Debt Collections In Sweden

1.1 Amicable Phase

1.1.1 General

Collection Agency Service Sweden operates a highly professional debt collection process in the country, and focuses expressly on the relationship between our client and the debtor who is being pursued. As a policy, Collection Agency Service Sweden maintains a high level of professionalism throughout the entire process, and works to create an amicable solution between our client and the debtor, rather than pursuing any legal actions in order to recover the outstanding balance of the debt.

All of our collections processes are carried out in-house, resulting in a situation that is easier for our clients and more approachable for the debtors that we are pursuing. Any contact made with debtors will be done either via telephone contact or in written correspondence delivered to the debtors address. Should Collection Agency Service Sweden need to pursue greater information about the debtor, our in-house legal specialists will handle the investigation and make sure that everything complies with local laws. Likewise, our entire collections process in Sweden is designed specifically to comply with federal and state laws as passed by local governments.

1.1.2 Local agent

Collection Agency Service Sweden has a strong desire to make sure that all services we offer are performed by in-house professionals. Because we do not currently operate a department that can facilitate fiend visits to debtors in Sweden, this service is simply not offered. It should be noted that field visits are permitted by the laws of Sweden, however, and Collection Agency Service Sweden will inform its clients if it expands its local operations to include such personnel. In the meantime, debtors are able to visit our local offices in the country and consult with one of our professional staff members.

1.1.3 Interests

It is the policy of Collection Agency Service Sweden to always charge interest on an outstanding debt during the amicable collections phase of the process. This rate is calculated using a two-party formula, as is regulated and mandated by European Union regulations. The base of our interest rate comes from the current interest rate set by the Swedish National Bank. That interest rate is then added to a flat 8 percent rate that is charged to every debt. The debt is charged interest on a daily basis, rather than a monthly or annual schedule.

Though this policy is our most common way of charging interest to a debtor, there are two other options that can be used when calculating an interest rate and assigning to the outstanding balance of a debt being pursued:

1. Collection Agency Service Sweden will adhere first and foremost to the terms of a contract negotiated between a debtor and our client. If that contact has stipulations regarding the interest rate charged on a past due balance, we will charge that rate instead of the one mandated by European Union regulations.

2. Collection Agency Service Sweden can optionally use a slightly different interest rate offered by the National Bank of Sweden. Instead of using the daily rate issued by the bank, Collection Agency Service Sweden can apply the preference rate fixed by the bank on a semi-annual basis. This rate is fixed on the first day of January as well as the first day of July. An 8 percent charge is then added on top of that rate when calculating how much interest will be charged to the debtor.

Because it is our policy to always charge interest on debts, we will default to the National Bank of Sweden’s fixed rate, plus 8 percent, in cases where a contract does not stipulate a different rate between the debtor and the creditor.

Culturally, interest rates are a large part of collections process in Sweden and debtors in the country are used to paying these rates on top of their existing balance. Typically, interest rates are not used as a point of negotiation but are instead viewed as a mandated fee by the creditor.

1.1.4 Debt collection costs

The costs associated with the debt collection process in Sweden are highly regulated, allowing them to be rather predictable when dealing with debtors. Generally speaking, a 160 SEK fee applies to the client’s claim when a collection file is initially generated for the collection of the debt. This flat fee is included by many companies in their contract with the debtor at the time of beginning business.

If the debt collection process cannot be resolved by the procedures described in the amicable phase, then it will be assigned to a Swedish court. At that time, costs are added to the balance based on how much the court charges the creditor to pursue the legal proceeding against the debtor. In many cases, the debtor is responsible for the 160 SEK charge as well as the full cost of legal proceedings lodged against them by the creditor.

It’s worth noting that, much like the interest added to a debt, Swedish debtors are quite used to paying collection costs on top of their debt’s outstanding balance and they will not raise much of a fight when those costs are assigned. These costs are typically not negotiable between creditors and debtors, and can typically not be used to negotiate some type of settlement or payment plan.

