Our clients from abroad often ask the following questions:
Are there any recommendations for successful court proceedings?
It is very important to be able to support the court with written documentation and evidence like written order, confirmation of order, memos of telephone calls and meetings (meeting protocols) a.s.o. For that fully documentation of a business relation is to recommend, especially at the moment difficulties and misunderstandings occurs in business relation.
Furthermore it is important to present to the court all facts of the case in detail. It is not sufficient to argue at the court that a contract was concluded "sometime". Both parties are obliged to present specific details like: "On the 12th of november 2005 the witness Mr. John Doe, caribbean shade 123, Downing Road 24, 12345 London UK, has spoken to Mr. ... about the contract concerning ... " The court always asks: "Who, when, what, in which way".
In Germany documents are generally more important in court proceedings than any possible witness of an individual.
What is meant by out-of-court-proceedings in detail?
To avoid long lasting and event. unsecure court proceedings we will undertake all to come to a payment of your debtor without need of court proceedings. All our efforts to hit that target we call prejudicial or out of court proceedings.
Out-of-court-activities regularly involving to investigate the actual address and financial standing of the debtor, sending a dunning letter with a deadline for payment (within 8-10 days), correspondence with the debtor in written and by telephone, negotiations concerning an instalment agreement (if recommendable). Further on we check for information at different sources like trade register, internet databases, commercial agencies and resident's address registration office a.s.o..
What are the main problems in practice of debt collection?
To have all relevant and needed information to our disposal like documents, dates of legal events (cancellation, conclusion of contract a.s.o.), full name and postal addresses of witnessess and to find out the exact and actual postal address of the debtor. The address of the debtor is very important for service of documents to the debtor by the court. Often clients do not know exactly the legal identity of their contractual partner (a "GmbH", "GbR", "Ltd." a.s.o.)
Do we have to sign a special contract or agreement?
For our point of view it is not necessary to offer terms of business or sign an agreement because we think that we communicate our conditions very evident and they would be settled in our correspondence. But if you have a suggestion for an agreement please let us know what clauses you would like to have stipulated or send us a draft of an agreement.
What documents do you require?
For collecting the debt we need first of all the documents concerning the contract, invoice (s), dunning letter (reminder), event. credit notes, delivery notes, relevant pieces of correspondence with the debtor.
In simple and obvious cases the invoice and statement of account is sufficient.
It is very helpful for us if you send us a short statement of the development of the business relation and its crisis.
Do I have to send the original documents?
No, copies are sufficient. Please forward the documents by e-mail or facsimile.
Please send us the documents via e-mail (email@example.com, please no zip-, msg or rar-files) or fax 0049-22116844619.
In case of court proceedings it is eventually necessary to present an original document. Nowadays it is no problem to send it within 1-3 days if necessary.
Do you need a Power of Attorney, PoA (written proxy)?
More and more a proxy (power of attorney) from the client/creditor is needed on request of the debtor, of the bailiff and the courts. Especially we have to present a proxy
- to the bailiff: They do not pay money out if we do not have provided a PoA
- to the debtor: if we have to assert special rights for the client for instance rescission or cancellation of contract a.s.o.. We would like to suggest to request a proxy only if needed. In addition a court regularly do not ask a Lawyer for a proxy in court proceedings. We would like to suggest to require a POA only if needed.
Are there any fees on legal advice if I would win the case?
No, the legal advice itself is always included. In case of successful court proceedings we cover our fees by the debtor. It is our own interest to give you a well-founded assessment on the legal position to be able to estimate chances of court proceedings. Only your success is our success.
How much are the lawyer fees when taking legal action against the debtor?
German Law Firms are subject to the German Federal Law regarding Lawyers Fees called "RVG, Rechtanwaltsvergütungsgesetz". Success fees are not legal in Germany and law firms are legally bound to charge at the RVG. This scale of fees is binding by law. You can find here more here>>
But for sure it is possible to work without any retainer, to work on a hourly rate or to find a different individual agreement with the client. We will give you further details on your request.
What are the risks in court proceedings?
