Debt collection in Denmark

Debt collection in Denmark

Debt collection in Denmark is a process that, while based on universal principles of debt collection, has specific regulations and procedures peculiar to the country. Denmark, as one of the members of the European Union, follows common European legal norms, but there are some unique aspects in debt collection practice due to local law and business culture. Denmark has a different culture and legislation, which often complicates the debt collection process in Denmark.

Debt collection is not an easy process. The matter becomes even more complicated when it comes to international debts. Many creditors wonder who to turn to in order to recover their money. If you are having trouble recovering debts in Denmark, seek professional help. We specialize in debt collection activities in Denmark.

We can help you recover debts incurred by your employer or contractor. Debt collection in Denmark does not always end up in court. We want our clients to avoid public charges. That’s why we value dialogue and amicable problem solving. Only when it turns out that it is not possible to recover the debt in this way, we will decide together with you on the further procedure.

What does debt collection look like in Denmark?

In some instances, companies established in Denmark fail to pay their debts to suppliers, even in the current robust economy. To recover these debts, specific measures must be implemented to compel the debtor to settle the claims. In the initial stage, the creditor sends a reminder to the debtor, requesting payment within 1-2 weeks. If the debtor does not pay, it is recommended that the creditor seek assistance from a debt collection agency or a team of attorneys, such as our specialized lawyers in Denmark.

In Denmark, the debt collection process is divided into two stages. At the pre-court stage, debt collection takes place without the involvement of a judge, while at the court stage, the presence of a judge is necessary. Our assumption is that all new debt collection cases should start at the settlement stage. We try to avoid legal intervention, as this always involves additional costs.

Amicable debt collection in Denmark
As in other countries, debt collection in Denmark begins with amicable action. This is called so-called “soft” debt collection. The creditor’s first step is to send a letter to the debtor reminding him of his obligation to pay. This document must be official so that it can later be used as evidence in court. The amicable settlement also includes the debtor’s agreement to pay the debts and the specified payment terms. If the debtor fails to pay, this document can be used against them in the judicial phase.

At the same time, the creditor shall set a deadline in the letter for the debtor to pay the debt. This deadline cannot be less than 10 days from the date of receipt of the letter. Part of the amicable debt collection process is negotiation aimed at convincing the debtor to meet his obligations. If the intended effect is not achieved, the next step is to issue a demand for payment stating that legal action will be taken if payment is not made. When it comes to demanding payment, it is worth using the services of a debt collection company.

Taking legal action
If amicable debt collection in Denmark is unsuccessful, legal action should be taken. Civil debt cases should be referred to the relevant district court. There are currently 24 district courts in Denmark. However, depending on the severity of the case and the size of the debt, the case may go directly to the Supreme Court. However, these are sporadic cases. The creditor’s task is to prove the debtor’s guilt so that the court can issue an enforcement order to recover the debt from the debtor’s assets. To streamline the process and increase your chances of recovering your money, it is worthwhile to seek the support of a trusted debt collection partner.

In the legal phase of a debt collection process, the assistance of a Danish law firm is essential. Here are the main characteristics of the judicial debt collection process:

  • Danish court procedures can be either simplified or ordinary.
  • The simplified procedure applies when claims do not exceed 50,000 DKK. The bailiff issues a payment request, which can be contested within 14 days.
  • If uncontested, the bailiff can approve the payment request.
  • If the debtor contests the request, the ordinary procedure must be initiated. The ordinary procedure is also used for debts exceeding 50,000 DKK.

Payment order and bailiff assistance
If the debt is less than DKK 100,000, a simplified route can be used. This is the “betalingspåkrav”, or summons for payment. The documents will be filed with the relevant district court, and the case will be heard before a bailiff court. This route is usually chosen when the debt is small and it is certain that the debtor will admit to his obligations to the bailiff. Cases are usually resolved quickly, and bailiffs begin collecting the debt after receiving the “betalingspåkrav.”

When is it a good idea to file a debt collection request?
There are times when, after an employee has been fired, the employer will not pay last months’ dues or vacation pay. Vacations are unpaid in Denmark, so employees taking leave receive a portion of their annual salary. Anyone who fails to use this service has the right to initiate collection proceedings.

It can happen that an employee, despite having worked for several months, does not receive the wages due to him. Sometimes it happens that entrepreneurs do not pay their bills on time. In such cases, it is important to act as soon as possible. Let’s not be fooled and taken advantage of by others. Even if you are not familiar with Danish laws or regulations or have a language barrier, it will not be a problem here. We will help you recover all your debts. We will do everything in our power to ensure that debtors meet their obligations.

Successful debt collection in Denmark requires following strict procedures. If you want to recover your debt, you must do the following:

  1. Send a reminder to the debtor

    A reminder is a warning that debt collection may be initiated if the debt is not paid. This is a friendly solution and should not be avoided. Such a letter should contain information about the date of the invoice, the amount and the account to which the money will be transferred. The reminder should include the due date for payment – no later than 10 days from the date of delivery of the reminder.

  2. Initiate collection proceedings
    This is possible 14 days after the demand letter is sent to the debtor, but only if the debt has not been settled.

How does debt recovery work in Denmark?

First contact the debtor and ask why the payment has not been made. If your Danish customer still has not paid, send a reminder. Reminders must include this information. The proposed payment date must include a certain number of days.