1.2 Legal Procedures

1.2.1 General

The legal procedure for collecting a debt can only begin after a four-day notice has been issued to the debtor at their primary residence, or their business’ primary headquarters. The notice that is sent to the debtor must include a few essential pieces of information in order for it to be considered valid in the eyes of the Swedish court system. Those pieces of information include the following:

– The name of the creditor issuing the notice
– A specification of the debt’s amount, the associated interest rate, the date the debt was due, and any costs incurred for collecting that debt
– A notice that a refusal to commit to a payment arrangement will result in further collection costs and legal fees
– Warning that a failure to pay the debt, or make any arrangements, will result in legal action against the debtor and that these proceedings will add even more costs to the balance

In order for the notice of the debt to be enforceable, and in order for the debt to be properly collected, the debt must be proven to legal authorities in Sweden. If the notice sent to the debtor is undisputed and the debt is considered valid, a bailiff will issue a payment order for the full amount of the debt. This payment order is essentially Sweden’s version of a judgment lodged against the debtor.

If the notice is sent to the debtor, and the debtor dispute the debt within the four-day deadline, the file is assigned for trial. The goal of this trial is to determine whether or not the dispute lodged against the creditor by the debtor is valid. If it is deemed valid, a judgment will be obtained and issued against the debtor for the full and outstanding balance of the debt.

If the debtor refuses to pay toward an issued judgment, whether they dispute the debt or not, their file will be handed over to the Bailiff’s Court for execution of the payment. During this phase, it is possible to garnish the debtor’s wages and withhold a portion of their salary in order to satisfy the outstanding balance of the debt. Such a measure is issued the enforcement office nearest the debtor’s physical location. The debtor’s employer sends any withheld wages to the bailiff, who then subtracts that amount from the outstanding balance of the debt. The garnishment continues until the debt has been paid in full, either through garnishment or voluntary payments.

In Sweden, the garnishment of wages is typically enough of an enforcement action to provoke debtors into making either a full payment toward the debt, or a satisfactory payment arrangement. At that time, garnishment will also cease.

1.2.2 Required documents

The legal procedure in Sweden is tightly regulated, and this means that clients must be able to provide extensive documentation in order to prove that the debt they’re attempting to collect is valid. Before Collection Agency Service Sweden can proceed with any legal action against the debtor, we require our clients to provide us with the following documentation:

– Copes of the contract between the debtor and creditor
– Copies of any terms and conditions agreed upon during business relations
– Copies of the invoices billed to the debtor
– Copies of outstanding invoices
– Copies of credit notes and payment toward the outstanding invoice amount

These documents will suffice unless a defended legal procedure is pursued by the debtor. At that time, Collection Agency Service Sweden will require additional documentation from our client in order to ensure a quick trial and the best possible outcome for the client. Those documents will include:

– Complete contractual documentation
– Documentation of written correspondence
– Documentation of oral agreements, including witness lists and meeting notes

All documents should be handed directly over to the lawyers who will be representing the case on behalf of the client with Collection Agency Service Sweden. When all of the necessary documentation is in the hands of our legal team, the lawsuit can proceed against the debtor though Sweden’s judicial system.

1.2.3 Lawsuit

The procedure for filing a lawsuit against a debtor in Sweden occurs as the result of one of the following two scenarios:

1. The amicable collection process has filed to recovery any of the debt, or the debtor has failed to live up to payment arrangements made with them by Collection Agency Service Sweden’s professional team.

2. The debtor has either not responded to a notice of legal action within the required four days, or has responded to that correspondence with a dispute of the debt.

At this time, the legal dunning procedure begins in order to prepare the case for trial and create the strongest possible case for the client. A written pre-procedure document is issued to the debtor, and both the plaintiff and the defendant exchange written opinions via postal mail with the court until enough proof has been gathered by the judge to launch a lawsuit against one of the parties.