In Germany the risk of a law-suit is that the party who lose the lawsuit has to bear all costs of proceedings like court fees and the fees of the attorney of the counter party. The losing party will be ordered to pay the costs by the court. So the party defeated in a lawsuit has the risk to pay all costs and fees of court proceedings.
What is to pay for the court? How much do I have to pay if I lose the lawsuit?
In case our out-of-court activities do not lead to success the client has the option to engage our office for court proceedings. In case of legal action the court will ask for an advance payment for the court fees. Otherwise the court will reject each action. These costs cannot be paid by our office. By this the client has to provide us with an advance for the court fees. The court fees are related to a legal table. This scale of fees is binding by law. The amount depends on the sum in dispute (amount of the claim). You can find here more here>>
Furthermore it is to take into account that the debtor from outside the EG (non-european clients) could be entitled to claim for a deposit of security for costs of court proceedings. In that case the court can order to furnish a deposit to the court.
How long do legal proceedings take until I get payment?
Please note that in an average legal case the court should require around 3 - 5 months to pass a sentence (judgement). If the debtor does not pay voluntarily the judgment is to enforce by special proceedings (order to a bailiff, attachment of bank account a.s.o.) This could last further 2-3 months and depends on the fact whether the debtor is solvent or not.
Do I need to personally attend the court hearing?
In general it is not necessary to attend at the court hearing personally but regularly it is to recommend. The court can order that the plaintiff or a representative must attend but a release can be applied to the court. It is regularly not necessary that the client or a member of the company attends to the court hearing (depends on the judge), except it is necessary that an informed person should answer questions of the judge concerning details of the facts (like conclusion of contract, agreements, defects a.s.o).
How many hearings in court does it normally requires?
The courts in Germany are keen to perform only one court hearing, at the most 2 hearings (f.e. hearing of witnesses).
Are there any supplementary costs in court proceedings possible?
Yes, in case the court will order a hearing for witnesses it is to pay a sum for the service of the witnesses. Same in case the court will order an expert opinion (regularly more than 700,00 EUR!). If the judge need an expert evidence (f.e. concerning the applicable law, different allegations related to facts important to decide the case) the court requires advance payments for the expert expenses.
What are the possibilities to enforce a judgement in Germany?
The enforcement of a judgement itself is the matter of the creditor himself. There are different possibilities to execute a judgement for instance by order to a bailiff to execute the judgement against the debtor's property (seizure under execution), attachment of a claims of the debtor, of his bank account, of wages or to levy execution on different property of the debtor. Further on it is possible to force the debtor to compile a declaration of his assets - from "pocket money" up to real estate - in execution proceedings (affidavit of means). This schedule of property and assets is deposited ("registered") at the court.
We receive the information that the debtor has compiled a "declaration of his assets" resp. an "affidavit of means" at the court. What does it mean?
It means in fact that the debtor is probably not solvent anymore. It is possible to file an inquiry to the register of debtors at the competent court. If the debtor is registered as a debtor it means that also other creditors have forced the debtor to compile a declaration of his assets (from "pocket money" up to real estate) in execution proceedings (affidavit of means). This declaration of assets is deposited ("registered") at the court.
To be registered at the court regularly implicates that all efforts of other creditors to enforce a debt were in vain.
Registration at the court persists for a time-period of 2 years. All banks and other potential business partners or companies (up to catalogue companies, credit agencies) have access to this information.
In consequence the debtor is unworthy of credit and will not obtain any credit and is no more able to establish serious business connexions. Because of the serious consequences all debtors are regularly anxious to avoid this measure.
Further on it means that other creditors are prior and have probably tried to enforce in assets of value before. Because the debtor has to compile a list of all assets (from "pocket money" up to real estate) other creditors have already noticed all assets of value.
This registration indicates that it is improbable to succeed in enforcement of the debt after having achieved a judgement. Please note that this registration does not mean that it is definitely impossible to execute the judgement with success, but this is to assume with the utmost probability.
As I understand, it is rather difficult to recover any money from such a debtor. It means, that the best time for such an action will be after these 2 years.
Correct, excepting you or we receive new information about new business attempts of the debtor or assets he possesses.
Can he still run his business? Yes, but he will have problems to get money from the bank or credit from his business partners. What about if he will sell his assets? It is possible, if he had still assets. Can he incur new obligations or debts? Yes, it is not forbidden.
