Consumer rights

If the total sum of your payments due exceeds the amount of funds you have available, you should contact the business in question immediately. Although unpaid payments start to accrue additional costs, legislation sets limits to various types of collection fees.

The total amount due keeps increasing until it is paid. The fees accrue in the following order:

1. interest for late payment
2. the creditor's late charges or fees for demands for payment
3. the collection agency's collection expenses
4. court processing fees
5. the creditor's legal expenses
6. debt recovery costs

It's possible to negotiate more time to make payments

Call the creditor and explain your financial situation to request additional time or an arrangement to pay in instalments. Request a longer payment plan and freezing the interest for late payment. Tell the creditor if your difficulties are the result of e.g. long-term illness, birth of a child, divorce, unemployment or other reason that justifies a new payment plan.

You are entitled to negotiate with creditors throughout the debt collection process. This right to negotiate remains even when the matter is transferred to a debt collection agency, a court of law or the debt recovery procedure.

Interest for late payment accrues throughout the time of collection

Interest for late payment is determined by the Interest Act. If the due date has been specified, the interest for late payment starts to accrue on the due date. In other cases interest accrual may start one month from the date the business sent an invoice to the buyer or otherwise requested payment.

The penalty interest is 7 percentage points higher than the reference rate announced by the Bank of Finland. The general amount of interest for late payment is based on a reference rate which is determined semiannually. In recent years, the interest for late payment has hovered around the 10 percent mark.

• If the debt is taken out before 1 February 2010 and the prevailing general penalty interest rate is lower than the interest rate agreed for the debt or loan, the penalty interest applied for delayed payment is the loan's original interest rate.
• If the debt in question is taken out after 31 January 2010 and more than 180 days have passed from the due date, the maximum rate of penalty interest applicable is the penalty interest announced by the Bank of Finland if the teotal remaining debt has already fallen due.

If your financial difficulties are the result of illness, unemployment or other special circumstance, the interest for late payment can be negotiated for personal debts. However, this requires the presence of a weighty, justified reason.

Demands for payment also entail costs

The creditor may send the first chargeable demand for payment two weeks from the due date. Thereafter, the next chargeable demand for payment can be sent two weeks from the date the previous one was sent. The fee charged for a demand for payment may not exceed 5 euros.

Which invoices should be paid first

Invoices should be prioritised. The highest priority should be assigned to health: food, housing and necessary medicines are more important than a telephone or a car. It also makes sense to prioritise expensive credits over cheaper ones. Delayed payments tend to make their consequences felt in daily life rather quickly. Some of these consequences are:

• Housing - the lessor is entitled to terminate the lease agreement if the tenant fails to pay rent as agreed (Act on Residential Leases, Section 56). A housing company is entitled to take possession of an apartment if maintenance charges are in arrears (Housing Companies Act, Section 81).
• Electricity - electricity can be disconnected if the payment is five weeks late (Electricity Market Law, section 27).  If the payment is not received due to illness, unemployment or for a similar reason, electricity can be disconnected 3 months after the payment is due, at the earliest. The consumer must declare the reason for non-payment to the electricity company as soon as possible. The so called Winter Disconnection Rules concern electrically heated buildings. This means that electricity cannot be disconnected between October and April until four months have passed from the payment due date.
• Telephone subscription - the subscription can be cancelled, if the due payment has not been paid within two weeks from sending the payment reminder (Communications Market Law, section 73). Subscription cannot be cancelled, if
  - the payment due is less than 50 Euros
  - the consumer demonstrates that the payment is delayed due to illness, unemployment or for a similar reason and the consumer pays the bill within one month from sending the payment reminder .
• Credit card - credit card payments which are 60 days overdue may result in a bad credit record (Credit Information Act, Section 14).

When goods are paid for in instalments, the seller may repossess them

If the delayed payment pertains to a product that is paid in instalments, the creditor may have the right to repossess the purchased item. In this case, a statement of account is made. The seller and buyer may make the statement of account themselves according to the related provisions in the Consumer Protection Act. If they fail to reach an agreement, the seller or buyer may request the local debt recovery officer to make the statement of account. The debt recovery officer will charge for this service.