The regulations in Denmark are very different from those of most European Union countries. Therefore, debt collection in Denmark must be handled by professionals who know the local law and are able to comply with its provisions in favor of creditors. Without this, it will be difficult to successfully recover debts.

After receiving the enforcement title, the case is referred to the Danish Enforcement Court. This can be done on the basis of a court judgment or “betalingspåkrav”. The bailiff then begins enforcement against the debtor’s assets. If necessary, the debtor’s bank accounts and personal and real estate assets can be seized up to the amount of the debt.

The following documents are essential for debt collection in Denmark:

  • Signed agreements
  • General terms and conditions
  • Order confirmations
  • Copies of invoices
  • Proof of delivery or services
  • Correspondence with the debtor

The Danish Debt Collection Law
The general debt collection process is governed by Danish debt collection law. Key provisions include:

  • Inquiries to the Debtor: These are made through a letter of demand before any other actions are taken. The letter must clearly state the time limit within which the debtor can make the payment to avoid further measures.
  • Legal Action: Legal proceedings must be initiated against the debtor if not doing so would render the claim unrecoverable.
  • Access to the Debtor: Entry onto the debtor’s premises for collection purposes cannot occur without prior notification.
  • Collected Amounts: These must be immediately deposited into a bank account and paid to the creditor without delay, unless otherwise agreed. The interest on the deposited amount is credited to the creditor.

According to the law, any individual or company engaging in debt collection activities must have the appropriate authorizations. To be authorized as a debt collector in Denmark, a person must be a resident over the age of 25, must not be undergoing bankruptcy proceedings, and must have no criminal convictions related to these activities.

A company in Denmark can obtain a license for debt collection if it is not undergoing reorganization or bankruptcy and meets other specific criteria regarding its members and directors. Companies must ensure that the staff employed for debt collection activities have the necessary approvals. Both individual debt collectors and companies in Denmark must adhere to the principles of good debt collection practice.

Petition for Bankruptcy
It is not uncommon for a debtor to assert their inability to pay an outstanding invoice. In such cases, you can file for their bankruptcy (Konkurs) in Denmark. The primary requirements for a creditor to file a bankruptcy petition in Denmark are the existence of an overdue claim and the debtor’s insolvency, meaning they are unable to meet their payment obligations.

How much does debt collection cost in Denmark?

The cost of debt collection in Denmark depends on several factors, including the amount of the debt. If the amount does not exceed DKK 100,000, the costs will be calculated according to the court’s guidelines and will include the costs of collection within the court and court costs. Note that court costs in Denmark are always borne by the debtor, not the creditor.

If the debtor is in arrears, action should be taken as soon as possible. How much it costs to collect a debt in Denmark depends on the following factors:

  • Whether the debtor can be persuaded to pay the debt amicably by sending a demand letter to the debtor and informing him of the possibility of starting debt collection
  • Whether the collection will be judicial or extrajudicial in nature and whether a bailiff carries out the execution
  • The amount of the debt itself
  • The amount of court costs, which is something that changes every year.

Whatever the costs the creditor will incur, they represent only a small part of the recovered debt.

What is foreign debt recovery?

Foreign debt recovery in Denmark includes processes such as negotiating with debtors and assisting in court and enforcement proceedings. If the debtor’s situation is particularly difficult, a settlement between debtor and creditor can be attempted.

Time plays an important role in foreign debt collection. The longer a debt is overdue, the more difficult it is to recover. The recovery period is also affected by the efficiency of the country in which the collection is carried out, especially the courts. Fear of undertaking external debt collection, especially among small and medium-sized companies, is most often due to communication and language barriers, fear of high costs and unfamiliarity with foreign laws and regulations. If the counterparty is from a member state of the European Union, the European Order for Payment (ENZ) may be useful in this case, but unfortunately it is not valid in Denmark.

How long does it take to collect a foreign debt?
It is impossible to say with certainty how long it takes to collect a foreign debt. It all depends on the debtor’s attitude and willingness to cooperate, relationships with foreign counterparties, the debtor’s financial situation, the country or address of residence of the payer, the country’s procedures, and the amount you want to repay recovered. In addition, the overall course of the event is also important. International debt collection takes longer when courts and bailiffs assist in the recovery.

How to speed up debt collection abroad?
Ineffective communication with the debtor, unfamiliarity with foreign regulations, complicated procedures and, in the end, complicated procedures – these are some of the obstacles you may encounter if you decide to pursue debt collection abroad on your own. A debt collection company or a law firm specializing in foreign debt collection can come to your aid.

How do you collect debts from abroad?
In terms of the sequence of actions taken, international debt collection is not significantly different from domestic debt collection. As a rule, mild methods are used first and only if they fail are legal proceedings carried out.

Legal procedures for EU debtors
Special procedures are available if the money-lending company is based in the European Union (excluding Denmark). This can be done by applying for a European order for payment and then filing an application for enforcement proceedings with the competent authority of the country where the court issued the order for payment.

Debt collection abroad is not a big problem if you have the right tools. “Adequate resources” means providing customized strategies and legal and formal support. However, if you feel that you are not fully prepared, choose foreign debt collection through a debt collection company. This solution allows you to fully focus on your business and run it stress-free, without having to spend time with unreliable debtors. In some cases, the debtor may have declared bankruptcy, gone through restructuring or simply have no assets that can be converted into cash and cannot collect debts abroad. The debt collection company is obliged to inform you of this.