Debt & Collection — Dunning Procedures, Counseling and Personal Bankruptcy

Debt in Germany

Debts can accumulate quickly — through job loss, illness, or unexpected costs. In Germany, there are clear rules and free help.

Dunning Procedure — What happens with unpaid invoices?

1. 1st Notice (Payment reminder) — usually free
2. 2nd Notice — Setting deadline, possibly dunning fee (approx. 2–5 €)
3. 3rd Notice — final deadline, threat of collection/legal dunning procedure
4. Collection Agency: The creditor hires a collection agency — additional costs (collection fees according to RVG)
5. Court Dunning Notice: The district court sends a dunning notice — you have 2 weeks to object
6. Enforcement Order: Without objection → enforcement proceedings (garnishment)

Collection — Your Rights

• Collection fees must comply with attorney fee regulations (RVG)
• Unjustified claims: Raise objections in writing!
• Collection agencies must not threaten, harass, or deceive
• Carefully verify the claim — collection fraud is common (e.g., via email)
• Registration requirement: Legitimate collection agencies are registered in the legal services registry

Free Debt Counseling

If you have debt problems, you are entitled to free counseling:

• Caritas, Diakonie, AWO: Free debt counseling centers in every city
• Consumer Centers: Advice on debt and collection issues
• Municipal Counseling Centers: Through social services or job centers
• Online: meine-schulden.de (Caritas)

Counseling helps with:
- Getting an overview of all debts
- Negotiating with creditors (installments, partial forgiveness)
- Creating a debt settlement plan
- Preparing for personal bankruptcy

Personal Bankruptcy (Consumer Insolvency Procedure)

When debts become unbearable:

1. Attempt out-of-court settlement (with debt counseling)
2. If unsuccessful → File for personal bankruptcy at the district court
3. Good conduct phase: 3 years (shortened since 2020, previously 6 years)
4. Afterwards: Debt discharge — all remaining debts are forgiven
5. Garnishment exemptions protect your subsistence minimum (2026: approx. 1,491 €/month net for single persons)

Garnishment Protection

• P-Account (Protected account): Protects at least 1,491 €/month from garnishment
• Apply at your bank — free of charge
• Everyone is entitled to one P-Account

Important Tips

• Don't ignore notices — costs escalate quickly
• Debt counseling is free and confidential
• Personal bankruptcy is not failure — it's a legal fresh start

As of: March 2026. All information without warranty.