It is very annoying if you provide a service or product to someone and this person does not pay. Many companies experience this too. That is why they often engage a collection agency. They then try to collect the outstanding debt on their behalf. This is always associated with additional costs and the customer may even have to go to court. More and more companies are turning to a debt collection agency. This is because the number of people who do not meet their financial obligations is increasing significantly. This is partly due to the Credit Crisis, but this trend was already visible before then. Companies also turn to the collection agency for increasingly smaller amounts. Some do it for just a few tens of euros. There is no legal limit that regulates when a company can engage a collection agency. However, the agency may only charge additional costs after the first payment term has expired.
Hire a collection agency
Dozens of debt collection agencies are active in the Netherlands. Not all of them have an equally good name. This is because some charge far too high costs. The maximum amount of costs a collection agency may charge is determined by law. This also depends on the amount of the outstanding debt. Usually, a collection agency may charge a maximum of approximately fifteen percent extra of that debt. However, many people do not know this and are so shocked by the letter from the collection agency that they pay the entire amount. Collection agencies also often threaten with seizures, but according to the law they are not allowed to do that at all.
Industry organization of collection agencies
In the Netherlands, approximately 25 debt collection agencies are affiliated with the Dutch Association of Debt Collection Companies (NIVO). This is the trade organization for debt collection agencies. Agencies affiliated with this company are also accountable for the fact that they must adhere to the rules. NIVO also issues a special quality mark to agencies that it believes comply with the rules.
Collection agency approach
There are also many debt collection agencies that first try to get the customer to pay in a friendly manner. Companies do this because they also benefit from maintaining a good customer relationship. That is why the customer usually initially receives a warning that a collection agency is being contacted. If the customer has not yet paid, a few letters will usually follow, including additional administration costs. Many debt collection agencies eventually go to court if a customer still does not pay. This only happens in about fifteen percent of the cases. For amounts up to five thousand euros, the case will be brought before the subdistrict court judge. This means that the client does not need a lawyer to defend himself.
Difference between bailiff and collection agency
Many debt collection agencies work on a ‘no cure, no pay’ basis. This means that if they fail to collect the money, they do not have to be paid. The collection agency often settles for the additional administration costs charged, so that the claimant can still receive the entire purchase amount. The difference between a collection agency and a bailiff’s office is essential. Many people are mistaken about this. A bailiff can actually seize someone’s belongings after a court decision, while a collection agency has no legal status and no coercive measures.