Debt collection and the reminder procedure

An unpaid invoice, a forgotten subscription or a loan that is not repaid. Suddenly a debt-collection letter arrives. What does it mean? What does it cost? And what are your rights?

This guide explains debt collection and the reminder procedure in Denmark: what happens step by step, what a creditor can charge in interest and fees, and what to do if you receive a collection claim.

From invoice to collection: the process step by step

Step 1: due date and reminder

If an invoice is not paid by the due date, payment is late. The creditor typically sends a reminder (rykker) about the missing payment.

A creditor is not obliged to send a set number of reminders before a case can go to collection. The only real requirement is that a collection notice with a deadline of at least 10 days is sent (see step 3).

Step 2: reminder fee and default interest

For a reminder, the creditor can, under section 9 b of the Interest Act, charge:

• A reminder fee: at most DKK 100 per reminder, for at most 3 reminders concerning the same claim. There must be at least 10 days between each fee-bearing reminder. The first fee-bearing reminder can be sent immediately after the last timely payment day. The fee is exempt from VAT.
• Default interest: from the due date, at the National Bank's reference rate (the lending rate) plus a supplement of 8 percentage points.

If the debtor is a business (B2B), the creditor can instead choose to charge a fixed compensation fee of DKK 310 as soon as the payment deadline is exceeded (section 9 a of the Interest Act).

Step 3: collection notice

Before a case can be sent to collection, the debtor must receive a collection notice (section 10 of the Debt Collection Act). The requirements are:

• A written notice that the case will be sent to collection if payment is not made
• A deadline of at least 10 days to pay
• Information about the size of the claim and payment details

If this is not observed, collection costs cannot be charged. If the creditor sends the case to collection, a collection fee of up to DKK 100 can also be charged (section 9 b of the Interest Act).

Step 4: collection

If payment is not made within the deadline in the collection notice, the case can be sent to a collection agency or a lawyer. The claim can then be pursued with the addition of collection costs, and the case can ultimately go on to the enforcement court.

Interest and fees: what can they charge?

Default interest

Default interest runs from the due date and is the National Bank's reference rate (the lending rate as of 1 January and 1 July) plus a supplement of 8 percentage points. If another rate is agreed in the contract, it applies, within the limits of the law in consumer relationships.

Reminder fees (private creditors)

Reminder	Maximum fee
1st reminder	DKK 100
2nd reminder	DKK 100
3rd reminder	DKK 100

At most fees for 3 reminders can be charged per claim, and there must be at least 10 days between them. Public authorities follow different rules.

Collection costs

In addition to the DKK 100 collection fee, out-of-court collection costs can be added when a case is sent to collection. These are set in the order on out-of-court collection costs and depend on the size of the claim. The amounts are adjusted, so always check the current order. If you pay within the deadline in the collection notice, collection costs cannot be added.

RKI and credit reference agencies

RKI (today part of Experian) and similar registers record bad payers. Being registered can make it hard to get a loan, credit, a mobile subscription or a rental home.

When can you be registered?

As a consumer you can as a rule only be registered if:

• The claim is due, and
• You have received the necessary warnings, including a notice that non-payment can lead to registration, and the claim is either acknowledged or established by a judgment or the like, or you have not made a reasoned objection

A claim you have made a justified objection to can as a rule not be registered.

How do you get out?

• Pay the full debt. The registration is removed when the debt is paid.
• If the registration is unjustified, you can complain to the register and possibly to the Data Protection Agency.

A registration is removed after at most 5 years, unless the debt is paid earlier.

What do you do if you receive a collection claim?

If you owe the money

1. Pay quickly, as further fees and interest accrue
2. Contact the creditor about an instalment arrangement if you cannot pay it all. Get the agreement in writing.
3. Keep documentation for everything you pay

If you dispute the claim

1. Object in writing to the collection company
2. State precisely why, for example that the amount is wrong, that you have already paid, or that the claim is time-barred
3. Ask for documentation of the original claim

If you have made a justified objection, the collection company cannot continue collection without bringing a case, and a disputed claim can as a rule not be registered in a credit register.

Limitation of debt

Debt becomes time-barred. It is important to know the rules:

• Ordinary limitation: as a rule 3 years for most claims, for example an invoice (section 3 of the Limitation Act)
• Debt instrument: 10 years when a debt instrument has been issued for the claim (section 5 of the Limitation Act)

The period can be interrupted, among other things by the debtor's written acknowledgement of the debt or by legal steps. A new period then runs. If a debt is really time-barred, you are not obliged to pay, and a registration based on it is unjustified.

Payment order

If the voluntary collection process is not enough, the creditor can use a payment order as a simplified alternative to a full court case for undisputed money claims:

1. The creditor files the payment order with the enforcement court
2. The debtor can object
3. If no objection is made, the order can form the basis for enforcement
4. The creditor can then attach (for example wages, a bank account or assets)

The payment order is a cheap and effective route for undisputed claims.

As a creditor: what can you use collection for?

If your customers have not paid, a correct reminder and collection procedure is important:

• Send reminders correctly and with a clear collection notice, so you keep the right to collection costs.
• Document the debt. A debt instrument or a written agreement makes collection far easier.
• Assess whether the case is suitable. Is the claim documented? Is the debtor solvent? Is the claim not time-barred?

Frequently asked questions

What happens if I ignore a collection claim?

The collection company will typically go on to the enforcement court. A payment order without objection can form the basis for attachment of your wages, account or possessions. In addition, you risk registration in a credit register, which can affect your creditworthiness for up to 5 years.

Can I negotiate an instalment arrangement?

Yes. Collection agencies are usually open to instalment arrangements, especially if you approach them yourself. Get the agreement in writing and keep to it, or collection can be resumed.

What is the difference between collection and a collection notice?

A collection notice is the written notice that, with at least 10 days' deadline, warns that the case will be sent to collection if payment is not made. Collection is the recovery itself. Without a correct collection notice, collection costs cannot be charged.

Can the collection company contact me at any time?

No. The Debt Collection Act and good collection practice set limits on how and when collection companies can contact debtors. They may not use improper methods or threaten steps that are not possible. A breach can be complained about.

Can I demand an itemised statement?

Yes. You can ask for a detailed statement showing the original claim, interest, reminder fees and collection costs separately. Always check that fees and costs are calculated correctly.

Summary

The collection process follows a clear chronology:

1. Due date without payment
2. Reminders (up to 3 fee-bearing reminders of at most DKK 100)
3. Collection notice (at least 10 days' deadline, in writing)
4. Collection with the claim, interest and collection costs
5. Possibly the enforcement court and registration in a credit register

As a debtor: pay quickly, or make a precise, written objection. As a creditor: follow the procedure carefully to keep the right to collection costs.

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The content of this article is for guidance only and does not constitute legal advice. Consult a lawyer for advice on your specific situation.