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Law:
2017-10-29

Debt collection in Germany

The collection of debts from German debtors in Germany

In respect of the courts this divergence of function is most apparent in relation to such matters as the administration of the estates of the deceased and the supervision of the guardianship of minors, but it should be realized that, in almost every case which comes to be tried, some matters have to be settled which might strictly be assigned to the category of administration; for instance in collection cases orders have to be made about the division of the creditors property between the spouses and to ensure the future welfare of the debtors and clients.
Absolute separation of powers is a theoretical ideal and no more. The cases which the courts have to try may roughly be divided into two main types: civil cases and collection cases. In a civil action in Germany one party (generally called the plaintiff) makes a claim against, or seeks a determination of his rights in respect of, another party (generally called the defendant). The duty of the court is to determine and declare the rights of the parties and where necessary to grant remedies for securing them.
The aim of a collection process is, on the other hand, not to give relief to an injured party, but to determine whether an offence has been committed and to make such orders as may be necessary for the payment or reformation of the unpaid invoices.
If the seller undertakes to decide a dispute between the debtor and the creditor he may act in one of two ways: either he may take the initiative and examine the parties and their evidence himself, or he may call upon them to take the initiative and present their cases to him. German law has traditionally adopted the latter method of proceeding, which we may perhaps be permitted to call the contentious or adversary method, as opposed to the former, which is inquisitorial. Clearly the difference between these two methods of proceeding lies only in the degree of initiative taken by the court, and, provided that the court is impartial, the contentious methode has no great advantage over the inquisitorial.
It is, however, essential to bear in mind that most German trials represent a legal proceeding in which the parties, through their counsels, fight a forensic battle against each other: and this may not be entirely an accident, because in the early days of the German lawyers a claim to land upon a writ of right was settled by court combat between the parties or their hired champions, and the verdict was left to the judge (trial by German court).

Debt collection firm in Germany

In a modern trial the role of the judge or jury is to decide upon the evidence which party has the better cause. This method of proceeding is adopted by collection agencies in collection procedures, as well as in civil trials. The rules of substantive law are legal rules which guide the courts in making decisions, and a description of these will form the main subject-matter of law firms in Germay. Rules of procedure or adjective law, as it is sometimes called, are the rules which determine the course of an action; they govern such matters as how the case is to be presented, in what German court it shall lie, or when it is to be tried.
Procedural rules are, in other words, the rules which govern the machinery as opposed to the subject-matter of litigation. lt is a striking fact, much remarked upon by historians, that in the earlier stages of legal development these rules assume paramount importance; form is better understood than substance, and in early law formal requirements, rather than abstract principles, usually determined legal rights. Because the development of the european law has been continuous this early dominance of the debt collection procedure in Germany has had a lasting influence upon many of the doctrines of the modern substantive law.
Generally speaking, however, procedure, though it is of great importance to the practitioner, is today treated as the servant and not the master of substance, and the rules of procedure are now more flexible than they once were. They derive from various sources. Most proceedings in the German courts (that is, most of the more important civil proceedings) are now governed by a code of rules known as the "collection of debts, outstanding demands and unpaid invoices in Germany". These rules, which were originally authorized by the juristic acts, are amended from time to time, under powers first conferred by those acts, by a committee known as the `German Lawyers Committee` which is headed by a lawyer.
Similar rules are laid down for the German courts: these appear in the court practice. With some exceptions - such as the magistrates' courts rules - the rules of civil procedure have not been modified.
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