Debt Collections In Luxembourg

1.1 Amicable Phase

1.1.1 General

Collection Agency Service Luxembourg seeks to maintain a professional approach to collections throughout the entire process, focusing primarily on maintaining a sound relationship between our creditor and the debtor who we are pursuing. We maintain an entirely in-house collections staff, ensuring that the process is controlled and assuredly high quality. Our collection experts will contact debtors via telephone and via written correspondence to their primary residence or their main business address.

If a dispute does arise between a debtor and one of our clients, it is the policy of Collection Agency Service Luxembourg to review every existing contractual document, invoice, and prior communication, in order to find a reasonable settlement that will please both parties. In the event that legal action must be pursued to recover a debt from a debtor, our in-house legal team will handle the process of discovering the debtor’s information and taking the appropriate action against them.

Collection Agency Service Luxembourg strictly follows all state and federal laws in the country, and makes sure to adhere to all European Union regulations that govern collections and legal proceedings against debtors.

1.1.2 Local agent

In some cases, our oral and written communication efforts fall short of achieving the desired outcome for our clients. When this happen, Collection Agency Service Luxembourg resorts to local agents who can visit debtors at their main business address or at their primary place of residence. The goal of these visits is to determine the debtor’s financial situation and assess their assets, largely to determine exactly how to proceed through the process.

Our field agents will report back to Collection Agency Service Luxembourg any information they do discover during a field visit, and that information will help to guide our next course of action. Field agents also produce an extensive summary of the debtor’s business operations, if necessary and relevant.

1.1.3 Interests

It is the policy of Collection Agency Service Luxembourg to always attach an interest payment to outstanding debts collected by our professionals. We do this by following one of three guidelines set by our clients and European Union regulations:

– Our first course of action is to examine the contract that currently exists between the creditor and the debtor. If the contract specifically states an amount of interest that should be charged on late payments and collected debts, this is the amount that will be charged by our collectors.

– If we cannot find any information within the existing contract about the interest rate that should be charged, we will move to charge an interest rate that has been stipulated by European Union regulations. This rate will be a flat 12 percent figure.

– If the interest rate stipulated in the creditor’s contract is below 12 percent, it is the policy of Collection Agency Service Luxembourg to charge the 12 percent rate instead of the lower one agreed to by the debtor and creditor at the outset of their business relationship.

Collecting interest on top of an existing debt can be exceedingly difficult in Luxembourg, and therefore the attachment of any interest to a debt is often viewed more as a negotiation tactic than as a realistic fee charged to the debtor.

1.1.4 Debt collection costs

There are two ways that collection costs are charged to debtors by Collection Agency Service Luxembourg. First and foremost, our company adheres to European Union regulations when charging these fees. That means that each debtor will be charged a flat rate of 40.00 EUR for an outstanding debt that our collectors are pursuing. On top of this amount, it is the policy of Collection Agency Service Luxembourg to enforce a 10 percent penalty clause when collecting a debt. That 10 percent is calculated based on the full outstanding balance of the debt itself.

1.2 Legal Procedures

1.2.1 General

In Luxembourg, legal proceedings to cover debts and receivables are based in regulations set forth by the Civil Code of Luxembourg, as well as by pieces of the country’s Commercial Code and its Judicial Code. All three codes are typically applied in tandem, with small pieces of each code governing the proper collection of a debt via trial, lawsuit, and notification to the debtor.

Collection Agency Service Luxembourg pursues debtors through several different court systems in Luxembourg. These venues are differentiated based on the amount of the claim being filed against the debtor, as well as the debtor’s place of residence within the country.

1.2.2 Required documents

In order to file a lawsuit against a debtor, it is necessary for Collection Agency Service Luxembourg to be in possession of several documents. These documents are used to prove the claim’s validity and to help fend off a dispute that might be filed by the debtor:

– Copies of all invoices
– Copies of the terms and conditions, as agreed by both parties
– Original Power of Attorney, signed by the client Collection Agency Service Luxembourg is representing
– Copies of the original contract
– Copies of delivery notices, orders, and order confirmations
– Copies of any notices or payment reminders signed by the debtor upon issue

If the debtor files a dispute during the legal period, Collection Agency Service Luxembourg will require additional documentation of any correspondence that has occurred between the parties. Witnesses and experts may also be needed to help prove the validity of the claim being lodged by our client against the debtor.

