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How to collect an unpaid invoice from a debtor in Berlin?
If you have a debt that needs to be recovered in Berlin, Germany, then this guide is for you! We have all the information you need to understand exactly how the debt collection process works. If you need help and need to hire a professional debt collection service or lawyer in Berlin, simply fill out our form and you will receive three free quotes in no more than two days.
Overview of the debt collection process in Berlin
In Berlin, the debt collection process typically follows several steps, tailored to the claimant's specific needs and the type of debtor, based on the size of the claim and other considerations. We thoroughly assess the situation beforehand, allowing us to customize the collection process and thereby achieve the highest possible rate of recovery.
The image below explains our standard framework for collecting debt in Berlin:
Step 1: Find a local collection agency or attorney
Upload your issue to Debitura and you will be furnished with 3 quotations from debt collection firms in Berlin ready to aid you.
Step 2: Pre-legal collections
A no-risk strategy when you engage Debitura for amicable collection of your debt involves sending friendly reminders to your debtor in Berlin through multiple communication channels including email, SMS and postal service. If the debtor acknowledges or pays the debt due, our fee is a nominal success fee.
Step 3: Evaluation:
If you have not received the money owed to you by the debtor following the pre-legal methods, it is now time to evaluate your alternatives. Evaluate the amount of your claim, the possibility of the debtor to pay, and the legal provisions in the city of Berlin, to help you make the correct choice on the following steps. The three routinely available ventures in Germany, moving forward, are:
Step A: Surveillance:
If the amount owed to you is less than 5000$, it may be too costly to take a legal approach. Our suggestion is to engage in "debt surveillance". This involves a continued dialogue with your debtor, with the goal of reaching a peaceful agreement. This process should be viewed as a pre-legal investigation, and we will report any changes to you, advising you on the next steps.
Step B: Legal collections:
If the claim is considerable, initiating a legal process could be recommended; generally speaking, if the sum is higher than 5000$, it is probably advantageous to take legal action. However, the real amount depends on the debtor's funds and other elements. The method used in legal proceedings is changeable, and whether the debtor has responded to your demand or not will determine the approach taken. Normally, the time frame for legal settling is between 12 to 18 months, and it is necessary to pay for the legal costs associated with this process. Finding a debt collection lawyer with a good reputation and at a reasonable cost can be a difficult task, so it's a good idea to look around and obtain numerous quotes for comparison.
Step C: Debt enforcement:
If you have a debtor who has agreed to your terms or you have received a court order, you can bring it to the bailiff's court for enforcing the claim. Within Berlin, this normally takes around a year and a half. Legal charges must be paid to your debt recovery lawyer, while the court charge is fixed, depending on the value of your claim. For a precise estimate of cost, upload your claim onto the Debitura platform.
Pre-legal debt collection in Berlin
Pre-legal debt collection is the first stage of recovering unpaid debts, often referred to as 'amicable collection'. Unlike legal collection, it is focused on maintaining a positive relationship between the debtor and creditor by engaging with the debtor in attempts to recover the debt without court intervention. The speed and low financial risk associated with pre-legal debt collection make it the preferred method among creditors, while the mutual resolution of debts can benefit further business transactions between both parties.
When it comes to collecting debt, you have two options. The first is first-party collections, where you collect the debt yourself. Alternatively, you can seek third-party collections and involve a debt collection agency. This is often the more efficient route, allowing you to outsource the process and free up your time. Doing so also means you have an experienced debt collection agency in Berlin, who knows the local laws, culture and payment behaviour and can help you achieve the best results possible.
Documenting all agreements and payment plans and updating records accordingly
Regularly reviewing the debt situation and responding to changes quickly
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Generating reasonable payment plans that are feasible for both parties and that can be enforced
Providing reasonable opportunities to the debtor to pay their debt without penalties or further costs
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In Berlin, as in many other cities, pre-legal debt collection involves initiating contact with the debtor in order to reach a mutually-agreeable solution to the debt. A collection agency will first assess the debt and then make contact with the debtor to attempt to come to an arrangement. It is important to contact the debtor in a professional, respectful way via the appropriate communication channels.
It is essential that creditors and collection agencies remain aware of debt collection laws, including those prohibiting harassment, and ensure that all communication is documented. This can help to protect both the creditor and debtor. The end goal should always be full payment or a reasonable payment plan that both parties can agree to and honor.
Below are some best practices for amicable debt collection:
• Know your rights and the debtor's rights under the law
• Maintain a professional and respectful attitude in all dealings
• Document all communication and interactions
• Avoid engaging in any activities that could constitute harassment or abuse
• Ensure agreements and payment plans are documented, realistic and enforceable
• Remain flexible and review the debt situation regularly, responding to changes quickly
• Offer reasonable payment plans that don’t involve additional penalties or costs
Interest fees can be charged when a debtor fails to pay on time. The amount you can charge depends on the age of your claim and the amount that is due. You can then add on additional late payment fees in order to incentivize debtors to pay as soon as possible.
Our Pre-legal collection process is compliant with civil regulations in Germany. Furthermore, we guarantee 100% risk-free service, and we can get started within 24 hours of you submitting your claim.
Don't wait any longer than necessary. Get in touch with us and let us help you get the justice you deserve.
Legal debt collection in Berlin
The costs of taking legal actions, such as court and lawyer fees, will likely be higher than the amount of the claim. You also need to be aware that if you do not win the case from court, the judge may decide to charge you for all the costs and legal expenses.
