There’s no legal timeframe to determine when you can hire a debt collection agency. There is, however, a legal limit of five years for outstanding receivables. So, it is wise to hire a debt collection agency in time. Then you also have the best chance of recovering the overdue amount of the invoice.
Before you can hire a debt collection agency, you must first send a letter stating that your customer has still not paid despite previous payment reminders. You must indicate that you expect to receive the payment within a number of days (min. 14 days for consumers), otherwise a collection agency will be called in and the resulting costs will be charged to your customer.
What can a debt collection agency do or not do?
A collection agency can contact your debtor on your behalf to request payment. This can be done by phone, by registered email, or even by WhatsApp or via social media. This depends entirely on where the debt collection agency suspects that your debtor is most likely to respond. A debt collection agency is not legally entitled to seize the income or the estate, as opposed to a bailiff.
What is the difference between a bailiff and a debt collection agency?
The main difference between a bailiff and a collection agencyis that a bailiff is legally entitled to seize both the income and the estate (such as house, boat, car, etc.).
A collection agency acts as an intermediary to give your customer one last chance to pay the invoice. If this collection process does not have the desired results, you can decide to initiate legal proceedings. The final verdict is followed-up by a bailiff. A debt collection agency is therefore not allowed to move towards a possession order to seize assets and can only request your debtor in a discrete but urgent to transfer the principal sum and collection costswith the aim of keeping the customer relationship as good as possible for you.
When is a debt collection agency legally valid?
In principle, anyone can start a debt collection agency, no legal provisions have been laid out for this. It is therefore important that you research the track record and proven expertise. Unfortunately, there are still unreliable collection agencies that complete the collection process and then disappear without notice.
Want to know more?
How does it work?