What is a debt collection procedure?
A debt collection procedure is the legal process of collecting an outstanding debt from a debtor who fails to pay. The procedure consists of four consecutive phases — from a friendly payment reminder to the execution of a court judgment. How far you go depends on the debtor and their willingness to pay.
In most cases, the first or second phase is sufficient. A letter from a specialized legal
firm makes a greater impression than a direct demand for payment and, in practice, leads to prompt payment much more frequently.
Phase 1: Pre-collection process — sending reminders yourself
Before engaging an external party, give the debtor the opportunity to pay yourself. You do this with a payment reminder and one or two demand letters.
A payment reminder is friendly in tone and refers to the outstanding invoice. A demand letter is more formal and sets a strict payment deadline. After the demand letter, you can hand over the claim to MKBjuristen.
For business-to-business (B2B) clients, you are not legally required to send a formal demand letter first. You can hand over the claim for collection immediately after the payment term has expired. For consumers, you must first send a free formal demand letter with a period of at least 14 days — the so-called 14-day letter — before you may charge collection costs.
Phase 2: Out-of-court collection process
In the out-of-court process, we attempt to collect the debt without the intervention of a judge. On your behalf, we send a demand letter, contact the debtor by telephone, and negotiate payment or a payment arrangement.
In most cases, this is sufficient. A letter from MKBjuristen makes it clear that they mean business — and that legal action will follow if payment is not received. On average, the out-of-court process takes 30 to 45 days.
The costs of the out-of-court process are recovered from the debtor via extrajudicial collection costs in accordance with the Collection Costs Act (WIK). For undisputed business claims between €1,500
and €25,000, we work on a no cure no pay basis.
Phase 3: Judicial collection procedure
If the out-of-court process yields no results, you turn to the court. The judicial process begins with a summons — a written call for the debtor to appear before the judge.
For claims up to €25,000, you go to the sub-district court. Here you can litigate without a lawyer. For claims exceeding €25,000, you are required to engage a lawyer.
In 80% of cases, the debtor does not appear before the judge. The judge then issues a default judgment, in which the plaintiff is almost automatically found to be in the right.
If the debtor does file a defense, the judge holds a hearing and subsequently delivers a ruling. In the event of a favorable
judgment, the debtor is ordered to pay the principal amount, interest, and legal costs.
Phase 4: Execution process
If the debtor fails to pay even after the judgment, the enforcement phase begins. With the judgment in hand, you have an
enforceable title — you can engage a bailiff to seize all of the
debtor's assets through enforcement.
Attachment may be placed on bank accounts, real estate, vehicles, shares, future claims against third parties, and in certain cases also on salary or benefits. The proceeds from the sale of the attached assets are used to satisfy your claim.
Disputed claim: legal dispute
If the debtor raises a substantive defense—claiming that the invoice is incorrect, that the work was substantive, or that agreements were made differently—then this is no longer a standard collection procedure but a legal dispute. The chances of success and the approach are then determined by evidence, the content of the contract, and legal strategy.
At MKBjuristen, we also handle disputed claims — from legal position assessment and demand letters to negotiation and litigation. We do this for a fixed price, not on an hourly basis.
Recovery investigation: is litigation worthwhile?
Litigation is only worthwhile if the debtor has sufficient assets to satisfy your judgment. A debtor without recourse yields nothing, even after a successful judgment. We provide you with honest advice regarding recovery options before you incur legal costs.