1.2.3 Legal dunning procedure

Luxembourg requires the Justice of the Peace to launch the summary procedure against the debtor. This procedure is not always the best course of action when recovering debts and receivables, and can be ineffective for a few key reasons:

– The creditor’s claim must be undisputed
– The claim cannot exceed a maximum of 10,000.00 EUR
– The formal conditions needed in order to lodge such a claim are rather particular and extensive, often requiring proof of the capacity of the person who will be signing for the creditor, as well as requiring a large number of documents to prove the claim’s validity

1.2.4 Lawsuit

Lawsuits in Luxembourg are able to take on two very different forms, with different possible outcomes and durations. The first is the Summary Procedure, which is easily the most popular way to pursue legal action against debtors in the country. It is also the quickest way to ensure payment is made by the debtor. A second procedure, known as the Substantive Procedure, is far more complex and extensive. There is no written intervention, and the case can become seriously defended and needlessly complex if the debtor does file a dispute against the creditor.

1.2.5 Costs

Obtaining a summons and inscription in the court’s calendar will cost clients roughly 250.00 EUR. The cost for indemnity of procedure is not fixed, and can vary on a case-by-case basis depending on the case’s duration and complexity. Court costs are, in most cases, able to be charged to the debtor. The court will need to agree that such charges can be issued to the debtor, however, and some judges have been known for forcing the creditor to pay such charges. Legal fees and the costs of representative in the court will vary based on the size and scope of the case itself. These costs cannot be charged to the debtor.

The cost of enforcement in Luxembourg depends heavily on how the bailiff has to proceed in order to enforce a judgment. Simple procedures will be relatively affordable, while longer and more complex enforcement requirements will result in a far higher cost of enforcement overall.

It is the policy of Collection Agency Service Luxembourg to provide an estimation of legal costs only on a case-by-case basis, due largely to the variable fees levied by the judicial system in Luxembourg.

1.2.6 Expected timeframe

As with virtually every case, enforcement of any outcome varies a great deal. The expected timeframe of any outcome depends heavily on the debtor’s compliance, and the bailiff seeking the enforcement. In the best case, enforcement will take about four months. In complex cases, they can take up to 12 months or even longer.

1.2.7 Interests and costs in the legal phase

After legal action has begun against a debtor, the interest rate applied to the outstanding balance of the debt is stated is included as part of the amount owed to the client by the debtor. This is as stipulated either in the terms and conditions between both parties, or as stipulated in the agreement between Collection Agency Service Luxembourg and our client. The court can, at its discretion, modify the interest rate to be lower than the rate agreed to between Collection Agency Service Luxembourg and the debtor. The interest rate can also be completely eliminated if the judge feels it will help the debt be collected in a more expedient fashion.

A penalty clause is also claimed in the balance owed to the creditor by the debtor. Just as the interest rate can be modified or eliminated by the judge, the penalty clause amount can also be reduced by the judge or eliminated entirely during the course of legal proceedings against the debtor. This is especially the case when the debtor has not signed any terms and conditions document with the creditor.

In accordance with European Statute 2011/7/UE, Collection Agency Service Luxembourg also claims a 40.00 EUR fee as part of the balance owed by the debtor, regardless of the size of the debt. This fee is rarely modified or eliminated during legal proceedings.

1.3 Insolvency Proceedings

1.3.1 General

Luxembourg has three basic types of insolvency accessible to debtors:

– Bankruptcy proceedings
– Controlled administration
– Composition proceedings

Insolvency proceedings must be filed with the court, and the court must decide that they’re valid and can proceed accordingly. The goal of the court is either to declare a non-payment situation or allow a company to restructure itself and pay off creditors with a dividend payment or a partial settlement. This allows some companies to continue to trade even as they proceed through the insolvency process.

