How high can collection costs be? You occasionally read messages from people who have to pay hundreds of euros extra in collection costs. Is this allowed by law?
Many people are unfamiliar with the fact that anyone can start a debt collection agency. There are no legal rules for this. The serious agencies are affiliated with the trade association of the Dutch Association of Collection Companies (NVI). They adhere to certain rules of conduct and have a dispute settlement. A collection agency must always first send a written reminder letter. The reminder letter must state that you have 14 days to pay. The letter also states how much collection costs will be charged if payment is not made.
If you are unlucky, you will have to deal with a collection agency that is not affiliated with the industry association. These non-affiliated collection agencies are often less professional and sometimes require sky-high collection costs that should not even be imposed. These 'cowboys' do everything they can to intimidate you into paying the bill and they collect their commission from the client. Sometimes the amount of collection costs seems absurd, but beware: often it is correct and it is legally correct.
Costs for a small invoice
There are legal rules for collection costs. For small accounts up to € 266, a maximum of € 40 collection costs may be levied. So if you receive a letter from a collection agency that asks much more than € 40 while your debt to that one company is less than € 266, you do not have to pay. You must then send a registered letter to the collection agency that you want to pay but do not agree with the high costs.
Collection costs that can quickly add up
If your debt is higher than € 266 then you have to be careful because considerable costs can be charged. With a debt between € 266 - € 2500, 15% collection costs may be charged by law (!). A 10% fee may be charged on debt between € 2500 - € 5000. Imagine falling behind paying for your credit card. After a reasonable payment term and a letter of formal notice, the creditor may engage a debt collection agency. For example, if your debt is € 4000, € 2500 × 15% + € 1500 × 10% may be charged in collection costs. That is € 525 in this example. You may now understand why debt collection agencies go out of their way to put people to the test. When paying the debt, they have earned a hefty compensation.
Collection agency can seize?
A collection agency does not have the legal power to seize your income from home or household effects. The collection agency can propose a payment arrangement. If you cannot resolve it, they will probably take it to court (or the creditor will go to court). The court can impose a payment arrangement or appoint a bailiff. This bailiff has the legal power to seize all your affairs. This whole state of affairs will entail more costs. It is therefore important that problematic debts are dealt with on time. With a loan from the social bank it is possible to pay off all debts at once.
Have you moved and have you not given your address to the creditor? Then you should definitely watch out. The reminder letter is simply sent to the old address. You may not be available, but legally it makes no difference. If the collection agency finds out about your new address, they will immediately be presented with the bill with the high collection costs.