We are in possession of a local judgement and would like to enforce it in Germany? How it is possible?
All coercive measures require as a condition first the declaration of enforceability of the court judgement. An enforcement order in respect of foreign judgements is needed. The corresponding application is to file to the German court. Such an order (clause) is the requirement that a foreign judgement is enforcable in Germany.
The enforcement order is regularly an "additional order" of the court because in general an appeal or another legal remedy of the debtor is possible so that enforceability of a judgment can be excluded, restricted or provisional. This is to scrutinize.
We learned that the debtor is in bankruptcy proceedings and claimed for insolvency. In German Law how does this now affect my claim? If we go to court, what are your total charges all inclusive? What service will you provide? How long will it take?
For information to bankruptcy proceedings: more
In general we are able to check very fast whether a company is in bankruptcy proceedings by investigations in our databases.
In case bankruptcy proceedings are filed to the bankruptcy court it is not possible any more to sue against the debtor in court proceedings. Court proceedings would be interrupted by law by the end of bankruptcy proceedings. Furthermore early court proceedings would not have been successful because court proceedings regularly last 3 months in minimum and you regularly would have not been able to achieve a judgement and enforce it against the debtor before institution of bankruptcy proceedings.
The bankruptcy court appoints an attorney as the receiver in bankruptcy in the matter. From that time on he is leading proceedings and he has the competence to decide in all matters concerning developments in business and future legal form and existence of the debtor's company.
It is necessary to file a proof of debt to the receiver in bankruptcy (to file the claim to the list of creditors' claims). In a letter to all creditor's the receiver in bankruptcy/liquidator ask to file the claim to the creditor's list and set a time-limit. Anyhow, it is still possible to file the claim by the time the first meeting of the creditors is scheduled by the court.
The liquidator reviews the claims in detail und he has to approve them in legal regulated procedures. The ascertainment of the claim by the liquidator has the same effect as a judgement.
company and to continue business if possible. If it is not possible the company is to be commercialised resp. liquidated. The creditors will then achieve a rate (quota) of their claim related to the funds and assets still available, whereas according to experience the rate is often/usually very small (to average 5% of the debt in Germany).
To assert the claim in bankruptcy proceedings we need all relevant documents (esp. the invoices, delivery notes, credit notes, reminders, a.s.o., whereas copies are sufficient).
For working on the file we regularly charge a retainer fee (closed budget). Supplementary fees will only be charged if further activities apart from filing and conducting the claim until the end of proceedings (payout of rates) become necessary.
Furthermore a special proxy (POA) is needed in order to entitle us to file the claim for the client. You can find the proxy also on : www.debtcollectioningermany.com/contact.html. Please fill and undersign the form. We need the form sent by post (original).
Please note that bankruptcy proceedings often last several years but that the possibility of receiving any payment should not be omitted.
Can you inform if there are any problems in you retrieving the money as the contract is in English Law and not German?
In case court proceedings become necessary the German court possibly has to apply English Law because the contractual duties could be substantially affected by the English Law, if there is no specific stipulation about the applicable law or specific circumstances suggesting the applicabel law (using of general terms, language of contract, a.s.o.).
Therefore the situation could occur that the court intends to revert to an expert's opinion if the judge refuses to assess the legal position by himself even though a judge is under legal obligation to apply foreign law. It could be recommendable to explain and and set out the legal position to the court by - for instance - presenting a legal information of an English Lawyer (solicitor) which explicates the legal rules and stipulations and substantiate the contractual claim (what kind of contract, mutual legal obligations, right to claim for the price etc.). A simpel letter is sufficient. The question is, whether the facts substantiates a legal claim in UK (under English Law) too. An expert's opinion will increase the costs of court proceedings.
Our question is: what is the limitation period? Can we do something in this case? (Ekaterina from Russia)
According to German civil law claims are generally statute-barred after 3 years. To interrupt the running of the period of limitation it is necessary to initiate court proceedings before the 31.12. of every year at the latest. In case of limitation of action no further court proceedings are possible and excluded by law. To levy execution against the debtor's goods and property is not possible afterwards.
To be continued ...