Unpaid invoices and outstanding debts can disrupt business operations and create financial uncertainty. Debt collection in Germany can be particularly challenging for international businesses and individuals unfamiliar with local legal procedures. Whether you are seeking to recover debts from German companies or enforce a foreign judgment, understanding your rights and the available legal options is essential.
At Schlun & Elseven Rechtsanwälte, our experienced debt collection lawyers in Germany comprehensively support creditors worldwide. As a full-service law firm, we leverage the full range of legal instruments to assert our clients’ rights efficiently. Whether they need assistance recovering debts or defending against claims, our team is here to guide them through the complexities of German debt collection law.
Legal Services for Creditors in the Debt Collection Procedure
The Pre-Action Phase
In Germany, debt collection typically begins with a formal demand letter (Mahnung) informing the debtor of the outstanding debt and requesting payment within a specified deadline. This letter should clearly state the amount owed, the claim’s legal basis, and potential consequences of non-payment. Under German law, a creditor must generally issue a demand before initiating legal proceedings.
If the debtor fails to respond, negotiations may provide an opportunity to resolve the matter without court involvement. Settlements can help avoid lengthy litigation and preserve business relationships. However, if no agreement is reached, creditors may proceed with legal action, including obtaining a court order for payment (Mahnbescheid) or filing a lawsuit.
At Schlun & Elseven Rechtsanwälte, we support international creditors in Germany by taking proactive steps to enforce their rights under German debt collection law. Our firm is dedicated to guiding international creditors through the pre-action phase with precision and efficiency, ensuring their interests are protected from the outset.
Debt Collection Legal Proceedings
If a debtor refuses to pay or disputes the claim, creditors may initiate formal legal proceedings in Germany. This process typically involves filing an application for a court order for payment (Mahnbescheid) with the competent local court (Mahngericht). Once submitted, the court serves the debtor with the order, granting them a deadline to respond.
If the debtor objects (Widerspruch), the case proceeds to litigation, requiring further legal arguments and evidence. If there is no objection, the creditor can request an enforcement order (Vollstreckungsbescheid), allowing them to proceed with debt enforcement measures. Court proceedings require proper documentation, including contracts, invoices, and relevant correspondence.
Enforcement Measures Available in Germany
Once a creditor obtains a legally binding judgment, various enforcement options are available under German law:
- Garnishment of Wages or Bank Accounts (Pfändung): Creditors can seize funds directly from the debtor’s salary or bank accounts through a court order.
- Seizure of Assets (Zwangsvollstreckung): Immovable and movable property, such as real estate or vehicles, may be seized and liquidated to satisfy the debt.
- Other Enforcement Measures: Creditors may request information on the debtor’s assets, compel third parties to pay the debt, or initiate public auctions.
Foreign creditors may also enforce judgments obtained outside Germany, provided they meet recognition requirements under international agreements or EU regulations.
Enforcement Measures for Creditors under German Law
Recognition & Enforcement of Foreign Judgments in Germany
Creditors seeking to enforce a foreign judgment in Germany must first determine whether it is legally recognised under German law. The European Regulation on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters (Brussels I Regulation Recast) simplifies the recognition process for judgments from EU member states. Under Article 36, a judgment issued in one EU country is automatically recognised in others without requiring a special procedure.
Recognition of judgments from non-EU jurisdictions falls under § 328 German Code of Civil Procedure (ZPO). A key requirement is reciprocity, meaning that if the foreign country does not recognise German judgments, German courts are unlikely to recognise judgments from that country. Additionally, the judgment must not violate fundamental principles of German law, such as due process rights.
Default Actions
If a debtor fails to respond to legal proceedings within the specified timeframe, the court may issue a default judgment (Versäumnisurteil) in favour of the creditor. Governed by § 688 ZPO, a judicial order for payment (Mahnbescheid) provides a streamlined alternative to formal litigation, allowing creditors to enforce monetary claims without a detailed statement of claim, oral hearings, or evidence submission.
A default action is often pursued when the creditor expects no objection from the debtor. The application can be submitted online, reducing costs and expediting enforcement. However, the debtor has the right to object within:
- Two weeks from service of the payment order (§ 692 (1) No. 3 ZPO).
- One month if served abroad (§ 32 (3) AVAG).
If the debtor objects within the deadline, enforcement is halted, and the case moves to ordinary court proceedings (§§ 696, 697 ZPO). If no objection is raised, the creditor may obtain an enforcement order (Vollstreckungsbescheid) to proceed with debt collection measures.
Debt Restructuring
Debt restructuring in Germany allows creditors to recover outstanding debts from companies experiencing financial distress. Under German insolvency law, restructuring measures can help creditors maximise debt recovery while avoiding the debtor’s complete insolvency.
Creditors may engage in the following debt recovery strategies:
- Consensual debt restructuring – Negotiating new repayment terms to secure partial or full payment.
- Financial recapitalisation – Encouraging liquidity improvements through asset restructuring or third-party investment.
- Formal insolvency proceedings – Participating in court-supervised processes, such as protective shield proceedings (Schutzschirmverfahren) under § 270b InsO, which allow businesses to restructure while continuing operations.