You can't always rely on debtors to pay voluntarily, so if the claim remains unpaid after amicable negotiations, you may need to take legal action. However, legal debt collection is often a lengthy and costly process and choosing to pursue it should be considered carefully. If your claim is worth 5,000 USD or more, legal action may be your best option. But remember, if you don't win in court, you may have to pay the associated legal fees as well as your own. This is why it's important to carefully weigh up all your options before pursuing legal debt collection.
If you're looking to get legal help with debt collection in Berlin, Debitura can make it easier. We work with local partners to provide you with three free quotes, making it simple to compare costs and processes. With Debitura, our goal is to simplify the process of collecting debt, so you can focus on your business.
Our German partner will begin debt collection by negotiating with the debtor for a payment plan. If this fails, the partner will take legal steps, as regulated by civil law. These may include litigation, debt enforcement, mediation or bankruptcy proceedings, depending on the size of the debt claim. This process, from start to finish, is expected to take 12-18 months.
Cost of debt collection in Berlin
Average success fee for pre-legal debt collection in Berlin
In Berlin, a commonly accepted practice for debt collection is to only charge fees if the debt is successfully recovered. This fee is based on the amount of the claim and the stages it requires. On average, debt collectors typically charge the following for amicable collections.
Hourly rate for legal-debt collection services in Berlin
When carrying out legal debt collection procedures in Berlin, there are two types of fees associated with the process. Court charges are determined according to the value of the claim while a qualified attorney or debt collection agency may charge you on an hourly basis. Fees vary according to the complexity of the case and the professional's individual rate. The following table provides an overview of the average rates of debt collection attorneys in Berlin.
Berlin city risk profile
We have evaluated Berlin's critical financial data and extrapolated a risk assessment. You can use this analysis to evaluate your payment terms and manage your risk when trading with customers in Berlin.
Our analysis concludes that the risk of doing business in Berlin is low.
Based on this low score, You can feel reasonably confident that you will be able to get paid when trading with customers in Berlin. Nonetheless, we always recommend doing a specific credit analysis on an individual customer basis before offering any credit.
The low risk score is based on the following factors:
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Economic risk in Berlin
Germany has a low economic risk score, with a low inflation rate and high purchasing power of their citizens. According to the World Bank, Germany's gross domestic product (GDP) is 4,223.12 billion US dollars and their real GDP growth was 2.89%. This places their economic size as fifth largest in the world and ranks their growth rate at 131st. GDP per capita is 50,802 US dollars, which ranks 19th; their inflation rate is 3.1% and the Consumer Price Index growth rate is also low. All these factors, along with the interest rate, contribute to Germany's low economic risk.
Business risk in Berlin
Berlin is a city renowned for both its cultural offerings and its strong business environment. Recent analysis shows that business risk in Berlin clocks in at 1 out of 6, a relatively low score compared to other European cities. The business environment risk is determined by factors such as economic freedom, property rights, and market openness.
The city enjoys a high property rights index of 79, indicating a secure legal system that enforces contracts and protects property rights. Berlin's business freedom index of 82 is based on ten indicators, as provided by the World Bank, securing a pretty good score for the city. The overall economic freedom index is 73 out of 100 and is shaped by the rule of law, regulatory efficiency and market openness.
Thanks to these positive scores and the city's ability to foster an environment of economic security and growth, entrepreneurs in Berlin can rest easy knowing they are operating in a safe and successful business environment.
Political risk in Berlin
With an impressive score of 1/6 in terms of political risk, Berlin is one of the most stable cities in Europe. This low score is backed by strong indicators of government effectiveness, rule of law, control of corruption, and political stability. The rule of law index stands at 1.61 points, with a score ranging from -2.5 (weak) to 2.5 (strong), which guarantees the enforcement of commercial contracts. Similarly, the control of corruption is very strong with a Corruption Perceptions Index of 80 and the political stability index marked at a 0.76. Shadow economy, as a percentage of Berlin's GDP, is at a mere 7.75%. All this guarantees Berlin to be an e-commerce safe haven.
Commercial risk in Berlin
Berlin has a commercial risk score of 3/4, making it a medium-risk city. According to data collected, Berlin has a positive trade balance of 5.53%, representing a higher quantity of exports versus imports. Export of goods and services, in terms of GDP, is currently at 47.46%. This number is expected to grow as the country's annual export growth of 9.93% shows great potential. Imports of goods and services make up 41.93% of the city's GDP. Berlin also has foreign exchange reserves at 295.74 bn USD, a number that should help stem any potential economic downturns. Berlin's overall commercial risk score remains steady, a positive sign for the future of the city.
Financial risk in Berlin
Berliners have reason to feel secure when it comes to financial risks. A recent analysis shows the financial risk to be a low 1 out of 4, a score relatively low compared to other cities in Europe.
The banking system in the city plays a role in assessing the risk, and the credit information sharing index is 8 out of 8 - meaning access to and the quality of credit information is high. This makes it easy to understand the credit risk of any counterpart. Quality local credit rating agencies are available to help evaluate counterparties’ creditworthiness as well.
Though Berliners have a moderately weak juridical protection as creditors at 6 out of 12, the overall risk remains very low. Financiers in Berlin can rest easy knowing their city is one of the safest in Europe.
Looking for more detailed information? Then have a look at our country guide.
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