Debt Collection Agency Denmark
Amicable Debt Collection Denmark
1. General information
Cosmopolite Collections maintain a professional collection process, focusing on the relationships between our clients and their debtors at all times.
Our team of collection specialists carry out the collection process in-house, contacting debtors both verbally and in writing whilst adhering to all appropriate laws and legal requirements.
When there is a dispute, we aim to reach an amicable solution between the creditor and the debtor. We do this by analysing all contractual documents (e.g. signed contracts, orders, confirmations, invoices and delivery notes, as well as standard terms previously agreed upon). All investigations are completed with the assistance and agreement of our legal team.
1.2. Local agents
We offer a field service for visiting debtors in Denmark (except for Bornholm). The purpose is to collect monies, negotiate settlements, get an acknowledgement of debt and gather information about the debtor’s financial situation, residence and place of business.
Our client will receive a report with all the information about the visit and a recommendation on the next step for their case. The price for visiting debtors in Denmark is DKK 850–DKK 1,250.
Cosmopolite Collections always charge interest to debtors, according to the Act of Consolidated Law on Interest on Overdue Payment 743 of 4th September 2002.
There are two alternatives:
- To calculate the interest rate as agreed between the creditor and the debtor
- To calculate the interest rate according to Danish regulations, based on the reference rate fixed by the National Bank of Denmark (plus 8% per year).
This rate is fixed twice a year on 1st January and 1st July. The second alternative will always occur if the interest rate is not agreed between the creditor and the debtor.
From a cultural point of view, Danish debtors are used to paying late payment interest fees.
1.4. Debt collection costs Denmark
In Denmark, debt collection costs are chargeable to debtors, representing the creditor’s claim for late payment based on the Act of Consolidated Law Extrajudicial Collection Costs 601 of 12th July 2002.
From a cultural point of view, Danish debtors are used to paying debt collection costs. Cosmopolite Collections either pass all recovered debt collection costs to our client to reduce their claim or add them to the success fees, depending on the contractual agreement between the client and Cosmopolite Collections.
The general prescription period in Denmark is three years starting from the due date of an invoice. Transport claims prescribe within one year starting from the delivery according to the CMR Convention of Geneva.
The limitation period is suspended or recommenced according to Law number 522 of 6th June 2007 if:
- Negotiations between the obligor and the obligee are in progress in respect of a claim or circumstances giving rise to the claim, and one party or the other refuses to continue the negotiations
- A right to refuse performance occurs
- There is a force majeure
- The obligor acknowledges the claim towards the obligee by partial payment, payment of interest, the provision of security or in any other way A judicial or official act of execution is undertaken or applied for.
1.6. Accepted and most common payment methods
The most common payment methods are bank transfers and cheque payments. Cosmopolite Collections do not offer the direct booking off of payments from the debtor’s accounts, unless it is done through our Danish lawyers.
1.7. Types of companies
- Enkeltmandsvirksomhed (Sole trader / sole proprietorship)
Unlimited liability of the owner with business and private funds In order to pursue such debtors, we must have both the first names and surname of the debtor.
- Interessentskab (Partnership)
Unlimited liability of owners with their business and private funds In order to pursue such debtors, we must have both the first names and surname of the debtor.
- Anpartselskab ApS (Private limited company) (Limited liability)
A minimum capital of DKK 50,000 divided into shares Liability is limited to company capital.
- Aktieselskab A/S (Joint-stock company) (Limited liability)
A minimum capital of DKK 500,000 divided into shares Liability is limited to company capital.
1.8. Sources of information
In Denmark, Cosmopolite Collections contact credit-reporting agencies to assess the financial situation of the debtor, including real estate and other enforceable assets.
We combine this with our own phone contacts to get an accurate impression of the debtor’s financial situation and advise on the next step. It depends on the legal form of the debtor whether we are also able to request information from public registers.
All traders have to be registered at the Municipal Trade Office. A debtor with an unknown address can be traced via the Registration of Address office. Private persons are legally obliged to officially deregister when moving from one town to another and re-register in their new town.
Occasionally some debtors do not follow this procedure and cannot be traced, despite this being a punishable offence. Even if a debtor is untraceable, we are still able to obtain a judgment through the official Gazette.
2. Retention of title
Retention of title is rarely used, as, although it might have been agreed between the debtor and the creditor, it is rarely enforceable in Denmark. The goods in question have to be specified in detail. The use of individual numbers as a general description is not sufficient.
3. Acknowledgement of debt (‘frivilligt forlig’/’skyldnererklæring’)
If the debtor is not able to settle the claim quickly, Cosmopolite Collections will request that they secure the debt in favour of our client.
This can be done amicably and cost-efficiently by providing an acknowledgement of debt. In general, we arrange for a written payment arrangement to be drawn up, followed by a special juridical document (‘frivilligt forlig’), which allows us to instruct a bailiff if the debtor does not fulfil their obligations according to the payment arrangement.
We prefer to spend time on finding an amicable solution; however, if the debtor is uncooperative, we will start legal action immediately. On the whole, we accept a duration of payment arrangements of up to ten months, as this is the period most often granted to debtors by the bailiff, but of course we try to shorten this period as much as possible.
4. Legal collection Denmark
4.1. General information
The Danish court system is governed by the Administration of Justice Act. The ordinary courts are organised in a threetier hierarchy, consisting of 82 local courts, two district courts and the Supreme Court.
Entering into legal proceedings is only possible with a warning to the debtor, which must include:
- Ten days of notice
- The name of the creditor
- The specifics of the debt (interest rate, date, amount, etc.)
