Payment order and debt-collection letters: how to react

In short: Never ignore a debt-collection letter or a court payment order: check the claim, use the deadlines and object in writing if it is wrong.

In more detail: Someone who thinks they are owed money first sends reminders, then often a collection agency, and finally can apply for a court payment order (Mahnbescheid). Each stage has different consequences, and only the payment order has a short, hard deadline.

In Depth

Collection letters

A collection agency is not a court and can enforce nothing. Still check: who claims what for (invoice, date, contract)? Is the main claim right? Are the collection costs reasonable (caps under the Legal Services Act and the Lawyers’ Fees Act; excessive fees can be challenged)? Serious agencies state the client, the reason for the claim and a cost breakdown. Unjustified claims: dispute them in writing; avoid paying under pressure.

Court payment order

It arrives by yellow letter from the local court (dunning court) and is not checked on the merits. You have two weeks from service to lodge an objection (form enclosed, online possible). Without an objection the creditor can obtain an enforcement order; then only an appeal remains (again two weeks), after which enforcement threatens (wage garnishment, account seizure). If you object, a court decides in a dispute. Objecting to a justified claim creates costs; against a false claim it protects you.

What you can do

1. Stay calm, note the service date, enter deadlines in a calendar.
2. Collect documents (contract, invoices, reminders, proof of payment).
3. Check limitation: many claims expire after 3 years at year end.
4. Get advice: consumer advice centre, debt counselling (free at recognised bodies), a lawyer. Legal aid for advice exists for low incomes.
5. Part payments or instalment plans only in writing and after checking. Sign nothing that contains an acknowledgement of debt if you are unsure. This article is not legal advice.

See also: Default interest and reminders, Limitation periods in everyday life, Garnishment-protected account