Dunning notice

What is a dunning notice?

A dunning notice is an official document issued by the district court at the request of a creditor and delivered to the debtor. It serves to assert a claim and formally request payment.

Purpose of a dunning notice

1. Assert a claim:
   The dunning notice is the initial step in the judicial dunning procedure to enforce an outstanding claim.

2. Set a deadline:
   It provides the debtor with a two-week deadline to either settle the claim or file an objection.

3. Precondition for enforcement notice:
   The dunning notice is required to obtain an enforcement notice if the debtor does not respond.

Contents of a dunning notice

A dunning notice includes the following information:

• Details of the creditor and debtor: Names and addresses of both parties.

• Claim amount: The exact sum claimed, including interest and costs.

• Reason for the claim: A brief explanation of why the claim exists.

• Payment demand: A request to settle the claim within two weeks.

• Notice of objection rights: Information for the debtor about their right to object within two weeks.

What does it mean to receive a dunning notice?

Receiving a dunning notice is a significant legal step in the debt collection process initiated by a creditor. It signals that the creditor is officially asserting their claim and has begun legal action.

Implications of a dunning notice

1. Official payment request:
   It is a formal demand for payment of an outstanding claim.

2. Start of judicial dunning procedure:
   The process begins with the dunning notice, which could lead to an enforcement notice if ignored.

3. Deadline setting:
   The debtor has two weeks to pay or object to the claim.

Consequences of a dunning notice

1. Additional costs:
   Fees and expenses may be added to the original claim.

2. Legal action:
   Failing to respond may result in further legal measures, such as enforcement proceedings.

3. Creditworthiness impact:
   Being involved in a dunning procedure can negatively affect the debtor’s credit rating, as it may be recorded and visible to future lenders.

How should I respond to a dunning notice?

Receiving a dunning notice requires careful and timely action. Depending on the situation and evaluation of the claim, different responses are possible:

Possible responses

1. Pay the claim:

   • Full payment: Settle the claim in full within two weeks to conclude the process.

   • Partial payment or agreement: Negotiate a payment plan or deferral if full payment is not possible.

2. File an objection:

   • Timely objection: Submit a written objection to the competent court within two weeks if the claim is considered unjustified or incorrect.

   • Justification: While an objection does not require justification, documenting the reasons and seeking legal advice is recommended.

3. Do nothing:

   • Consider the consequences: Ignoring the notice allows the creditor to request an enforcement notice, potentially leading to enforcement actions.

Steps to take

Review the dunning notice

• Check the claim amount and justification: Ensure the claim is accurate and valid.

• Verify creditor and debtor details: Confirm that the information is correct.

Observe deadlines

• Two-week deadline: Respond within the mandatory two-week period.

Document actions

• Keep records: Maintain written documentation of all steps and communications for reference in case of a dispute.

What are the costs of a dunning notice?

The judicial dunning procedure involves various costs, including:

1. Court fees

• Fees for the dunning notice are determined by the claim amount (dispute value).

2. Costs for the creditor

• If the creditor employs an attorney, attorney fees may apply. These are regulated by the German Attorneys’ Fees Act (RVG) and also depend on the claim value.

3. Default interest

• The creditor may also claim default interest from the time the debtor was in default. The statutory default interest rate is currently 5 percentage points above the base rate.

Acting promptly can help avoid these additional costs. Paying the claim immediately or arranging an installment plan may reduce the overall expense.

Can I ignore a dunning notice?

Ignoring a dunning notice is not advisable and can lead to serious consequences:

1. Legal binding of the notice:
   If no objection is filed within the two-week period, the dunning notice becomes legally binding. This means the claim is considered acknowledged, allowing the creditor to proceed with further legal actions.

2. Enforcement notice:
   After the objection period expires, the creditor can request an enforcement notice. This has the same effect as a court judgment, enabling the creditor to initiate enforcement measures.

3. Enforcement actions:
   With an enforcement notice, the creditor can take steps such as wage garnishment, account seizures, or the seizure of assets, which can have significant financial and personal repercussions.

Can I file an objection to a dunning notice?

A debtor has the right to object to a dunning notice, allowing them to challenge unjustified claims. Acting quickly and correctly is crucial to protect one’s rights.

Key points for filing an objection

1. Objection period:
   The objection must be filed within two weeks of receiving the notice. Missing this deadline can result in legal disadvantages.

2. Form of objection:
   The objection must be submitted in writing to the competent court. Include the file number of the dunning notice to ensure proper processing.

3. Consequences of objection:
   Filing an objection does not automatically trigger a review of the case. The creditor must decide whether to continue the process, potentially resulting in a court hearing.