Creditors Have For Debt Collection In Germany?
The debtor's personal situation should always be tracked. Companies that have lent money should always keep in mind that their customers in Germany may wind up in a situation where they may favour other creditors or may stop making repayments.
Business owners that have debtors in Germany reluctant in repaying the debt or have stopped paying it altogether, should not wait too long to proceed with debt collection in Germany. If changes in the debtors company bank account, or the people managing the company are realized too late, the race of creditors for the company's lasts assets will have already begun.
As in most other European countries, being the first in acquiring assets or payment from a debtor tends to be crucial due to the fact that if insolvency proceedings begin, debtors tend to freeze their assets. If debtors file those proceedings, a very minimal quota of the assets, if any, goes to ordinary, non-privileged creditors. Therefore, a debt collection company should be instructed to act as quickly as possible.
Time should not be wasted on unnecessary proceedings "Mahnverfahren" is often touted as a quicker procedure for debt collection in Germany, however, going for that option should be avoided because it can turn out to be a waste of time. Within the 2 week time frame that is provided to debtors, a majority tend to object. This means that the case has to be started from scratch as an ordinary court procedure and at least 3 months of time is lost in the process.
Negative economic circumstances could be encountered even by the most long term and reliable German customers. Therefore, every change in the debtor's personal situation, such as changes in address, company name, directorship, shareholder, etc., should be carefully noted.
The debtor's assets should be secured. As mentioned, there is no chance of recovering a debt from a German debtor once insolvency has been filed. Therefore, make an attempt and effort to secure a debtor's assets beforehand, which can safeguard a creditor against bankruptcy proceedings. Under German and international law, this can be done legally in several different ways, such as:
-- Credit insurance: The debtor should be asked for credit insurance.
-- Delivery under retention of title: When signing a contract with a debtor, a lawyer should be asked to draft this clause. Under German law, ownership of goods can be retained even if they have been sold to third parties by the debtor.
- Ownership by way of security: The debtor should be asked to set up a piece of property as collateral. The collateral can then be legally seized if the debtor does not pay the debt. Property that can be used as collateral may include cars, real estate, warehouse, and other goods.
-- Personal bond and guarantees: Debtors should be asked for personal guarantees of directors, shareholders or other creditworthy people, so that the claim can be secured in the future. Usually, a bank guarantee may not be provided, but they will have no reason to refuse personal guarantees.
Although these suggestions can prove to be helpful, many business owners do not take them. In such cases, when German debtors keep delaying repayments, hiring a professional company for debt collection in Germany may become necessary.
There are debt collection agencies UK that offer services across Europe. They have put in place a network across the continent that enables them to conduct their activities.
Business owners that have debtors in Germany reluctant in repaying the debt or have stopped paying it altogether, should not wait too long to proceed with debt collection in Germany. If changes in the debtors company bank account, or the people managing the company are realized too late, the race of creditors for the company's lasts assets will have already begun.
As in most other European countries, being the first in acquiring assets or payment from a debtor tends to be crucial due to the fact that if insolvency proceedings begin, debtors tend to freeze their assets. If debtors file those proceedings, a very minimal quota of the assets, if any, goes to ordinary, non-privileged creditors. Therefore, a debt collection company should be instructed to act as quickly as possible.
Time should not be wasted on unnecessary proceedings "Mahnverfahren" is often touted as a quicker procedure for debt collection in Germany, however, going for that option should be avoided because it can turn out to be a waste of time. Within the 2 week time frame that is provided to debtors, a majority tend to object. This means that the case has to be started from scratch as an ordinary court procedure and at least 3 months of time is lost in the process.
Negative economic circumstances could be encountered even by the most long term and reliable German customers. Therefore, every change in the debtor's personal situation, such as changes in address, company name, directorship, shareholder, etc., should be carefully noted.
The debtor's assets should be secured. As mentioned, there is no chance of recovering a debt from a German debtor once insolvency has been filed. Therefore, make an attempt and effort to secure a debtor's assets beforehand, which can safeguard a creditor against bankruptcy proceedings. Under German and international law, this can be done legally in several different ways, such as:
-- Credit insurance: The debtor should be asked for credit insurance.
-- Delivery under retention of title: When signing a contract with a debtor, a lawyer should be asked to draft this clause. Under German law, ownership of goods can be retained even if they have been sold to third parties by the debtor.
- Ownership by way of security: The debtor should be asked to set up a piece of property as collateral. The collateral can then be legally seized if the debtor does not pay the debt. Property that can be used as collateral may include cars, real estate, warehouse, and other goods.
-- Personal bond and guarantees: Debtors should be asked for personal guarantees of directors, shareholders or other creditworthy people, so that the claim can be secured in the future. Usually, a bank guarantee may not be provided, but they will have no reason to refuse personal guarantees.
Although these suggestions can prove to be helpful, many business owners do not take them. In such cases, when German debtors keep delaying repayments, hiring a professional company for debt collection in Germany may become necessary.
There are debt collection agencies UK that offer services across Europe. They have put in place a network across the continent that enables them to conduct their activities.