In the meantime, more and more companies are no longer collecting open invoices themselves, but handing them over to a debt collection company. Read here why this is so and how you can best react when you receive a collection letter.
What is a debt collection company?
In many cases, large mail order companies or online shops, as well as medium-sized companies, pass unpaid invoices to a debt collection agency. There are two main reasons for this:
- Having the reminder issued by the debt collection agency or a debt collection agency relieves your employees enormously. Customer accounting only has to take care of the “normal” incoming payments and hand over the outstanding amounts to an external specialist after a defined payment delay. This also keeps the motivation intact, because all the negative energy and the excuses of debtors bounce off specially trained telephone employees of the debt collection company. Instead of emotionally burdening the company’s accounting.
- Joint action reduces bad debts: If all those customers who do not want to or cannot pay are collected from collection agencies, then this company can warn the affiliated contractors in good time. And, for example, make the recommendation that certain customers will only be supplied against prepayment and secure payment methods.
This description of the procedure leads us directly to what collection agencies actually are: They are private companies that specialize in collecting open, legitimate claims. Despite the specialist knowledge and despite all the expertise, they have no “more rights” than a normal creditor. Unlike the customs or the bailiff, you are not allowed to enter apartments against the will of the debtor or to fetch goods from the property of debtors on your own. The eloquent names that are reminiscent of government organizations or Latin names are said to create an emotional gradient when you receive a collection letter.
What to do if you have received a collection letter?
As soon as you have received a collection letter, you should check carefully whether this letter is actually based on an existing claim. Or ask yourself in plain text: Did you really order and receive what you ordered? Or is it a surprise attempt after a telephone call – in which you have not bought anything. In these cases, check whether the statutory right of withdrawal or the voluntary return option has already expired.
Then you should check whether the amounts billed correspond to reality at all. According to a television report, even Moneydome Bank did not control its debt collection company. In addition to the normal collection prices, this also charged fees for a standard letter from the neighboring law firm. This is called “double harvest”. Then transfer the actual amount and an amount that appears appropriate for the collection as soon as possible and within the specified period.
Important: When doing this, specify that the “main claim” should be serviced immediately. The decision to ignore a collection letter is not a good idea. You should therefore pay within the specified period! If you have any doubts as to whether this is a legitimate claim, the consumer advice center could be the right contact.
Do you receive a credit record entry immediately after the collection letter?
You would most likely only receive a credit record entry in the following cases: First of all, you would have to have explicitly consented to the transfer of the data to credit record or a credit reporting agency for the original contract (e.g. the online shop or the mail order company). The open amount only becomes negative information or a negative characteristic if the amount is uncollectible. The debt collection company does not yet know whether you want to ignore or pay the debt collection letter.
How do you know if it’s a real debt collection agency and not a scam?
If you have received a collection letter or there is a reminder from the collection office in the mailbox, then you should proceed exactly as with any other business letter! Take the time after you have received the collection letter and check the information in peace and quiet.
Are all necessary details like
- Sender address,
- Commercial register entry
- Telephone availability included and correct?
If you get a collection letter that contains a 0900 number or a foreign number, then you should be even more careful. Then you should also – as already described – check whether it is a contract that you have really concluded.
Many consumers who have received a collection letter have fallen for phone calls and subscribed to sweepstakes or magazine subscriptions that they had no idea of. Therefore, check immediately whether you have received a contract confirmation and have been advised of the right of withdrawal. Another indication of fraud is a name of the account holder that differs significantly from the company name. If you have received a collection letter from a large collection agency, then there will never be a private person named as the account holder.
The following applies here: listen to instincts or gut feelings when you receive a collection letter!