Loans, reminders, debt collection: what you need to know before it gets expensive
Whether it's a cell phone, furniture, or a television—many larger purchases can now be conveniently financed in installments. But if you don't keep track of your spending, you can quickly find yourself in financial trouble. Marco Hessel, lawyer and managing director of coeo Inkasso GmbH, knows the typical debt traps from experience: “Before signing a loan agreement, you should honestly assess whether the monthly payments are really affordable. A budget plan listing all your income and expenses will help you make a realistic assessment.” Caution is also advised when comparing loans—it is not only the nominal interest rate that counts, but above all the effective annual interest rate, which reflects all costs. If this is too high in relation to the loan amount, you should critically examine the offer. Consumers with a negative credit rating often have to expect worse terms—it is worth taking a second look and, if necessary, seeking advice.
If, despite all precautions, payment difficulties arise, quick action is required. A first reminder should never be ignored. “If you don't respond, you risk additional costs due to late payment interest or debt collection,” warns Hessel. Instead, direct contact with the creditor is the right way to go – it is often possible to arrange installment payments or deferrals. If you have already received a collection letter, check whether the claim and the company are legitimate. Reputable collection agencies – such as coeo Inkasso – are listed in the Register of Legal Service Providers and follow the strict guidelines of the Federal Association of German Collection Agencies (BDIU). “Our goal is not to overwhelm debtors, but to find a solution together. We focus on dialogue, not threats.”
Many people mistakenly believe that debt collection agencies are allowed to seize assets immediately – this is not the case. Enforcement measures such as account seizure or wage garnishment are only possible with a court order and never take place without prior notice. Those affected therefore have time to react – and should make use of it. Anyone who feels overwhelmed can contact a debt counseling service, consumer advice center, or a lawyer. Often, a consultation is all it takes to clarify the situation and develop new perspectives. “It is important not to become passive,” says Hessel. “Those who act early can avoid many problems and actively shape their financial future.”
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About the coeo Group
The coeo Group is the leading technology-based debt collection company in Europe.With a clear focus on combining pioneering AI and first-class customer service, coeo is setting new standards in the industry and continuously driving the optimization and further development of receivables management and all other business processes.
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