Debt collection process

If you cannot pay an invoice or any other debt by the due date, tell the creditor immediately and negotiate a new payment schedule.

If you do not pay a debt by the due date, its total amount will keep increasing, as you will have to pay overdue interest  and the creditor’s reasonable recovery costs.

Recovery means both voluntary debt collection and legal debt collection. Payment reminders and demands sent by letter are examples of voluntary debt collection. Legal collection means recovery in court.

If you do not pay a debt by the due date, you will have to pay the recovery costs and overdue interest. The law sets the maximum amounts for debt recovery costs and interest on late payments. The creditor can only exceed the maximum recovery costs if the debt collection requires an amount of work that is greater than can be normally expected. In this case, the creditor must specify  the recovery costs and the reasons for them as well as inform you that the costs are greater than the maximum amounts.

  • Pay the invoice by the due date. When you receive an invoice, you have at least 14 days to pay it as a rule.

    Overdue interest may start accumulating straight after the due date.

  • If you do not pay the invoice by the due date, you will receive one or two payment reminders. *

    A payment reminder is usually a reminder invoice or other  notice from the creditor that the overdue debt has still not been paid. The creditor usually sends out one or two payment reminders.

    The first reminder for which you will be charged may be sent to you at the earliest 14 days after the due date. You may only be charged for the costs of sending a second payment reminder if at least 14 days have passed since  the first reminder was sent. At most EUR 5 can be charged for each written payment reminder.

    A payment reminder does not yet mean that you will have a payment default entry in your credit history.

    If you pay a debt after the due date but before you have received a debt collection letter, the recovery costs must be paid if the creditor has, before you have paid, carried out the collection processes on which the costs are based. However, the creditor cannot charge you for recovery measures taken after you made the payment.

    * Note! The creditor may start legal collection without sending any payment reminders at all.

  • If you have not paid the overdue debt after receiving the creditor’s payment reminder(s), the creditor may transfer the debt collection to a professional body, such as a collection agency. The agency will continue the collection process by sending you a payment demand.

    A payment demand may not be sent until the debt is overdue, you have been reminded of the debt, and at least 14 days have passed since a payment reminder was sent to you.

    Recovery costs related to a payment demand may only be charged if at least 14 days have passed from the date on which the previous payment reminder or demand was sent.

    A payment demand does not yet mean that you will have a payment default entry in your credit history. After a delay of 60 days, however, an unpaid consumer credit can result in a payment default entry in your credit history if this possibility is mentioned in your credit agreement. In addition, at least 21 days prior to that eventuality, the debtor must be sent a request for repayment in which that threat is mentioned.

    Recovery costs related to a payment demand

    The recovery costs charged for the first payment demand can be

    • at most EUR 14 if the principal amount is at most EUR 100, or the debt is directly enforceable (for example, a health centre fee paid to the municipality)
    • at most EUR 24 if the principal amount is more than EUR 100 but at most EUR 1,000
    • at most EUR 50 if the principal amount is more than EUR 1,000.

    The recovery costs charged for a second payment demand may be

    • at most a half of the maximum charges for the first payment demand.

    A collection agency sharing the same parent company with the creditor or using an auxiliary business name in the process may, when collecting its own debts charge

    • at most EUR 5 for a payment demand.

    Recovery costs can usually be charged for at most two payment demands.

    Recovery costs for more than two payment demands can only be charged if there has been a special reason for recovery measures and the recovery measures taken are not disproportional,  particularly considering the principal amount. The recovery measures must be specified, and you must be informed why there was a particular reason for the recovery measures.

    Read about payment arrangements

  • If you have not paid the debt after receiving the payment demand(s) and no new payment plan has been agreed, the creditor or debt collection agency may take the matter to the District Court to obtain a judgement based on which the debt can be collected by the enforcement authorities.

    It is possible to bring an action for payment without any preceding voluntary collection measures. If the receivable has been transferred to a professional debt collector, for example a debt collection agency, they must send you a written payment demand before a debt collection action is brought in the District Court.

    At this stage, the only way you can avoid a payment default entry is usually by settling the matter with the creditor.

    The government’s and municipalities’ receivables and compulsory insurance premiums are usually enforceable without a District Court judgement. Examples of these receivables include:

    • hospital fees owed to a municipality
    • day-care fees and other social and health care client fees
    • parking fines.

    Read more about the legal costs

  • When the court issues a debt-collection ruling, you will have a payment default entry in your credit history. *

    • You will have a payment default entry recorded in your credit history.
    • Debt enforcement may be initiated.

    * Note! In case of a loan, you may also get a payment default entry in other ways.

    More information about enforcement

Maximum amount for the total recovery costs

Maximum amounts have been set for the total costs charged for voluntary collection. Payment reminders and demands sent by letter are examples of voluntary debt collection.

These maximum amounts are

·       EUR 60 if the principal amount is more than EUR 100

·       EUR 120 if the principal amount is more than EUR 100 but at most EUR 1,000

·       EUR 210 if the principal amount is more than EUR 1,000

·       EUR 51 for a directly enforceable debt. Higher charges than these may not be charged even if the debt collection process is exceptionally difficult.

The creditor may only exceed these maximum amounts if the recovery process has been exceptionally difficult for a justified reason and the recovery measures are not out of proportion, particularly considering the principal amount. The recovery measures you are charged for must be specified and you must be informed of the reasons for charges that are higher than the maximum amount of recovery costs.

Your right to ask for suspension of recovery

To avoid unnecessary recovery costs, you have the right to ask that voluntary debt collection is suspended and that legal collection of the debt is started. When you have asked for suspension, the creditor may take you to court or apply for an enforcement.

After that the creditor can no longer send you collection letters for which you are charged, except for reminders and notifications that the creditor is required send to inform you of a payment default entry, to terminate the expiration period of the debt, or to otherwise preserve their rights.

You can ask for suspension if

  • the full amount of the debt is overdue
  • you make the request in writing or in a form that can be stored digitally.

If you have received an unfounded invoice or collection letter, see the instructions concerning an unfounded debt.

Overdue interest keeps accumulating during the debt collection process

If you do not pay on time, you will have to pay overdue interest. The interest on late payments is determined the Finnish Interest Act. If the due date of a debt has been fixed in advance (in a manner binding on the debtor), interest for late payment must be paid from the due date onwards.

Otherwise, the collection of overdue interest may start 30 days after the date on which an invoice or other request for payment has been sent to you. The invoice or other payment demand must state the valid rate of overdue interest and the date from which you will be charged interest. You do not have to pay interest before the creditor has informed you about the overdue interest.

The overdue interest rate is

  • 7 percentage points higher than the reference interest rate announced by the Bank of Finland. The general default interest rate is defined twice a year.
  • If the debt was taken out before 1 February 2010 and the overdue interest is less than the agreed loan interest, overdue interest equalling the loan interest will be collected for the delay period.
  • If the debt was taken out on 1 February 2010 or later, overdue interest equalling the loan interest can be collected for at most 180 days from the due date of the whole loan and, after that, at most the default overdue interest.

Read more