Iceland Debt Collection – No Win No Fee
Creditreform operates a global specialist International debt collections service. We have local offices and fully approved expert international debt collection agency partners in every country worldwide. All our International debt collection agency partners and offices operate on a No Win No Fee basis charging an agreed commission against monies recovered only. All our international offices and partners initiate the collection processes by sending the debtors a debt collection letter to introduce their involvement.
Main reasons why a local country debt recovery agency is so important rather than trying to recover from a debt collection agency UK are as follows:
The local International Debt collection Partners know:
- The local cultures
- The best methods of initiating debt recovery letters and processes
- The languages
- The laws
- Are in the same time zonesHerewith details of our debt collection service Iceland
Location of debt recovery office in Iceland?
Reykjavík. All debt collection letters are sent by the local head office.
Number of debt collection staff?
4 staff. Each staff member is allocated a client and all their debt collection letters are personalised in order to effect the best response results from debtors.
How long have you been operating a debt recovery service in Iceland?
What type of debt collection services do you provide? Do you do commercial debt recovery (B2B) and consumer debt recovery (B2C)?
We handle both Business to Business debt recovery cases and Business to Consumer debt collections cases. There is different content for business to business debt collection letter templates and business to consumer debt collection letters templates.
Statue of Limitation in Iceland?
The general rule is 4 years (commercial invoices etc.), however debt originating from a bank loan is 10 years and judgments 10 years, damages 8 years
How EU (European Union) laws effect debt collection in Iceland?
As members of the EEA we have to apply to most of it, we have implemented all the GDPR rules, but we do not have the European Payment order etc. but we are of course a part of the Lugano Convention from 2007 regarding the enforcement of judgment as between Iceland, Switzerland and Norway and all pre-2004 EU states plus Poland. 2007 Lugano Convention was ratified in February 2011 in Iceland and implements regulation EU 44/2001. The condition stipulated in reg. 44/2000 must be fulfilled. The EU judgment must be enforceable in the country of origin. An original of the judgment or a certified copy, with the Lugano certificate; an inscription from the relevant court in the country of origin/the relevant domestic Court where certified that the judgment is enforceable in the country of origin.
A notification to pay a debt that and a notification of serving must be served to debtor according to same formalities that apply to serving a subpoena. Then it is possible to apply to the District Court for a confirmation that the judgment can be executed in Iceland. The District Court needs a certified copy of the judgment, with the inscription that it is enforceable in the home state, together with a proof that a notification to pay the debt has been served to debtor accordingly.
How many companies registries in Iceland for businesses (i.e. UK has just 1 central registry)?
1 Official business registry ,”Fyrirtækjaskrá ríkisskattstjóra”
General comments regarding process in Iceland for debt collection and how differs from UK / other countries in Europe:
Perhaps not the process but the mentality. As it is considered costly to initiate legal proceedings here in Iceland, many are reluctant due to the cost risk. Debtors in Iceland are often very well informed and aware of that fact. As many creditors do not take the risk to initiate legal proceedings, debtors often simply “wait and see” if they can get away with it, but on the other hand pay immediately after a summon has been served (at their doorstep) when they can see that the creditor will not give up. An important factor (to our benefit) is that in the recent years credit score became of value here in Iceland for individuals. As a result debtors that have,, something to loose” pay when they have the threat of being registered on the official default registry. We have the permission to have debts/claims listed there as we are a law firm.
What is the debt collection process in Iceland?
We are flexible with our service and we can bring tailored approach to each of our clients and partners to offer them exactly the service they need and require. When we register a creditor in our system for the first time, we also define in the beginning the workflow procedure at the same time for that creditor or we set up various collection schemes depending on the nature of the claim. As a result, we can tailor make the workflow for each of our clients and/or each of their claim types. Then it is defined in the system – what should be done each day – in each claim towards a debtor with the creditor in question – and it automatically sets the task that should be carried out each day. As a result: your client can simply decide for himself what work flow he prefers as a general rule in his files (how many letters are sent out – the days between (except for the days between the first and second one that is prescribed by law) when phone call attempts are made and his wishes for the monitoring procedure (the time frames that is).
Amicable debt collection process – an example of the debt collection workflow in B2C pre legal phase:
Day 0 File received from client via e-mail/platform
Day 1-2 Dunning letter sent to debtor: First debt collection warning letter send to debtor
(“Innheimtuviðvörun). Payment term 10 days
Steps taken before being able to send the first letter – but within 48 hours of receiving a file:
• Debtor´s validation: Validation of the Icelandic social security number for debtor that is essential to be able to register claims. The name of debtor and most of the time DOB is essential to be able to find the correct one.
• The claim/file is registered to our system and we confirm the receipt of the file to the customer with our ref. number. Informing client if further information or documents is required (but we try to send the first letter with what we have in order to start as soon as possible).
• The address search is automated within the system once registered. For e-mails there is no information provider in Iceland – it is not information that is open to the public (or anybody if not provided in the phone listing). For phone numbers we look in the public phone listing.
Day 11-14 Second letter send to debtor – a reminder – ,”Áminning” with the warning that no payment could lead to further cost. (followed up by a phone call attempt when phone number is listed plus the letter is sent in an e-mail when provided). (no payment plan only full payment). If we are contacted by debtor that offers – asks for installment plan we write down the possible terms to be accepted or get the creditors acceptance or counteroffer.
