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Letter from debt collection received - What now? -

Letters from debt collection agencies

-What to do?

Anyone who receives a letter from a debt collection agency usually immediately asks themselves the following question:

"Have I forgotten to pay a bill?"

A glance at the creditor of the - alleged - claim is often enough to categorise this very claim. What the affected party then has to do depends largely on whether or not they dispute the claim asserted against them.

The following article is intended to briefly explain what a debt collection agency actually is and how a letter from a debt collection agency should preferably be dealt with.

I. Definition of Terms

For a better understanding, the following terms should be explained in advance:

-Debtor: A debtor is a person who owes something to another person.

-Creditor: A creditor is a person who is entitled to a claim against another person.

Assignment: An assignment is the (in rem) transfer of a claim. is to be understood.

Here is a case study:

Max Mustermann (creditor) "lends" EUR 1,000.00 (debt) to his best friend Hans Schmidt (debtor), which he transfers to Hans' current account.

Hans (debtor) cannot repay the EUR 1,000.00 immediately, but has a claim of the same amount against his work colleague Stefan Müller.

Hans (debtor) and Max (creditor) agree that Hans will transfer his claim against Stefan to Max (assignment) in order to free himself from his debt to Max.

II. What is a debt collection agency?

If you consider the above example, a debt collection agency does nothing other than "buy" claims from creditors on a commercial basis and enforce them against the respective debtor in its own name.

One of the ways in which the debt collection agency earns money is by "buying" the creditor's claim at a lower price than the nominal amount of the claim in question.


The creditor's claim corresponds to EUR 1,000.00. The debt collection agency pays the creditor EUR 950.00 and collects the EUR 1,000.00 from the debtor, among other things.

Furthermore, the debt collection agency also charges fees when enforcing the respective claim, which it demands from the debtor of the claim due in addition to the actual claim.

Furthermore, letters from debt collection agencies contain "notices" that Schufa records may be made if the claim is not paid. With these "notices", the debt collection agencies hope that the respective "debtors" will be frightened with regard to their own creditworthiness and pay the demanded amount prematurely.

III What to do if you receive a debt collection letter?

The further procedure after receiving a letter from a debt collection agency depends largely on whether the affected party considers the claim in dispute to be justified or not.

1. existing or undisputed claim

If the respective affected party considers the claim in dispute to exist and to be justified, it is usually advisable to pay the claim in dispute, provided that the respective affected party is not entitled to any counterclaims against the claim in dispute.

An example:

The debtor is the tenant of a flat and has not paid one month's rent. The flat in which the debtor lives for rent has no defects.

In this example case, the debtor is advised to settle the claim as quickly as possible in order to avoid further costs.

The procedure would be different if the affected party were entitled to any counter-rights, on the basis of which the subsidy in question could be regarded as partially or completely non-existent or justified.

Modification of the example case:

The debtor is the tenant of a flat and has not paid one month's rent. The flat in which the debtor lives for rent has suffered water damage and is uninhabitable. By law, this leads to a reduction of the monthly rent debt to EUR 0.00 for the duration of the flat's uninhabitability.

In the modified example case, the debtor would be advised not to make any payments to either the landlord or the debt collection agency. Although the landlord is basically entitled to payment of the agreed monthly rent, this is reduced to zero by law (ipso iure) for the duration of the uninhabitability of the flat. If the landlord carelessly calls in a debt collection agency, the landlord's declaration of assignment in this regard will be in vain due to the lack of existence of the claim.

2. non-existent or disputed claim

If the affected party disputes the existence of the claim in dispute on the merits, for example because no valid contract has been concluded at all, it is generally advisable not to make any payments.

The affected party must not fall prey to the misconception that there is a risk of a negative Schufa record and that their own creditworthiness could be lowered if no payment is made.

A Schufa record is unlawful for disputed claims. The affected party can demand that Schufa deletes the entry immediately, if necessary even with the help of an interim injunction from the competent court.

IV. Our experience with debt collection agencies

1. reputable creditors work through debt collection agencies

Our experience to date has shown us that "dubious" creditors in particular are simply attracted to debt collection agencies.

Particularly in cases where the conclusion of a contract between the respective parties is in dispute, certain creditors systematically call in a debt collection agency to enforce the alleged claim.

If the affected party then continues to defend themselves against the claim in dispute, they suddenly give up.

Here is an example from business practice:

This approach by dubious creditors is due to the fact that they understandably shy away from the costs of a legal dispute before a German court. If they lose the legal dispute, they would not only have to pay the court costs, but also the other party's legal fees. From the point of view of dubious creditors, co-operation with a debt collection agency is usually cheaper, easier and faster.

2. no response

It is not uncommon for us as a law firm to receive no feedback from either the creditor or the debt collection agency after we have appointed ourselves for an affected party and, for example, disputed the claim in dispute on behalf of the client.

This often has the advantage for the affected party that the matter effectively settles itself.

V. Conclusion

We can only advise affected parties not to make any payments to debt collection agencies prematurely and instead to seek legal advice in good time.

This applies in particular to cases in which the affected parties dispute the claim on the merits or are of the opinion that they are not obliged to pay due to counterclaims (set-off, cancellation, termination, revocation, rescission, etc.).

The threat of a negative Schufa record is not a reason to make a hasty payment if, as already mentioned, it is a disputed claim.

Tolga Topuz

March 2024 - Düsseldorf -

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