Collection costs – Fast credit required
How high may collection costs be? You occasionally read messages from people who have to pay hundreds of euros extra in collection costs. Is this allowed by law?
Many people are unfamiliar with the fact that anyone can start a collection agency. There are no legal rules for this. The serious agencies are members of the Dutch Association of Debt Collection Companies (NVI). They adhere to certain rules of conduct and have a dispute settlement procedure. A collection agency must always first send a letter of formal notice. The letter of formal notice must state that one has 14 days to pay. The letter also states how much collection costs will be charged if payment is not made.
If you are unlucky, you will have to deal with a collection agency that is not affiliated with the trade association. These non-affiliated collection agencies are often less professional and sometimes require sky-high collection costs that may not even be imposed. These ‘cowboys’ do everything to intimidate you so that you pay the bill and they collect their commission from the client. Sometimes the amount of collection costs seems absurd but beware: often it is correct and is legally correct.
Costs with a small invoice
There are legal rules for collection costs. For small accounts up to € 266, a maximum of € 40 collection costs may be charged. So if you receive a letter from a collection agency that demands much more than € 40 while your debt to that one company is less than € 266 then you do not have to pay. You must then send a registered letter to the collection agency that you would like to pay but do not agree with the high costs.
Collection costs that can quickly add up
If your debt is higher than € 266, you must be careful because considerable costs may be charged. With a debt between € 266 and € 2500, 15% of the collection costs may be charged by law (!). 10% may be charged in respect of debt between € 2500 and € 5000. Imagine falling behind with paying for your credit card. After a reasonable payment period and a written letter of formal notice, the creditor may call upon a collection agency. For example, if your debt is € 4000, € 2500 × 15% + € 1500 × 10% may be charged in collection costs. That is € 525 in this example. You may now understand why debt collection agencies are trying so hard to put people on fire. When paying the debt, they have earned a hefty compensation.
Collection agency can seize?
A collection agency does not have the legal authority that they can seize your house or household income. The collection agency can propose a payment arrangement. If you can’t figure it out, they probably bring it to court (or the creditor goes to court). The court can impose a payment arrangement or appoint a bailiff. This bailiff has the legal power to seize all your affairs. This whole course of business will again entail more costs. It is therefore important that problematic debts are dealt with on time. With a loan from the social bank it is possible to pay off all debts in one go.
Have you moved and have you not provided your address to the creditor? Then you should definitely watch out. The reminder letter is simply sent to the old address. You may not be available, but it makes no legal difference. If the collection agency comes after your new address, you will immediately be presented with the bill with the high collection costs.