Treatment of Commercial Debt by the German Courts

UNDERSTANDING THE GERMAN COURT SYSTEM AND HOW TO AVOID IT WHENEVER POSSIBLE!!

The construction of the German court system is simple. ​ ​There is the Regional court (Amtsgericht) and the Higher Regional Court (Landgericht), depending on the value of the claim. In addition, there is a Court of Appeal and for very rare case the Supreme Court (Bundesgerichtshof). When we are talking about debt collection, it is practically impossible to end up in the Supreme Court, because this court is only dealing with questions of law, not with questions of facts. 

In the German system, a pleading will only be served by the court if the court costs are completely paid in advance. The costs and advanced attorney fees can approach 5% for court costs and 10% in attorney fees, however, Commercial Collection Consultants and it’s network of local representatives are successful in solving 90% of the debt collection cases out of court. Our legal counsel in Germany will endeavor to negotiate a settlement and get the proposal secured by a notarial statement of debt. With a notarial statement of debt as security from a German debtor, the courts will allow it to serve as a judgement under certain circumstances.

Of course, to obtain a notarial statement of debt, you have to convince the debtor that it is better and cheaper for them to go to the notary and to give an explanation. If the debtor only wants to gain some time, a creditor can combine the notarial statement of debt with an agreement that the debtor can pay in installments. In general, as already mentioned, most cases will be solved out of court once your delinquent customer is contacted by a third-party agent.

In conclusion, Germany is yet another European country where legal proceedings can be expensive and time consuming. For this reason, we recommend that you remain close with any delinquent overseas customers that might be ignoring your demands for timely payments.

Compliments of Commercial Collection Consultants, Inc., a member of the EACCNY