If you cannot pay a bill, immediately inform the sender of the bill about the circumstance and start negotiating for a new payment schedule.
If you pay a bill after the due date but before receiving a debt collection letter, the recovery costs must be paid if the creditor has, before you have paid the bill, carried out the collection processes on which the costs are based.
The law sets the maximum amounts for debt recovery costs and interest on late payments. The creditor can exceed the maximum recovery costs only if the debt collection requires an amount of work that is greater than can be normally expected. In a case like that, the creditor must give the details of the recovery costs and the reasons for them as well as inform the consumer that the costs are greater than the maximum amounts.
Payment collection process
1. Payment reminder (voluntary collection)
A payment reminder sent by the creditor creates an additional payment of € 5/reminder at most. The creditor is allowed to send
- the first payment-incurring reminder after 14 days from the bill's due date at the earliest.
- the second payment-incurring reminder, at the earliest, after 14 days has elapsed from the sending of the previous reminder.
A payment reminder does not cause a payment default entry in the credit history yet.Get into an agreement with the creditor about the payment period or payment plan
Make a complaint about the reminder you regard as unjustified
2. Payment demand (voluntary collection)
If the bill still remains unpaid after the creditor's payment reminder/s, the creditor might have transferred the collection to a professional collection body such as a collection agency that continues the collection process by sending a payment demand. Apart from collection agencies, professional collection activities are practiced mainly by law and accounting firms.
Recovery costs for a payment demand can be claimed only if at least 14 days has elapsed from the sending of the previous payment reminder or demand.
Normally, debt recovery costs can be claimed at most for two payment demands. Costs can be claimed for more than two payment demands only if there has been a special reason for sending them and the payment demand details the collection particulars and provides the special reason for sending those demands.
The recovery costs claimed from the debtor for the first payment demand can, at most, amount to:
- € 14, ifthe principal sum does not exceed € 100 or if the debt is directly enforceable (for example, a health centre payment for a municipality).
- € 24, if the principal sum is € 100 – 1 000
- € 50, if the principal sum is more than € 1 000
For the second payment demand, the creditor can charge at most a half of the maximum amount of the 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 can claim at most € 5 for a payment demand in its debt collection.
A payment reminder does not yet cause a payment default entry in the credit history. After a delay of 60 days, an unpaid consumer credit can cause a payment default entry in the credit history if the matter is specified in the 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.
Maximum amounts have been defined for the total costs of the debt collection concerning the same debt. The creditor can exceed them only if there are reasonable grounds to believe that the debt collection has been exceptionally difficult. The maximum amounts are:
- € 60, if the principal sum does not exceed € 100
- € 120, if the principal sum is € 100 – 1 000
- € 210, if the principal sum is more than € 1 000.
For the collection of a directly enforceable debt, the maximum recovery charge can be no more than € 51, which cannot be exceeded even if the debt collection were exceptionally difficult.Get into an agreement with the creditor about the payment period or payment plan
3. District court (legal collection)
If a bill remains still unpaid after a payment demand(s) has been issued and there is no agreement on the payment plan, the creditor or the collection agency may take the matter to court to obtain a verdict based on which the debt can be collected by competent authorities.
It is possible to bring an action for payment without any preceding voluntary collection measures. Nevertheless, if the receivable has been transferred to a professional debt collector, a written payment demand must be sent to the debtor before the case is taken to court for the payment.
N.B. The government's and municipalities' receivables and compulsory insurance payments are usually enforceable without a court decision. These include fines, taxes, municipal parking fees, traffic insurance payments, health centre payments and social services payments by the customers.
When the court sends you the document made by the creditor to institute the proceedings,
- you may ignore the document, in which case the court will order you to pay the whole debt amount.
- you may contest the case if you think the demand is baseless or unclear, for example if the amount is incorrect or you are not responsible for the debt. The court then processes the case as contested. In that case, it is required that you present soundly argued claims affecting the case.
- you may continue negotiating about the payment plan with the creditor or the collection agency concerned. However, at this stage it might not be possible any longer to avoid having a payment default entry recorded in your credit history, except by paying the debt in its entirety including the costs for the institution of proceedings and the court costs.
Court fees increase the amount of debt by € 110–240. The following lists the maximum court costs:
- for a debt below € 300, the basic rate is € 50 and the high rate is € 80
- for a debt between € 300 and € 1 000, the basic rate is € 80 and the high rate is € 120
- for a debt over € 1 000 or if it is a question of eviction, the basic rate is € 110 and the high rate is € 160
In addition, for the handling of the case, the district court will charge a court fee:
- € 60, if the details have been electronically transmitted to the district court
- € 80, if the details have been transmitted to the district court as paper document(s)
4. Enforcement (legal collection)
When the court issues a debt-collection ruling
- you will have a payment default entry recorded in your credit history
- debt enforcement may be initiated. In debt enforcement, the amount of income and property seized will be such that it will cover the debt payment. An enforced debt recovery is carried out from wages or property. The entire wage or salary of a person cannot be seized. Social subsidies, such as rent support, income support and child subsidies, cannot be garnished
- you will get a debt collection letter from the execution officer once the creditor has transferred the debt to the enforcement authority. Contact the officer and try to get into an agreement about a payment plan.
Examples of accumulation of recovery costs
Interest on late payments accumulates during the entire debt collection time
The interest on late payments is determined by the Finnish Interest Act. If the due date has been agreed on beforehand, the late-payment interest starts from the due date. In other cases, collection of interest can start after a month has elapsed from the time the agency has sent a bill or in another manner demanded the payment.
The amount of the interest on late payments is 7 percentage points higher than the reference interest rate communicated by the Bank of Finland. The general default interest rate is defined twice a year.
If the debt was taken out before the 1st of February 2010 and the interest on late payments is less than the interest agreed on the loan or credit, late-payment interest of the size of the loan interest will be collected for the delay period.
If the debt was taken out on the 31st of January 2010, interest of the size of the loan interest can be collected as a late-payment interest for a maximum of 180 days from the due date of the whole loan and, after that, no more than the amount of interest on late payments communicated by the Bank of Finland.Interest on late payments in accordance with the Finnish Interest Act.