What are collection costs?

A debt collection agency sends the consumer one or more payment reminders. These payment reminders not only contain the amount that initially had to be paid, but also the collection costs. The amount depends on the amount of the bill. The amount of the collection costs is stated in the law: WIK (Collection Costs Act). This law is there to give consumers clarity about the expected collection costs in the event of payment arrears. Collection costs are calculated if you still have not paid your (full) debt after several payment reminders. These costs are incurred by the collection agency to collect the debt.
As of October 1, 2024, the cumulative provision for debt collection costs will be mandatory. This amendment to the WIK ensures that debt collection costs cannot accumulate indefinitely if someone fails to pay multiple installments under the same agreement. The goal is to prevent consumers from facing increasingly high collection costs for recurring payments and to prevent debts from accumulating unnecessarily. You can read all about this in our financial guide.