Collection costs: the costs of collection service providers are part of the damages caused by delay

Collection costs often come up against incomprehension by the consumer. Many people do not understand how collection costs are incurred and why they are liable for these. The following article is to answer these and other questions on the topic of collection costs.


Collection costs: payment for a service

Collection agencies offer a service on an open market. As with any private company, they must at least break even in offering their service. A collection agency offers the service of collecting due receivables.

Companies that have a high default rate might soon be getting into difficulties. Equity ratio and liquidity suffer. To make up for the payment default, companies often have to increase the prices of their products. This causes consumers to suffer. Ultimately, this difference may even lead to corporate insolvency. This then endangers many jobs. The services of collection agencies help to avert excessive payment delay.

If a company appoints a collection service provider, this will incur collection costs. This is because costs arise during the collection process, for the correspondence with debtors, for example, verifying the conclusiveness of receivables, or telephone collections. A creditor and debtor sometimes arrange for instalment plans. All these services are covered by collection costs.


Collection costs: part of damages caused by delay

The purpose of a  debt collection service may be clear to some consumers. But why must the debtor bear the collection costs, if he has not made use of the respective service? The answer to this can be found in the German Civil Code (BGB) §§ 280, 286, where it is regulated that the debtor must reimburse the creditor for damages caused by delay in payment. These damages caused by delay cover all financial disadvantages. Collection costs are part of damages caused by delay, because they would not have arisen if the debtor had paid on time.

Although one occasionally reads and hears otherwise, collection costs are damages caused by delay and therefore reimbursable. This was confirmed by the Federal Court of Justice in a judgement in June 2005. Furthermore, collection costs are common ancillary claims in legal dunning procedures, in which they are admitted as such and are charged to the debtor.


Collection costs: amount and calculation

In accordance with § 4 para. 5 of the Introductory Act to the Legal Services Act (RDGEG), the fees under the Lawyers' Remuneration Act (RVG) apply to the calculation of collection costs. Accordingly collection agencies claim expenses on a per case basis; these expenses are costs that correspond to 1.3 times the general business fee ("threshold fee" for cases that are neither extensive nor complex) analogous to § 13 RVG in conjunction with the List of Applicable Fees (Vergütungsverzeichnis or VV) RVG no. 2300 plus expenses no. 7002 VV RVG. Overall, the amount of the collection costs is based on the amount of the principal claim. The higher the total claim, the higher the calculated collection costs.


Settling collection costs

If you have received a request for payment from the Arvato Financial Solutions collection agency (infoscore Forderungsmanagement GmbH), verify the receivable that is being asserted to you first. If you reach the conclusion that the receivable is outstanding and justified, you should transfer the due amount as soon as possible. Be sure to pay the full amount, i.e. the principal claim and the various ancillary claims, including the collection costs. For the collection process to be concluded as quickly as possible, the collection costs need to be paid together with the principal claim.

It is also important that you transfer the total requested amount, including collection costs, to the account specified in the letter from the collection agency. This method should also help to quickly identify payments and to complete the relevant collection process as soon as possible.