2026-07-15

Debt collection and encashment

An important field of activity of the German lawyers is the encashment of claims.
In this connection, they are specialised as much in the assertion and the implementation of claims of foreign clients in Germany as in there alisation and collection of open claims of companies and private persons in Europe. Primarily, they enforce claims judicially, accomplish various forms of debt collection and enforcement measures in Germany and then manage the entire legal process on behalf of the client. This includes the money squeezing procedures of movable properties as well as of real estates, to the point of purchasing the assets by execution or sequestration and the resale in the name of the debtor. In case of measures of forced sales in Germany, they arrange the collection and cashing of claims. Unlike collection agencies, they manage the outstanding receivables by their own law-firm. They handle an entire collection process including enforcement, litigation and out of court compromise agreements or settlements.
The foreign creditor can rely on the experience in telephone collections. The employees of the law firm will track down the debtor by phone to expedite the collection process. There is no better way to capitalize all outstanding receivables: a debt collection process should always be managed by legal experts.

Example:

The plaintiff requested that the defendant be ordered to pay the balance of the price, as well as late payment penalties calculated beginning on October 29, 2025, until the date the action was filed and continuing until actual payment, representing the amount of bank interest the plaintiff paid on foreign-currency loans taken out to perform the contract.
According to German law, the debtor of a debt on which interest or a yield is payable may not, without the creditor’s consent, apply a payment made toward the principal in preference to the yield or interest. The courts, in upholding the plaintiff’s claims, misapplied the provisions of the Civil Code, which do not apply to relationships between merchants, as the penalty for failure to fulfill contractual obligations is the payment of penalties, not interest, given that (during the course of the litigation) the defendant paid the debt.

Information

Most clients want more information about debt collection, and it is obvious that a party to a contract who has performed his obligations will be discharged from further liability. He will also normally be discharged if he makes a valid offer (or 'tender') of performance which the other party rejects. Mere tender of a money debt will not, however, operate as a discharge.
In order to escape liability a debtor must show, not merely that he tendered the correct sum upon the date on which it was due, but also that he was ready and willing to pay up to the time that the creditor brought his action for the recovery of the debt.
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