Assign debt collection privately

Important Considerations

What should you pay attention to, when assigning debt collection privately?

We repeatedly encounter two mistakes:

1. Excessive patience and waiting too long. This increasingly puts the debtor in a stronger position; they experience how their excuses, promises, and maneuvers succeed. And success, as we know, reinforces preceding behavior.
2. Pursuing collection exclusively through legal channels for too long. Of course, it is correct to follow the legal collection process or to conduct legally-supported negotiations via an attorney for disputed claims, and if these show no success, to pursue legal action (lawsuit).

The Problem: Such processes can extend over months to years, e.g., when the debtor (and their attorney) exhaust all deadlines and objection possibilities (actions for annulment, appeals, possibly up to the Federal Supreme Court). Not only is this approach expensive, but it also gives the debtor all the time in the world to prepare for enforcement proceedings based on a legally valid judgment (transferring assets, generating undeclared income, etc.). Therefore, even in private collection cases, professional assistance should be sought early (assign private debt collection).

Debt Collection Service Providers

 Legacy debt collection? Attorny? Collection Specialist?

Many of our clients have not had good experiences with a classical collection agency, which primarily writes letters and possibly initiates legal collection. This is not to underestimate the services of conventional collection agencies; their services are useful and essential for numerous claims. Their arsenal is more effective with consumer debtors or those who are at least not unwilling, but temporarily unable to pay.

Instead, private creditors in sensitive cases should entrust themselves to a specialized collection company. We also refer to this as direct collection. We thoroughly research the debtor, not only online but also on-site, develop clever pressure scenarios, and negotiate forcefully with the debtor on this basis. The success rate, which is around 75% for our company, shows that this approach is often worthwhile.

Attorneys are particularly the right contacts when legal questions need to be clarified or when it is clear from the outset that only legal steps that are reserved for attorneys come into question (e.g., a civil lawsuit).

FAQs

Frequently asked questions

Can I, as a private individual, assign debt collection?

Certainly, yes! As a private individual, you would need to be the owner of the claim.

Can I, as a private individual, assign a claim?

Certainly, yes! There are a few formal requirements that need to be met.

Can I engage a collection agency without sending reminders beforehand?

Certainly, yes:

There is no legal obligation to send reminders before engaging a collection agency or an attorney. The expiration of the payment deadline is sufficient to put a debtor in default. However, sending one or possibly two reminders is sensible, as often the reason for non-payment is trivial or the debtor responds to the reminders. A common mistake, however, is waiting too long or when repeated assurances from the debtor are not fulfilled.

Are the cost worthwhile to assign private debt collection?

If you and the offering collection company see (estimate!) a probability of success of over 50%, then it is worthwhile. If not, then you should consider writing off the claim. This is painful, probably even more so for private individuals than for companies, but still better than a years-long battle against windmills and escalating costs. If a case seems too uncertain to us, we advise clients against proceeding. Unfortunately, we observe that some do not follow this advice and try elsewhere with questionable success.

If you (and we) are uncertain, you could commission us with a preliminary investigation mandate (financial circumstances of the debtor, place of residence and registration, etc.). This usually reveals the chances. For you, it is more cost-effective than immediately issuing a collection mandate. And if such a mandate can be issued later, we will apply these costs toward the advance payment.

If there are chances, they only materialize if one is prepared to bear the costs and a certain residual risk. Here we provide a general cost and revenue example.

If you would like a detailed preview regarding your claim for various outcome variants, please submit an inquiry.

Scope of Service and Terms

How do we facilitate assigning debt collection privately?

Based on our experience with private clients, we have adapted our approach and terms to their needs, with the same advantages naturally benefiting commercial clients as well:

• Before taking on a case, we conduct analysis and preliminary research, make a statement about the prospects of success, and submit an offer. The private individual can thus make their own cost/benefit assessment.
• We enable installment payments for the advance payment, typically two to three installments over 2-6 months. This preserves the client’s liquidity, and they can be convinced of our professional and reliable working methods. Sometimes a repayment success occurs before the entire advance payment has been made.
• We share costs and risks. First off: There is never a guarantee of success in debt collection, and the process often enough contains surprises. We share this risk by contractually committing to work on a case for an unlimited period without incurring additional costs for the client beyond the advance payment. If a case lasts longer than approximately 6 months, the advance payment is exhausted in most cases, and we continue working at our own expense. The client has access to the project accounting at any time and can be convinced of our time and financial commitment. This increases the chances of achieving a result even in difficult cases.