Reminding and Executing costs (new German law as of July 1, 2004)

The following costs arise as part of reminding and execution proceedings:

[Image]  Calculation of court costs and legal fees
[Image]  Expenses due to the debtor’s delay of payment
[Image]  Court costs
[Image]  Expenses for instructing an attorney
[Image]  Expenses arising from internal company reminder department
[Image]  Expenses for a collection agency
[Image]  Expenses for enforcement measures  

Attention: The following information does not apply to reminder procedures involving labour law. In this case, please see:
[Image]  Expenses in work-judicial reminder procedures  

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Calculation of court costs and legal fees
Please indicate the total value of claims you wish to collect from a debtor. The court costs and legal fees for issuing a court order, and subsequent enforcement order will be automatically calculated:

total value of claims

You have a right to input tax deduction.

 

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Expenses caused by debtor’s delay of payment
Normally, expenses which arise during the collection of claims can be also claimed as damages caused by delay following the second reminder. 
Principally, it is possible to claim damages caused by delay from the moment of default of payment onwards. A default of payment is also in effect prior to sending a first reminding.

[Image]  Information on maturity and default

These expenses are only recoverable if they can be directly attributed to the debtor’s default. It is not possible to claim expenses for services rendered by company employees by citing damages caused by delay of payment. It is only possible to claim this by instructing an attorney.

Typical expenses that may be claimed as damages caused by default include:

  • postal charges
  • default interest
  • attorney costs
  • legal costs for court orders
  • Costs of reminders following default (A charge of 2.50 € per reminder is legally accepted )

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Court costs

Calculation of court costs –  Local courts charge certain expenses for the release of a legal court order. These expenses are calculated according to the amount of your claim: 



Claim amount
up to x.xxx €

Court costs in €

Claim amount up to
x.xxx €

Court costs in €

600

18.00

40.000

199

900

22.50

45.000

213.50

1.200

27.50

50.000

228

1.500

32.50

65.000

278

2.000

36.50

80.000

328

2.500

40.50

95.000

378

3.000

44.50

110.000

428

3.500

48.50

125.000

478

4.000

52.50

140.000

528

4.500

56.50

155.000

578

5.000

60.50

170.000

628

6.000

68

185.000

678

7.000

75.50

200.000

728

8.000

83

230.000

803

9.000

90,50

260.000

878

10.000

98

290.000

953

13.000

109.50

320.000

1028

16.000

121

350.000

1103

19.000

132.50

380.000

1178

22.000

144

410.000

1253

25.000

155.50

440.000

1328

30.000

170

470.000

1403

35.000

184.50

500.000

1478

Charges for the enforcement order – If an enforcement order follows a court order because the debtor does not comply with the obligation to pay even after the release of a court order, there are no additional legal charges for the release of the enforcement order.

Charges for a lawsuit – If the debtor files an objection or protest against one of the orders, the proceeding will enter into a lawsuit. The charges will be five times higher for a lawsuit than the charges  listed in the chart above. If the amount of the demand is, for example, € 2.500, then 40.50 € is due for the release of the court order or the enforcement order. Legal charges for a possible subsequent lawsuit is normally an additional € 202.50.

Payment in advance – The court releases an order only after the charges have been paid into the court’s account. The charges can be paid by either purchasing court fee stamps at the local court or by transferring the charges to the court after receipt of the bill of charges from the court. If an attorney is instructed to act on your behalf, it is possible for the attorney to advance the charges on loan. Thus the charges are debited directly from the attorney’s bank account.

Payment through the debtor – All legal expenses that arise due to the court order are added to the amount of the claim, plus any additional damages caused by default of payment (i.e. interest). These must be paid by the debtor together with the original claim . If the claim is justified and if the debtor pays because of the court order, the creditor receives repayment of all legal expenses by the debtor!

 

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Expenses for retaining the services of an attorney
Calculation of lawyer’s fees – If you retain an attorney to claim a court order, the lawyer’s fees are  calculated (similarly to the court fees) based on the amount of your claim:

Claim amount
up to x.xxx €

Lawyer’s fees in €

Claim amount up to x.xxx €

Lawyer’s fees in €

300

25

40.000

902

600

45

45.000

975

900

65

50.000

1.046

1.200

85

65.000

1.123

1.500

105

80.000

1.200

2.000

133

95.000

1.277

2.500

161

110.000

1.354

3.000

189

125.000

1.431

3.500

217

140.000

1.508

4.000

245

155.000

1.585

4.500

273

170.000

1.662

5.000

301

185.000

1.739

6.000

338

200.000

1.816

7.000

375

230.000

1.934

8.000

412

260.000

2.052

9.000

449

290.000

2.170

10.000

486

320.000

2.288

13.000

526

350.000

2.406

16.000

566

380.000

2.524

19.000

606

410.000

2.642

22.000

646

440.000

2.760

25.000

686

470.000

2.878

30.000

758

500.000

2.996

35.000

830

. .

Extent of attorney services  – The attorney fees cover services for the entire dunning procedure.

Charges for the enforcement order: If an enforcement order is required following a court order because the debtor does not comply with the obligation to pay despite a court order, the attorney will levy an additional 0.5-fold charge (based on the claim amount calculated in the chart above) for issuing an enforcement order.

Charges for a lawsuit: If the debtor files an objection or protest against one of the orders, the proceeding will enter into a lawsuit. The attorney must substantiate in writing why the claim is justified. This activity involves an additional 0.3 fold attorney fee.

Another charge occurs if a court hearing becomes necessary. A 1.2-fold charge must be paid if a court hearing occurs where the debtor is present or represented. A 0.5-fold charge must be paid if the debtor is not present or represented.

Payment of the debtor – All legal expenses arising in relation to the court order will be added to the amount of the claim, in addition to further damages caused by default  (i.e. interest) and these additional expenses must be paid by the debtor together with the initial claim. If the demand is justified and if the debtor pays because of the court or enforcement order, the attorney receives his or her fees directly  from the debtor! As a result, the creditor must assume the legal expenses only if the claim is not justified or enforceable due to debtor insolvency.

Flexible fees – A flexible fee arrangement that differs from the legally regulated fees can be made with your attorney, if required. Flexible fees may occur only if the attorney recovers claims for a creditor
in a large number of cases and the amount of each claim exceeds € 1.000.

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Expenses arising from internal company reminder department  
Expenses resulting from the collection of a claim (made by company employee) cannot be claimed using a court or enforcement order as damages caused by default of payment. This is because reminder expenses do not arise directly for each individual claim. The option of outsourcing the dunning process to an attorney offers remarkable savings potential because legal fees are accepted as damages caused by default.

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Expenses for a collection agency
Collection agencies buy out claims in packages for a portion of their value (usually for 5% of the value or less) in order to collect the debts themselves. The amount paid for claims by an collection agency depends on the chances it sees in retrieving debts. Based on experience the amounts which collection agencies are willing to pay are rather small since the agencies bear the risk that debtors are insolvent and also because agencies wish to profit from the debt recovery.

All information is presented to the best of our knowledge. We assume responsibility for its correctness.  

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