All posts by GeorgesVonfelt

Au Royaume Uni les entreprises de recouvrement de créances

anglais, News, ,

Au Royaume Uni les entreprises de recouvrement de créances sont soumises à  des restrictions d’action par le gouvernement britannique depuis le 03/01/2020. Les principales restrictions sont détaillées ci-dessous.

 

  1. Les entreprises de recouvrement de créances ne peuvent pas pour le moment (la procédure applicable est suspendue) initier une procédure de liquidation contre des sociétés à responsabilité limitée du fait de factures impayées. Il est toujours possible de liquider une entreprise au Royaume-Uni, mais il faut un jugement préalable, le faire signifier et si vous ne recevez toujours pas de paiement, un juge ou un shérif peut envisager de vous accorder la mise en liquidation de la société concernée. La mise en liquidation relève de l’appréciation discrétionnaire du juge ou du shérif. Les décisions en faveur des créanciers ont été rares en 2020 car les tribunaux ont tendance à favoriser les débiteurs. Cela s’applique à toutes les dettes commerciales accumulées après le 1/3/2020 jusqu’à ce jour. Cependant les règles normales s’appliquent aux dettes accumulées avant le 1/3/2020.
  2. Le recouvrement de créance pour tout type de dette liée à la consommation privée est strictement interdit, cela s’applique à toutes les dettes quelle que soit la date à laquelle celle-ci a été constituée.

La loi qui interdit le recouvrement de créances liée à la consommation et bloque les procédures de liquidation a été prorogée trois fois, elle devait prendre fin le 30/09/2020, puis à nouveau le 31/12/2020, et a été prorogée jusqu’au 1/04/2021. Elle a été prorogée à nouveau par le gouvernement britannique jusqu’au 30/06/2021. C’est une nouvelle très décevante pour les créanciers et pour les professionnels du recouvrement de créances au Royaume Uni car cela entrave vraiment ce que nous pouvons faire et nous ne pouvons pas menacer les entreprises avec la liquidation, l’un des principaux leviers pour recouvrer les dettes commerciales.

 

L’amélioration de la situation sanitaire en lien avec l’intense campagne de vaccination au Royaume-Uni devrait conduire à un retour a la normale dans les prochaines semaines pour le bien-être de la trésorerie des créanciers.

Georges Vonfelt dirigeant de GEVO Recouvrement de Créances

Fondateur du réseau de recouvrement de créances internationales SEKUNDI

Economic Situation and debt collection in France

Non classé

chart-1905224__340

The economic situation of France in March 2021.

French companies have resisted rather well during the Covid-19 pandemic.

To date, and thanks to the support of the public authorities, there has been no wave of bankruptcies.

A few large groups have taken advantage of the situation to sell their unprofitable activities and to close excess stores and outlets. They often used legal proceedings, either a safeguard plan or legal redress to facilitate negotiations with buyers. The traders benefited from the support of consumers who did not hesitate to go to the stores despite the sanitary measures. Consumption habits have changed dramatically; for example, after the first lockdown consumers flocked to shoe stores, but activity in this area has largely subsided thereafter.

The “drive” system in the food trade has had considerable success, leading to management difficulties for the brands concerned. For everything related to sports, cycling, e-bikes, many products are out of stock and replenishment is long overdue. Whole sections of the economy are overheating and unable to cope with new demands, including landscapers, pool engineers, carpenters, tilers, IT service companies. The deadlines are getting longer, it takes several months for them to intervene and many are no longer accepting new clients.

Sectors closed by administrative decision (restaurants, bars, cinemas, etc.) benefit from support measures from the public authorities which have enabled them, with certain exceptions, to stay afloat. For the solvency analysis, the databases had to modify their algorithms to approach the financial reality linked to the pandemic; the non-publication of accounts possible for medium-sized companies and for small companies to date makes the work of analysts more complex. Bank unpaid bills were numerous during the first 2 confinements, but companies massively regularized payment incidents. It also turned out that the Banque de France behaved very flexibly about payment incidents. At the end of the first quarter of 2021, there was a significant drop in payment incidents and debt collection disputes. Debt collection companies, however, find that the creditworthiness of companies that are seriously overdue in paying their invoices is deteriorating. In the portfolio of debt collection companies, nearly 47% of debtors are in a seriously compromised financial situation.

It cannot be said enough that time is the greatest enemy of unpaid bills. Each week that passes after an unpaid deadline increases exponentially the risk of never collecting the bill. One year after the invoice, the chances of recovery of this debt are almost nil. Today the government has just decided to confine 30% of the French population which will not be without consequences on the economic situation in France.

 

GEVO specialist in Commercial debt collection in France.

Founder of the international debt collection network SEKUNDI.

Covid 19 the Big One and good Cash management

anglais, Newsletter, , , , ,

hollywood-116225__340

 

Covid 19 the Big One and good Cash management. The Big One is the name given to the earthquake which should one day engulf California if the forecasts of the seismologists are realized. In economic matters, the first half of 2020 probably has the status of Big One. An unprecedented global economic crisis that will take a significant toll financially. The slow emergence of containment that is emerging will put Cash at the center of business concerns. Neither profitability, nor productivity, nor the development of turnover will save companies, it will be Cash.

Approaching this subject with tools before the Covid 19 crisis is a mistake.

All indicators are broken and inaccurate; payment incidents are no longer recorded by the Banque de France, balance sheets are not closed, tax deadlines are postponed, social charges are not paid and payment behaviour is modified due to cash loans guaranteed by the State. However, all analyses, databases and decision-making tools are based on these indicators which will be at least inaccurate for several months.

