Debt Collection in Finland

The principles of good collection practices are defined in the Debt Collection Act (in force since 1999). According to this, it’s strictly forbidden to jeopardize the debtor’s privacy protection, provide incorrect information regarding the aftermaths of the failure to pay the debts, or cause unnecessary expenses and difficulties to the indebted.

Below, our Finnish lawyers explain the debt recovery process. You can rely on us if you need support in collecting a debt.

Debt collection procedures available in Finland

There are two methods to collect a debt in Finland:

1. the amicable procedure;
2. the court proceedings.

The process usually begins with the amicable one, as prescribed by the legislation. Our debt collection lawyers in Finland are at the service of clients who need support in starting the recovery of any outstanding amount of money.

Types of debts that can be chased in Finland

Both natural persons and companies can have debts at a certain moment in time, so the following ones can be recovered in Finland:

• consumer loans;
• credit card debts;
• credits obtained from non-financial institutions;
• commercial debts;
• business loans in the case of Finnish companies;
• unpaid bills and invoices.

 For each category of debtor, specific measures can be imposed. You can cooperate with our Finnish law firm for guidance on the suitable approach.

Amicable debt collection in Finland

The procedure of debt recovery in Finland begins with a notification that is sent after the due date (a reminder fee may be charged only if it is sent at least 14 days after the due date). The notification must state the name and the address of the creditor, the reasons why the notification was sent and the due amount, the address where the payment can be made and the due date for this payment, details regarding the contact person if the debtor has questions, debt collection charges, and the deadline for submitting observations.

At least one payment reminder must be sent, and 14 days must pass, before a demand for payment can be issued. In the last reminder, the creditors must state the consequences of the non-payment, including the fact that a debt collection agency will be contacted.

Debt recovery through specialized agencies

If the above measures have no effect and the debtor refuses to pay, the creditors are advised to contact a debt collection agency, which will provide all the support necessary in order to recover the amount.

First of all, the agents are sending a notification to the indebted containing the name of the creditor and details regarding the debt collection agency, the reasons why the notification was send, information regarding the receivables (including the capital, interest, interest on arrears, collection expenses and their total amount), the modality of payment and the recipient of the payment, the modality of submitting observations and the person in charge with receiving it.

Skipping the amicable debt collection procedure

There are cases where the amicable process is skipped altogether. This is the case of creditors that use the services of debt collection agencies, or of public receivables that are directly enforceable by the National Enforcement Authority without a court judgment. This usually occurs when the creditor has tried to reach the debtor several times without a response. Even in this case, the agency is required to send at least one payment warning before taking the case to court.

In Finland, this is usually the case of:

• insurance premiums;
• unpaid hospital fees;
• state daycare and healthcare fees;
• parking tickets.

Our Finnish debt collection lawyers can help you if you are in this situation and want to file a petition with the nearest district court.

Court proceedings

If the above steps have no success, a legal debt collection procedure may begin in Finland if the creditors agree with this. The legal debt collection is initiated by the debt collection agency or by a law firm by sending a complaint to the district court. The decision taken by the court must be applied immediately, and if the debtor is still not paying the amount, it is transferred to execution. During the execution, all the debtors’ assets are used in order to cover the debt, the collection expenses, the execution fees and other legal expenses.

The debtors must be aware that if they refuse to cover the claims, besides the due amount, other expenses can be added, such as the debt collection expenses, interest on arrears, and court costs.

We also have a video on this subject below:

Overdue interests

Not paying debts implies incurring overdue interest. They are calculated in accordance with the Interest Act (633/1982) ,which states that the amount due for late payments starts from the respective date onwards. There are also cases where the overdue interest starts 30 days after the payment warning was sent to the debtor.

Here are the payable rates, or how they are established:

• 7 percentage points above the reference rate confirmed by the Bank of Finland (8 points in commercial contracts between businesses), which is calculated on a biannual basis;
• in the case of debts that arose prior to February 1^st, 2010, and the overdue interest is lower than the interest of the loan, the rate will be the same for the outstanding amount and be collected starting with the delay period;
• in the case of debts incurred after February 1^st, 2010, the interest can be collected for 180 days from the due date of the loan at most.

Our accountants in Finland can offer information on how interest rates are calculated in this case.

We also have immigration lawyers in Finland, should you want to move here. The Immigration Service makes decisions regarding the acquisition, maintenance, and loss of Finnish citizenship as defined by the Act, as well as the assessment of citizenship status. If you need guidance on obtaining or retaining your Finnish passport, you can rely on our lawyers, who have extensive experience in immigration cases.

In case you need assistance in this matter, do not hesitate to contact our team of Finnish lawyers.