Creditors can secure better repayment conditions by actively participating in debt restructuring, maintaining business relationships, and mitigating losses.
Legal Protection for Debtors
Debtors have legal protections against enforcement measures, ensuring fair treatment under German law. These protections aim to balance creditor rights with debtor safeguards. Key protections include:
- Challenging enforcement orders (§ 766 ZPO) – Debtors may dispute enforcement actions if they believe they are unjustified.
- Opposing asset seizures if disproportionate (§ 803 ZPO) – Enforcement must be proportionate, ensuring debtors retain essential assets.
- Filing objections in court against wrongful enforcement (§ 767 ZPO) – Debtors can contest enforcement if the underlying claim is invalid.
- Asserting third-party claims to protect non-debtor property (§ 771 ZPO) – If assets belong to a third party, they can challenge their inclusion in enforcement actions.
If a debtor is insolvent, enforcement proceedings are halted, as insolvency law prioritises equitable distribution among creditors. In such cases, debtors may also apply for personal insolvency proceedings, which provide a structured repayment plan and, ultimately, debt discharge.
The Role of Schlun & Elseven in the Debt Collection Process
At Schlun & Elseven Rechtsanwälte, we provide international creditors with comprehensive legal support to enforce debt collection and enforcement rights under German law. Our team combines legal expertise with strategic planning to recover outstanding debts efficiently through negotiation, litigation, or enforcement actions.
We assist creditors in the following key areas:
- Legal Guidance – We offer clear advice on creditors’ rights and obligations under German debt collection law, outlining procedural steps, available legal remedies, and potential obstacles to enforcement.
- Representation & Negotiation – Our lawyers represent creditors in negotiations with debtors, ensuring enforceable settlement agreements that prioritise debt recovery. We also provide assertive representation in court proceedings and enforcement actions if litigation becomes necessary.
- Strategic Debt Recovery – Each case is assessed individually to develop a structured legal strategy that maximises recovery while mitigating risks. We advise on the most effective enforcement measures, from securing payment orders to asset seizures and garnishments.
By ensuring full compliance with German legal procedures and leveraging our expertise in cross-border debt collection, we streamline the recovery process for international creditors. Whether pursuing amicable settlements or enforcing judgments, our team is committed to safeguarding creditors’ interests and securing outstanding claims efficiently and with legal precision.
Frequently Asked Questions: German Debt Collection and Enforcement Law
Foreclosure always begins with the creditor obtaining a legally enforceable title. Out-of-court collection proceedings and court dunning proceedings usually precede this. The exact procedure depends on the respective enforcement measure.
Enforcement, the last resort for debt collection, occurs when all previous requests and warnings have been unsuccessful. After receiving the enforcement order, the creditor can initiate measures such as asset seizure, wage garnishment, or a foreclosure sale to enforce their claim.
The enforcement order is the necessary legally binding document that gives the creditor the right to initiate enforcement measures against the debtor.
The enforcement order is a public document that certifies the creditor’s claim against the debtor. It is obtained when the creditor successfully completes legal proceedings, or there is another legal basis for the claim. The enforcement order must describe the parties and the nature and scope of the performance owed in detail. A notarized acknowledgement of debt on the debtor’s part may also constitute such an enforcement order, based on which the creditor can directly enforce the claim.
A legally enforceable enforcement order is a mandatory prerequisite for enforcement. The other requirements vary depending on the type of order and the enforcement measure applied (e.g., whether enforcement is against movable or immovable property).
The disclosure of assets is also an enforcement measure. It gives the creditor insight into the debtor’s financial and income situation. It can only be requested once the enforcement order has been issued.
In the asset disclosure, the debtor must truthfully disclose all relevant information and their entire financial situation (such as their employer, bank details, and a list of valuable items and real estate).
Providing asset disclosure has significant consequences for the debtor: They become uncreditworthy, and the entry of the asset disclosure in the debtor register can make it more difficult for them to find a job or apartment in the future.
Note: Asset disclosure used to be known as an “affidavit” or “declaration of disclosure.”
An amicable agreement should always be set out in writing to ensure legal certainty for both parties. It is important to define every detail precisely, especially the installment amount and due dates. It is advisable to have legal counsel present during the negotiations. This will ensure that the agreement is fair and legally binding.
The seizure of items, known as “Sachpfändung,” is carried out by a bailiff. The bailiff either takes the debtor’s seizable items with them or affixes a seizure seal (known as a “cuckoo”) to items that remain with the debtor to indicate that they have been seized. The items are then sold at public auction, and the proceeds are paid to the creditor.
Debtors can keep a certain amount for themselves, even in the event of foreclosure, to secure their livelihood. This is to ensure that they can continue to pay their rent and buy food, for example. The seizure exemption limit is currently €1,555.00 per month (as of 2025). This amount is adjusted annually on July 1.
Even before the actual foreclosure, both the creditor and the debtor should consult a lawyer. A lawyer specializing in foreclosure law will review the outstanding claims from a legal perspective and provide you with strategic advice on every further step. For effective foreclosure, it is crucial that possible measures and legal steps are initiated immediately and correctly.
Practice Group: German Debt Collection Law
Practice Group:
German Debt Collection Law
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