After this determination has been made, the judge will set a date for a further hearing of the case. This hearing will be done in person, and both the debtor and the creditor must attend it. The end result of this hearing will be a final judgment issue for payment of the debt, unless the case is decided in favor of the debtor and no amount is deemed owed to the creditor.

The parties involved in the lawsuit will be informed via writing of the judge’s decision in the case, as mailed by the court handling the matter. Any judgment then becomes subject to execution in order to recover the balance owed.

1.2.4 Costs

Collection Agency Service Sweden urges our clients to charge the 160 SEK flat fee for collection costs that is allowed by Swedish regulations regarding debt collection. Above and beyond this amount, the debtor can also be charged any costs that resulted from the pursuit of legal action against them in order to collect the debt. Fees for legal proceedings vary based on the stage and complexity of the case. Certain fees only apply during a legal procedure depending on the actions taken by either side, making the total cost hard to predict.

It is the policy of Collection Agency Service Sweden to always estimate the costs associated with legal action on a case-by-cases basis. Clients should be mindful that additional expenses, like witnesses or experts, might be required in some cases. Those two things can greatly increase the cost of pursuing a legal action against a debtor.

1.2.5 Expected timeframe

The legal process in Sweden typically lasts for at least 12 months until a decision has been reached. In some cases, this can take several years based on the complexity of the case and the availability of the judges and lawyers involved in the proceeding.

1.2.6 Interests and costs in the legal phase

The costs assigned to the debt during the amicable phase can be attached to the judgment demanding payment from the debtor. These costs include both the interest rate assigned to the debt as well as any pre-legal collection charges above and beyond the 160 SEK flat rate that our clients typically choose to add to the debtor’s balance. It’s worth noting, however, that the losing party in any debt-related lawsuit is responsible for paying the costs associated with that procedure. In rare cases, when the creditor does lose, these costs become theirs to bear. If a settlement is reached between the parties, they each are responsible for paying their own legal fees after the conclusion of the case.

1.3 Insolvency Proceedings

1.3.1 General

There is a strong preference in Sweden to liquidate company assets rather than restructure them in order to pay a debt. For that reason, the insolvency procedures applied by courts in the country lean strongly toward full liquidation and a dividend payment issued to creditors who lodge a claim against the company as part of the process.

The insolvency procedures currently permitted in Sweden include the following:

– Forced dissolution of the company and a liquidation of all assets
– Bankruptcy of the company or an individual debtor
– Restructuring of the company’s debts and assets to pay creditors and improve the company’s financial position

1.3.2 Proceedings

Either the debtor or the creditor can file for insolvency. This leads to the appointment of a preliminary liquidator who is charged with checking into the debtor’s assets to verify their claim to insolvency. If the debtor is deemed to have a significant enough financial hardship, the process begins. Before any further action continues, the court assesses the company’s assets in relation to the court costs that result from the proceeding. Outside those costs, assets are typically liquidated and distributed to creditors. If insufficient assets exist for payment of court fees and debts, the court will resort to bankruptcy proceedings. If the procedure is not followed properly, the court can reject an insolvency application.

Creditors are able to lodge a claim against the debtor after the insolvency procedure has begun, and the court has accepted the application. There will be a deadline for filing claims, though this deadline is typically set by the appointed liquidator and not by a court mandate. The liquidator has the right to accept or reject a lodged claim against a debtor. Disputed claims can only be re-filed one time. At the end of this proceeding, creditors with approved debts will receive a dividend toward the debt’s balance. In matters of estate insolvency, dividends are often not paid.

1.3.3 Required documents

When lodging an insolvency claim against a debtor, Collection Agency Service Sweden will require copies of any outstanding invoices that might prove the existence of the outstanding debt.

1.3.4 Expected timeframe and outcome

Insolvency proceedings in Sweden are much more quick than those in neighboring European countries. In general, these proceedings can be expected to take between one year and three years, based on the complexity of the case and the size of the entity filing for insolvency. Often, dividends are not paid to creditors as a result of this process.