At the beginning of any insolvency proceeding, any outstanding enforcement against a company or a private debtor is immediately suspended until the proceeding has closed and reached an agreeable outcome for creditors.

1.3.2 Proceedings


Private individuals in Luxembourg cannot pursue bankruptcy proceedings. Instead, bankruptcy as a term only applies to companies who qualify as a merchant within the Commercial Code. When bankruptcy is requested, the court overseeing the proceeding will assign a trustee to the company. This is done by the Commercial Chamber of the District Court. That trustee will have the task of accepting claims filed by creditors to whom the debtor owes an outstanding balance. Those claims will then either be verified or rejected; the claims that have been accepted will be eligible for a potential dividend payout, while the rejected claims will have to be re-filed or appealed to the Commercial Chamber of the District Course in the case of a dispute.


While this insolvency proceeding is certainly allowed in Luxembourg, it is hardly ever used. Composition can only be pursued by those debtors who are classified as merchants within the country’s Commercial Code. The request is sent to both the Commercial Chamber of the District Court, and the High Court, simultaneously. The case will be reviewed by the court, and the court will then decide whether to accept the composition request or reject the temporary stay filed by the debtor. If the court accepts the request, a practitioner is appointed to facilitate the next stage of the process.

Creditors will receive an official notice that composition is ongoing, and they will be invited to the court to give an opinion on the case. The court follows this hearing with a detailed report about the hearing, and proceeds with composition only if a majority of the debtor’s creditors agree with the proceeding. The High Court is responsible for determining the duration of the definitive stay, which is a key part of the composition process.

Controlled Administration

In Luxembourg, Controlled Administration is essentially the country’s form of corporate restructuring. The procedure can only be completed by a merchant whose credit has been weakened. That merchant will have to make the request to the court himself or herself, as their creditors cannot make it on their behalf in order to force a restructuring of the company’s finances. This request is filed with the Commercial Chamber of the District Court and, once it has been accepted, a judge is appointed to draft a report about the company’s standing. This report will come with an attached deadline set by the court itself.

After the report has been drafted, it will be submitted to the court by the judge. The court will then hold a hearing and invite the merchant to speak at the hearing. This hearing will determine whether the court grants the restructuring application or rejects the merchant’s request. If the debtor is permitted to proceed with a restructuring plan, all of the company’s assets will be put under the control of the court where the case is proceeding, and a judge will be appointed to help reorganize and liquidate the company’s assets during a period of time determined by the court.

Any restructuring plan that is filed through the court will be dispatched to all of the debtor’s creditors after it has been approved. The creditors will then have 15 days to review the plan and either accept it or disagree with it. If the majority of creditors approve of the restructuring plan, it will proceed. If not, restructuring is immediately off the table and the merchant must resort to either composition or bankruptcy proceedings in order to satisfy their debts.

1.3.3 Required documents

In order to file a claim against a debtor during the insolvency process, Collection Agency Service Luxembourg must be in possession of the following documentation:

– Copies of invoices
– Copies of any conditions of sale, if relevant
– Copies of any account statements, including credits and adjustments of the debt’s balance
– Original Power of Attorney, signed by the creditor, if specifically requested

1.3.4 Expected timeframe and outcome

Insolvency proceedings in Luxembourg are relatively efficient and quick to complete, but their timeframe will vary greatly based on the company’s amount of debt, the complexity of the case, and the timeframes established by the court for certain periods of the process. Creditors should expect the quickest insolvency proceedings to last roughly 12 months. Beyond that, there is no limit to how long such a procedure can go on.

The chances of actually recovering any portion of the debt as a dividend are relatively poor. In Luxembourg, only about 5 percent of bankruptcy cases result in the issuance of a dividend the creditors. Composition proceedings do lead to higher recovery rates for creditors, as do controlled administration proceedings for those companies who are still able to restructure. Furthermore, because creditors have to approve a controlled administration plan, they are in far more control when it comes to determining the size of the dividend they may receive. Keep in mind that proposed dividends or settlements will vary by case.