Day 12/15 Phone call attempt and e-mail reminder to follow up second collection letter
Day 24 Third debt collection warning letter sent to debtor – (optional) could also be the “final warning”: Warning that no reaction could lead to the file being transferred to legal department and that debtor can expect to be listed in the default claim registry
that effects his credit score. (I am aware that your client never will go legal though but this text usually is what is needed to urge the debtor to take action here in Iceland).
Day 24/25: Phone call attempt and e-mail reminder
The number of the reminders can vary upon the client´s/creditor´s wishes. Normally we send the mandatory debt collection warning, 1-2 reminders and then the final warning (Plus notifications via e-mail/overview and payment instructions plus phone call attempts).
Day 35 (optional): Instructions are sent to Lánstraust – Creditinfo Iceland to register the debt and debtor in the default register list. Debtor receives a written notification from Creditinfo thereof.
Day 40-45 Status report is sent to creditor (if not sent at earlier stages)
Creditor then asks us to close the file or transfer it to surveillance (debtor monitoring)
Debt monitoring/surveillance: The workflow – the days and schedule is most of the time tailor made for each client. As an example:
• We register the debtor for the surveillance – that is automated in our debt collection computer system. We receive update in an e-mail if something changes with debtor´s financial status (credit score/bankruptcy proceedings etc). Also, the client can choose how long time passes until we check on debtor from the monitoring starts (start sending a reminder/calling him etc.) Normally clients ask us to put files in monitoring for 6 months to start with: In 6 months we thus: Check on debtor´s financial status, get his credit report and do another asset search/location, plus address search to see if there have been any changes. Also, we make another phone call.
• In 90 to 120 days (upon the clients wish): We report to creditor and next step is decided (to start collection procedure again – settlement agreement if we are contacted by debtor) – monitor debtor for 90 more days, etc.
• First debt collection warning letter sent to the debtor
According to the Icelandic Act on Debt Collection (Innheimtulög), the first collection warning letter must include a minimum 10-day payment deadline which begins to count from the date of the letter.
• The second collection warning letter (third and fourth depending on the plan)
The second collection warning letter includes 10-day payment deadline for the debtor, but the collection cost is higher rather than in the first collection warning letter.
• The final debt collection warning letter
The final debt collection warning letter is normally the last letter which is sent to the debtor before the legal actions begin. This letter includes 10-day payment deadline for the debtor and a special announcement to the debtor that he will be registered on the default register which can have a negative effect on his credit rating.
• The importance of the Defaulting Debtors Database register (DDD)
The DDD register contains information on defaults on individuals and collection actions. For debtor being on the defaulting register affects his credit rating. Both banks and other financial institutes plus possible business providers often assess new applicants/clients by investigating if the person is on listed in the default register. Thus, it is of great value to avoid that listing and receiving a notification of a possible listing makes debtors usually contact us after receiving one.
• Debt collection phone calls
Our staff has special training to make a debt collection phone calls as we all know personal contact is very important to make the debtor start to pay his debt. Most of our debt collection phone calls are executed in the first week after the debtor has got his salary paid and the last week in every month just right before the debtor gets his salary paid at the beginning of the upcoming month. Executing these phone calls at this certain period has shown us that results in debtor being more likely and willing to pay the debt or make a payment plan.
Average length of time to collect a debt?
The procedure can be tailor made depending on the need of the client. Normally my clients have a 20 – 40 days scheme. Please find attached an example of a collection schedule.
Can late payment fees / interest to be added to claims?
Yes, the limitation period for penalty interests is 4 years, the percentage is governed by the Central Bank of Iceland and varies. The statutory rate on claims in Iceland is irrespective of European Base Rate. Currently 12,25%. The Central Bank of Iceland determines its own interest rates and interventions in foreign exchange, and money markets. The statutory rate is governed by the Icelandic Interest Act (Lög um vexti og verðtryggingu No. 138/2001) and it depends on the nature of the claim. The rate is depandant on the decisions of the Central Bank of Iceland.
For undisputed claims it can take only a few months to obtain an enforceable judgment. The time frame if a claim is disputed can substantially vary, depending on many factors; the nature of the matter, the reaction of debtor, the workload on the relevant District Court etc.
An appeal must be lodged within two months from the day the judgment was rendered by the District Court. As from 1st of January 2018 we now have three stages here in Iceland, District Courts (8), Landsrettur and then Hæstiréttur (the Supreme Court).
The court system in Iceland is in many ways like the system in the other Scandinavian countries, but there are nevertheless distinctive features.
Iceland Business Credit Reports
Creditreform provides over 88 million international business credit reports throughout Europe and 200 million international business credit reports worldwide. There are around 35,000 companies registered in Iceland. We provide freshly investigated Iceland credit reports which can be done prior to trading to make sure the company you will be dealing with can meet the commitment or once the debt becomes overdue to ensure the debtor can meet the amount owed.
Iceland Tracing Agents
Creditreform’s debt collection company service also uses expert local Iceland tracing agent services to locate any absconded debtor. This debtor tracing service is provided on a No Find No Fee basis only charging for a successful trace.
Specialist Debt Recovery Experts
There are many unique requirements to recovering international debts in all countries including Iceland debt collection services which differ from the UK debt collection agency services and therefore it is very important that cases are handled directly by our expert international debt collection agencies and not from debt collectors UK. This method of international debt collection sets Creditreform aside from the competition who in many cases try and recover debts from a UK debt collector only. Using the local offices and partners enables us to achieve a far greater success rate and our No Win No Fee service together with competitive commission rates against monies recovered only ensures you get the best service.