17. June 2014
In file sharing cases in Germany, it often occurs that internet connection owners receive threatening letters from debt collection agencies. If you have received a letter from a debt collection agency, don’t panic! Here are some tips on what to do.
How a debt collection agency operates
In file sharing cases in Germany, it often occurs that internet connection owners accused of infringing German copyright law refuse to pay the compensation sums demanded. In reaction, law firms regularly engage the services of debt collection agencies to chase up the alleged outstanding debt.
Typical debt collection letters (for example from Debcon GmbH) contain demands for payment of the outstanding compensation sum plus additional costs incurred by the debt collection agency, meaning that the total sum demanded is much higher than the original compensation sum.
Many people react to such debt collection letters with fear and panic and decide it best to submit to the claims. Unfortunately, this is not the best way to react to such a letter. Instead, recipients should simply forward the questionable letter to their lawyer.
The debt collection agencies often write directly to the accused internet connection owner, even if the person is already being represented by a lawyer. This is unusual as normally all communication should go directly to the lawyer. However, the debt collection agencies choose this unusual method in order to try and place the recipient under pressure.
It is often unclear from debt collection agencies’ letters whether the original copyright claims have been sold and transferred from the original law firm to the debt collection agency. This means there is often uncertainty as to who is claiming and what exactly they are claiming.
The important thing to remember is that the legal position has not changed. The claims are still unjustified, even if they now come from a different entity. Individuals who receive debt collection letters should not give in to the demands.
Not only are the demands unjustified, but engaging a debt collection agency in the first place, is unjustified. Chasing demands for payment is an integral part of a lawyer’s job. A lawyer who engages a debt collection agency unnecessarily creates more costs and therefore infringes their duty to mitigate the damage. In such cases, the costs for engaging a debt collection agency should not be passed off onto the internet connection owner.
A somewhat surreal situation is that debt collection agencies may then engage a lawyer to obtain a court order for payment.
Recipients of such a court order for payment should lodge their objection to the claims before the deadline expires. If the claims are not contested, default summons proceedings will be commenced.
If an objection to the claims is lodged, it is highly likely that the debt collection agency will nevertheless continue to send payment demand letters.
It is often the case that the sums demanded will vary from letter to letter. Whereas the first demand for payment may contain a total sum of €2000, a third letter may offer a settlement amount of €400.
This simply shows that debt collection agencies are not interested in upholding the original claim. Instead they simply want to convince individuals to pay unjustified sums.
In addition, where individuals eventually do decide to reach a settlement, the debt agency and the lawyer engaged to seek a court order for payment often both denying responsibility for the case and thus make settlement a less than attractive option.
Debt collection agencies also regularly threaten individuals with a negative credit rating entry (a so-called Schufa entry) if the demands for payment are not met. Such threats are illegal. In the case of a disputed debt, a Schufa entry may only made if a legal binding judgment regarding payment has been obtained. According to the county court in Plön, individuals who dispute the debt claim even have a right to seek an injunction to prevent a Schufa entry (case ref. 2 C 650/07).
Individuals who receive letters from a debt collection agency should send them directly to their lawyer. The lawyer can then inform the debt collection agency that the individual is legally represented and that any further letters should be sent directly to them. The lawyer will then check the claims to make sure they have not exceeded the time limit and where necessary continue to refute the claims.
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