Creditor's rights to legal costs in the event of a payment demand in the enforcement court

This article describes your right as a creditor to be awarded legal costs when submitting a payment demand to the enforcement court. This is because you can order your debtors to pay many of the costs that arise from conducting a case in the enforcement court.

The legal basis

Section 316(1) of the Danish Administration of Justice Act sets out the rules for when a party is entitled to recover legal costs.

In the case of legal expenses, legal costs will be reimbursed at a reasonable amount. This means that the successful party will be reimbursed a portion of the actual costs of legal assistance.

For other expenses that are necessary to conduct the case, they will be reimbursed in full. For example, costs for documents and witnesses, etc.

The purpose of awarding costs is to ensure that the winning party does not suffer financial loss as a result of having to resolve a dispute in court. At the same time, it is to ensure that the losing party does not have to pay disproportionately high legal costs in a lost case.

More about the payment claim

The payment order is a legal procedure that allows creditors to demand payment of a debt from a debtor in a quicker and less costly way than litigation. When you as a creditor have tried to collect a debt unsuccessfully through traditional payment reminders and debt collection processes, you can submit a payment demand to the enforcement court. This can be done with the assistance of a Attorney. If certain conditions are met, you will be awarded legal costs at the enforcement court, which are determined according to recommended rates.

Also read our article on the debt collection process: "3 great tips on debt collection"

When can you be awarded legal costs for a payment demand?

You become entitled to the debtor's payment of legal costs at the time of the 1st endorsement by the enforcement court. In order for the 1st endorsement to be made, the following conditions must be met:

• The debtor must have been in arrears, i.e. not paid on time.
• The payment claim must be justified and the claim must be properly made with sufficient documentation.
• The debtor must not have objected to the payment claim or raised objections to the correctness of the claim.

The debtor is then obliged to pay the legal costs so that the creditor can cover its recovery costs.

How much money is awarded in a payment demand?

The size of the amount awarded depends primarily on whether the debt is recovered through third-party or self-collection. Self-collection is when you as a creditor collect the amount owed yourself. Conversely, third-party debt collection is when someone other than the creditor collects the debt on their behalf (e.g. an external Attorney).

In addition, the amount of costs awarded depends on the amount of the principal.

Below is a table of the currently applicable indicative rates for payment orders for third-party debt collection.

The above amounts do not include court fees, which for payment orders currently amount to DKK 750 + any supplement for legal fees. This amount is added to the awarded legal costs.

This means that if you, as a creditor, recover a claim of DKK 60,000 by third-party debt collection, where a payment order is issued, you are entitled to DKK 3,870 in legal costs, including court fees in legal costs + any supplement for legal fees, if the payment order receives a first endorsement.

Need help with your debt collection process?

As a business owner, it is important to be in control of your debt collection process. By choosing Clemens Advokatpartnerselskab as your debt collection partner, you ensure that you charge the debtor the costs that are possible. You can also save money by planning a smooth debt collection process. If you would like more information, please feel free to contact us.