- A warning that non-payment will lead to legal action and further costs.
4.2. Legal system
Debts below DKK 100,000
Cosmopolite Collections can go directly to the bailiff’s court. If the debt is undisputed, the bailiff will issue a payment order, which equals a judgment.
This procedure is the cheapest method of legal action as the court costs will be DKK 700 or DKK 1,350, plus lawyers’ fees. It is also the quickest procedure, taking between six and 12 months on average.
If the debtor disputes the debt, the file is always assigned for trial handling, no matter how serious the dispute.
Debts above DKK 100,000
A debt of this size always requires an external lawyer to file a claim form with the court. A judgment has to be obtained before enforcement proceedings can be carried out.
The cost of obtaining a judgment depends on the size of the debt. It will cost DKK 1,350, plus 0.5% of the amount above DKK 100,000, plus lawyers’ fees.
The time frame is up to six or 12 months on average. If a judgment is obtained and the debtor does not pay accordingly, the file will be handed over to the bailiff’s court for execution.
4.3. Required documents
In order to apply the legal proceedings, Cosmopolite Collections need copies of the contract, invoices, and a clear statement of account indicating payments and credit notes that have been booked against the outstanding invoices.
In the case of a regular lawsuit procedure, copies of the complete contractual documentation should be available starting with the contract, orders, order confirmations, delivery notes and invoices.
Every part of the trading relationship between all parties should be provable by documentation.
All notes and conversations between the creditor and the debtor should be kept and provided to our lawyers in case of dispute. In the case of any verbal negotiations, we will need copies of any reports and names of any witnesses.
4.4. Lawsuit in Denmark
The regular lawsuit procedure is either initiated directly after the amicable collection has failed due to a dispute by the debtor or directly after the legal dunning procedure if the debtor has appealed. A written pre-procedure is usually issued.
Both the plaintiff and the defendant must exchange opinions and proofs by letter until the judge believes all relevant information needed to make a judgment has been received.
In this case, a hearing is scheduled, during which both parties must be present. After the hearing, the judge sets a date to publish the final judgments, and both parties will be informed about the outcome in writing by the court.
An appeal against the judgments is possible, which will trigger a second verdict by the court of second instance (local court to district court, district court to high court). In case of third instance, the review will be restricted to a check of whether or not statutes were applied correctly.
4.6. Debt collection costs in Denmark
Costs of the civil law procedure (court costs and lawyers’ fees) are determined by the Ministry of Justice.
All costs depend on the outstanding amount. There are different fees that can apply during a procedure, which makes it difficult to predict the total cost. In addition to this, costs of witnesses and/or experts might also arise.
A cost estimation will be provided on a case-by-case basis should legal action arises.
4.7. Expected time frame
The average duration of a legal court procedure can take up to 12 months or longer, depending on the complexity of the case and the availability of the judge and lawyers on both sides.
5.1. Enforcement in debt
Enforcement proceedings are handled by a bailiff’s court and can only take place when there is a judgment or a written acknowledgement of the due debt from the debtor.
The bailiff will investigate if the debtor has any assets that can be taken as security for the debt and can be sold by the creditor following specific rules. The bailiff will try to establish a payment arrangement with the debtor.
Debtors will often try to delay the process by not attending the meeting in the bailiff’s court. In such cases, we have to wait until the police have traced the debtor and a new bailiff’s court meeting is held.
The cost of enforcement proceedings depends on the size of the debt. It will cost DKK 300, plus 0.5% of the amount above DKK 3,000, plus lawyers’ fees.
5.2. Expected time frame
The time frame is between six and 12 months on average.
6. Insolvency proceedings
6.1. General information
The aim of the insolvency proceedings is to pay out all creditors with the same quota by liquidating the assets of the debtor company or collecting the enforceable income of the individual who is declared bankrupt.
There are four insolvency proceedings in Denmark:
- Enforced dissolution
- Debt restructuring ( personal liability ).
After the debtor or a creditor files for insolvency of the debtor, a preliminary liquidator is appointed to check if sufficient assets are available to cover the costs of the proceedings (court costs and costs of the liquidator).
If these costs are deemed to be covered, then insolvency proceedings start and a liquidator will be appointed; usually this is the preliminary liquidator. If any other process is followed, the court will reject the declaration of bankruptcy due to insufficient assets.
The creditors can then lodge their claims and take back any goods delivered under retention of title. For goods in stock, the liquidator can choose whether to pay the original price to the creditors or to return the goods.
After the proceedings start, lodging claims is possible within a given deadline.
The liquidator can either accept a lodged debt or dispute it. If the claim is disputed, the creditor may only file a claim in court to prove the justification of their claim when further documentation does not convince the liquidator to confirm the debt.
At the end of the proceedings, all creditors with confirmed debts will receive a dividend if there are enough assets in the estate. Often there will be no dividend paid at all.
6.3. Required documents
In order to lodge a claim on behalf of our client in nondisputed claims, Cosmopolite Collections only need copies of invoices.
6.4. Expected time frame and outcome
The expected time frame for an insolvency estate in Denmark is one to three years.
7. Arbitration and mediation
Both arbitration and mediation are used in Denmark in disputed files. Arbitration in Denmark is based on the rules of the UNCITRAL Model Law.
In disputes when the parties agree to settle in accordance with the arbitration rules, the Institute of Arbitration decides in each dispute at an arbitral tribunal. Another way of solving a dispute is by mediation.
When the parties have agreed to mediation taking place under the rules of mediation or arbitration, the mediator will make a judgment on the dispute, which both parties must agree with.