Collection of Monetary Claims in Germany and Switzerland – Negative Consequences of Debt Collection vs. Dunning Procedures and Options

From hauser@m-win.ch, +41 (52) 269 21 11

A debtor has been prosecuted (in Switzerland) or a debt collection procedure has been carried out (in Germany). What are the consequences for the debtor? And what can he do about it? We will give you an overview of this.

The German dunning procedure, §§ 688 ff. ZPO D

In the dunning procedure, the consequences initially depend on whether the debtor (respondent) has done nothing, has objected to the order for payment or has lodged an appeal against the enforcement order (or has lodged a late objection against the order for payment).

Respondent has done nothing

An enforcement order is issued which is equivalent to a default judgment declared provisionally enforceable, Section 700 Paragraph 1 ZPO D . The court costs advanced by the creditor and damages caused by default, such as lawyer's fees, are included in the reminder notice and thus also in the enforcement order and must be paid by the debtor.

The defendant lodges an objection against the payment order or an appeal against the enforcement order or an objection against the payment order too late:

The case is referred to the competent court ( Section 696, Paragraph 1, ZPO D; Section 700, Paragraph 3, Sentence 1, ZPO D). Court and legal fees are usually borne by the losing party.  

In addition to the costs that may arise, other consequences are conceivable, such as:

• The creditor may have the option of reporting to Schufa. Schufa is a provider of credit reporting and information services. It provides credit reports, which are required when granting loans or signing rental agreements, for example.
• Under certain conditions, the debtor can be entered in the debtor register (§§ 882b ff. ZPO D).

However, these are not special features of the dunning procedure.

If a debt collection procedure has been initiated without justification, it is conceivable that the debtor could take criminal and civil action against the creditor.

Swiss debt collection, Art. 38 ff. SchKG

Regardless of whether legal action has been taken or not, the debt collection is evident in the debtor's debt collection register extract. If this extract is presented to third parties, this can have negative consequences. For example, a landlord may decide to rent the apartment to someone else or it can lead to disadvantages when applying for a new job. The worst thing about it is that the debt collection does not even have to be justified to appear in the extract.

How do you get rid of an entry in the debt collection register?

This is evident, for example, from Article 8a, paragraph 3 of the Debt Enforcement Act, which regulates the cases in which third parties are not informed of debt enforcement proceedings, namely if:

1. the enforcement is void or has been annulled following an appeal or a court decision;
2. the debtor has been successful in an action for repayment;
3. the creditor has withdrawn the enforcement action;
4.  the debtor has made a request to that effect after the expiry of a period of three months from the service of the payment order, provided that the creditor does not provide evidence, after the expiry of a period of 20 days set by the enforcement office, that proceedings to remove the legal objection (Articles 79-84) were initiated in good time. If this evidence is subsequently provided or if the enforcement proceedings are continued, they will be brought to the attention of third parties again.

In addition, the right of third parties to inspect documents expires five years after the conclusion of the proceedings in accordance with Article 8a, paragraph 4 of the Debt Collection Act . However, judicial and administrative authorities may continue to request extracts in the interests of proceedings pending before them.

Other lawsuits and associated judgments can also result in a debt collection action having to be “deleted”. 

If the enforcement is a harassment enforcement, it may also constitute criminal conduct that can be reported. If damage has been caused by the harassment enforcement, civil action is also imminent.

If you have any questions or need support, please feel free to contact us.

I am interested (email to sekretariat@m-win.ch; we will get in touch)

Note: This article was published on our blog by the independent law firm « Martin Rechtsanwälte GmbH ».