If a direct debit is rejected due to insufficient funds in the account, consumers must bear the costs of collecting the outstanding claims. We give tips for your own management of outstanding receivables.
The most important thing in brief:
- If there is a payment date in an invoice or for regular payments, a debt collection request can come directly without payment.
- The debtor may have to cover the costs for this.
- Tip: Check your account balance regularly and make sure you have enough credit.
Will I immediately be in default if a direct debit is rejected?
If a direct debit is rejected, for example after refueling or shopping, because there is not enough money in the account, you will automatically be in default of payment. You then generally have to bear the costs incurred for collecting the outstanding claims. There is no need for a reminder to pay beforehand.
You then risk receiving mail from a debt collection agency – often with horrendous fees. You may be charged the costs of the debt collection agency and the bank's costs for the return debit.
Because you agreed with your signature on the direct debit receipt that the direct debit can be honored and you are aware that the account must be adequately funded, most courts believe that you are immediately in default of payment. This also applies to direct debits that are issued, for example, to energy suppliers or telecommunications providers for monthly debits for electricity or gas payments or telephone bills. Here, too, you must expect a debit and ensure that your account is funded in good time.
Will I receive a reminder beforehand if I pay by invoice?
If you buy on account or receive an invoice from the tradesman, you will receive usually a reminder firstbefore you fall into arrears due to late payment. Payment is only made on time if the creditor has received the amount of money within the payment deadline.
For transfers, the date of crediting to the recipient account is generally decisive. However: If the invoice already stated when the invoice is due and the consequences of late payment, you as the debtor will be in default without a reminder no later than 30 days after receipt of the invoice or the due date.
When will I be in default without a reminder?
If a calendar date has been agreed upon by which you must pay the claim, no reminder is required. This is the case, for example, with rental agreements. If you do not pay on time, you will be in default from the day following the last day of the payment deadline. If the rent has to be in the landlord's account by June 3rd, you will be in arrears from June 4th if the money is not received.
When are companies allowed to use a debt collection agency?
It is not clearly regulated when a provider can pass on a debt directly to a debt collection agency without prior warning and charge you the costs for this. On the one hand, the legislature has stipulated that a creditor is entitled to compensation for “damage caused by default,” which may also include appropriate fees from a debt collection agency. If no reminder was required for the default, the consumer must then also pay the collection costs incurred after the default occurred. Because these are then part of the damage caused by delay.
On the other hand, the code also sees creditors as having a duty to prevent the additional costs from becoming disproportionately high for you as a debtor. That's why the North Rhine-Westphalia Consumer Center demands that providers first send their customers at least one reminder before calling in an expensive debt collection agency. Many providers do this too. But this is not the law. If there is a delay in payment, consumers currently have no means of fundamentally defending themselves against payment of the collection costs. Only the level of the costs is then vulnerable.
Check your account balance regularly
A regular check of account transactions is a good way to prevent collection costs. Standing orders, direct debits issued and expected debits when paying by card should always be in line with the current credit on the account balance. Otherwise, you risk direct debits being rejected if the account does not have sufficient funds.
Be particularly careful at the end of the month when the credit is running low and regular debits, such as the electricity bill, are still pending. Even if there is still a remaining balance in the account, banks may not honor small direct debits, for example for a purchase in the supermarket. This ensures that you can debit your account fees.
