Consumer rights

A debtor must compensate a creditor for reasonable costs resulting from collection regardless of whether the debt is collected by the creditor or an agency. In evaluating reasonableness the size of the debt, the amount of work required, the efficient performance of collection and other matters are considered.

The amounts of collection costs chargeable to consumers and the grounds for the obligation to pay collection costs are specified by law.

Payment reminders are sent by the creditor

A payment reminder refers to a reminder sent by the creditor or a professional debt collector on behalf of the creditor for an overdue payment. A consumer may be charged a collection fee for sending a payment reminder. The maximum fee for a written reminder is 5 euros and the following conditions must be met:

• an invoice or other form of notification of the due payment was sent to the debtor at least 14 days prior to the due date, unless the parties had specifically agreed that an invoice would not be sent.
• at least 14 days have passed from the due date before the payment reminder is sent.

A demand for payment is sent by a debt collection agency

A demand for payment refers to a collection letter sent by a professional debt collector after the reminder has already been sent. Demands for payment must mention at least the following:

• the name and address of both the creditor and the collection agency.
• the grounds for the debt (the obligation or contract on which the debt is based)
• information concerning the debt (capital, interest, interest on late payments and collection costs, itemised and as a total amount)
• the recipient, the payment method and the payment address
• the debtor's possibility to complain about the amount of the debt and its grounds
• if the interest calculation basis is not specified in the demand for payment, the debtor must be told that information on how interest is calculated and the total amount is available on request

A consumer may be charged a collection fee for a written demand for payment that includes the above information according to the following maximum amounts:

• 21 euros, if the debt if the debt principal does not exceed 250 euros
• 45 euros, if the debt principal exceeds 250 euros
• 12 euros, if the debt is directly enforceable (e.g. charges for municipal health services)

A further requirement for charging the above fees to consumers is that at least 14 days have passed from the date the reminder of the previous demand for payment was sent.

The fees charged for subsequent demands for payment must be lower than that charged for the first one. This is based on the fact that in collection work undertaken by a professional debt collector the largest amount of work is related to acceptance of the assignment and sending the first demand for payment. Following up with subsequent demands for payment is largely mechanical.

Total amount of collection costs

A debtor may not be charged more than the following total costs for a single consumer debt:

• 190 euros, if the debt principal does not exceed 250 euros
• 220 euros, if the debt principal exceeds 250 euros
• 59 euros, if the debt is directly enforceable

Payment plans are prepared jointly and in writing

A payment plan is prepared by the creditor or professional debt collector together with the debtor and covers the entire amount of outstanding debt. ”Prepared together with the debtor” means that a written copy of the payment plan must be sent to the debtor.

The maximum fee for such a payment plan is 30 euros.

Collection fees exceeding the maximum amounts must be justified

The consumer may generally not be charged collection fees exceeding the maximum amounts provided by law. These maximum amounts may, however, be exceeded in cases where collection has required more work than usual and the creditor or collector has therefore incurred costs exceeding the statutory maximum amounts.

If a creditor or professional debt collector, such as a debt collection agency, charges collection fees which exceed the statutory maximum amounts,

• it must provide the consumer with an itemised list of collection fees and collection measures so that the consumer can see what collection measures gave rise to the expenses and
• communicate to the consumer that the fees charged are in excess of the maximum amounts specified in the Debt Collection Act.

The maximum amounts set for directly enforceable debt such as overdue payments for municipal health services (reminder 5 euros, demand for payment 12 euros and total cost of debt collection 59 euros) may not be exceeded in any circumstances.

VAT is included in collection costs

In circumstances where a consumer debtor can be charged VAT, the VAT amount is included in the maximum amounts of collection fees specified in the Debt Collection Act. A debt collection agency collecting debt on behalf of a creditor may only require that consumers pay the VAT portion of collection costs if the creditor can't deduct the VAT incurred from his use of the agent in his own taxation.

When debt is paid before a collection letter arrives

It is quite common that a consumer pays their invoice after the due date but before receiving the collection letter. If the creditor or professional debt collector has already taken the collection measures for which the fees are charged before the consumer makes payment, the consumer is obligated to pay the collection fees.

In collection by mail the collection measures are usually taken 1-2 days before the collection letter is sent. As a rule, if a consumer has made payment at least 4 days prior to the date on the collection letter, he is not obligated to pay the collection fees.