If a creditor has lawfully sent a reminder to the customer regarding the outstanding account, he/she can sell the account to a factoring company or remain the owner of the account and commission a collection company to collect the account on his/her behalf. While some send out written reminders regarding the account, other collection agencies decide not to send out collection letters opting for collection via phone instead. Sending out collection letters or carrying out collection via phone as a collection agency requires a registration with the competent registration authority.
First of all, the collection letter informs the debtor of the open account. At the same time, the debtor is asked to pay the amount shown in full forthwith. This amount is the total of the account owed to the creditor and the costs incurred for the collection company's activities. For this reason, as a rule the amount demanded in the collection letter is normally higher than the original claim. If you receive a collection letter, it is important that you respond calmly and sensibly.
First of all, you should use your personal documents to check whether the claim asserted actually exists. Sometimes, it is worthwhile taking a look at the past because an enforceable claim only becomes statute-barred after a period of thirty years. If you do not find anything, you should contact the collection agency with the request to prove the claim. Remember that playing for time here risks incurring higher costs. If the debtor does not respond to the collection letter or if he/she responds with a delay, the collection agency might send you a second letter which usually includes a proposal to settle the outstanding amount in instalments.
If, as a debtor, you do not respond to collection letters and do not settle the existing accounts in due time, you are very likely to be contacted by the collection agency again in order to prompt you to make a payment. If the debtor does not respond to collection letters, he/she has to assume that court collection proceedings will be opened. A form on which the debtor can comment on the claims is enclosed with the collection letter. After receipt of the collection letter, the collection agency is the only point of contact to which the outstanding payments have to be made. The dunning process can only be stopped if the account is settled within the deadline set. This is the only way futher consequences can be avoided. Moreover, as a result of the initiation of the collection proceedings, personal data can be forwarded to credit agencies. In credit rating inquiries, this can have a negative effect on the conclusion of contracts or loans and, as a result, the contract or loan might be denied. If you object to the claim or feel that the claim of the collection agency is unjust, you should inform the collection agency of this fact. Debtors who have "lost track" of their outstanding accounts or do not feel responsible for them, should contact a debtor advisory office or consumer advice centre without delay, where they can receive professional support.