For everyone, suppliers, customers and consumers, it is essential that economic activity restart. Questions will then arise relating to late payments and supplier credit limits to be set up for new deliveries. It is customer supplier relationships that will have to be reinvented to ensure that all economic players have a sufficient mattress of Cash to overcome this crisis, and those that should follow, according to some experts.

After the end of the lockdown the solution will not be to jump to the throat of customers who are late in their payments. We must invent a new partnership based on new deadlines and means of payment. Suppliers will have to support their customers by delivering goods on credit, customers will have to agree to pay on a regular basis even if they spread their payments differently. To date, the regulatory deadline for paying invoices is 60 days with a large due date. At the end of the lockdown it would be useful to extend the time allowed from 30 to 60 days but by establishing, for example, partial regulations every 2 weeks. It would be a “win / win” solution where the supplier anticipates part of their cash flow and the customer finances their purchases in a smooth and spread out manner. A real dialogue will have to be engaged between supplier and customer to weave a regular and trusting relationship.

Companies after the lockdown will have to focus on their core business, the production or purchase of products as well as their marketing. It has never been so useful to outsource Cash Management which consumes time and resources when done in-house. And this is one of the reasons why some companies are abandoning this approach, which is essential if they want to survive the troubled times ahead.

The customer king dictatorship, myth or reality in the age of globalization.

anglais, Blog, , , , , , ,

The customer king dictatorship, myth or reality in the age of globalization.

 

The customer king. Everyone knows this adage! Its fame precedes it, to the point that it is like a golden rule for any good business. This simple sentence summarizes the implication it would take to retain consumers.

If we look at it from the point of view of the user, this adage the customer king suffers from numerous shortcomings, especially when the market is dominated by a few suppliers who find themselves in a situation of virtual monopoly. Who has not found himself in an ubiquitous situation when he must try to explain his problem to a telecommunications operator, a household water supply company or any other company which employs thousands of employees and whose rules are dictated by reporting and hunting down the costs of management controllers?

Is the customer king when after having renewed several times his call to a digital switchboard which indicates to us in a synthetic voice that the waiting time is more than 10 minutes and that it is necessary to think of renewing his call , then which forces us to dial different numbers on the keypad of our phone and that after endless waiting to the sound of heady music going on in loop we arrive at the station of an operator who very often is at halfway around the world and we are at the end of 5 minutes of conversation in front of the following answer “I could not solve your problem but I am not allowed to stay longer with you online. ” That speaks for itself. To believe that for these large companies the customer is no longer the king but is a simple adjustment variable in the operating account.

On the other hand, and in spite of their gigantism it seems that the GAFA are much better organized to put the customer king at the centre of their concerns.

At the other end of the scale, the small craftsman and the small business are subject to the dictatorship of their king customers because they do not have an administrative organization which would allow them to put objectivity in their approach to the customer.

For medium-sized companies, the concept of customer king may be a dictatorship with unexpected consequences. For many years, business leaders have gotten into the habit of giving precedence to the salesperson, placing less importance on administration, management control and profitability. It would also be relevant to talk about the turnover dictatorship. The entire decision-making chain (bank, manager, shareholders) has priority on eyes on turnover and profit. Few medium-sized organizations, especially in export services, will analyse the difference between the customer king and profitable turnover.

When you deal with client risk management, when you are a credit manager, you see the abuse of the customer king system every day. Such customers have always paid their invoices more than 6 months late. However, it still pays. This client will continue to use and abuse the system the customer is king. He will not be blocked; his goods will be delivered to him. Nobody will take the time to analyse the costs generated by this type of behaviour because they are not always apparent. For example, the man time necessary to follow up on these problem customers, the consequences on the cash flow of the incessant postponements, the additional costs such as the financing of the VAT for 6 months instead of 30 days etc.

It is of course necessary to put the customer at the centre of his project but the one who is profitable and the specialist in all kinds of abuse is certainly not profitable.

The customer king’s dictatorship is similar to that of the short term. In the business world, time is of the essence. Many entrepreneurs would be amazed at how quickly a little more rigor in customer management would improve the operating account.

It is not possible to let accountants and financiers decide the fate of clients on their own. We need a real credit manager who will arbitrate between the interests of the commercial and those of the administrative.

But this credit manager must have real decision-making power so that the customer king client, which is a concept to be nurtured, does not turn into a dictatorship.

In France, the number of companies having been the subject of a bankruptcy procedure decreased

anglais, News, , , , , , , ,
lower banruptcies rate

decrease of bankruptcies in France

In France, the number of companies having been the subject of a bankruptcy procedure decreased by 4.8% last year compared to 2018. There were 52,000 failures in 2019. These are 2,500 companies less than in 2018 who went to bankruptcy or were placed in receivership or safeguard proceedings. In the fourth quarter of 2019 alone, the decline even accelerated.  The improvement is visible in almost all trades. The number of liquidations has dropped significantly. In construction, trade, industry, business and personal services, and catering, bankruptcy is declining sharply. Road freight transport and IT and communications are sectors which experienced an increase in bankruptcy last year. One of the explanations for this good overall performance in 2019 is that household consumption held up even if it was not as dynamic as we might have expected. The domestic economic context is rather better than that of our neighbours. Job creation is still strong in 2019, which also contributed to good economic activity. Second, interest rates are still very low, which helps companies finance themselves at lower cost. After the crisis of “yellow vests”, the State was able to support companies in difficulty.  Small businesses have held up well last year if they haven’t fallen, that doesn’t mean they are doing well. Many suffer. The treasuries continue to be strained. Another fact that puts the drop in corporate bankruptcy a bit into perspective last year, many SMEs and even a few mid-size companies have experienced difficulties. Almost 350 SMEs with more than 50 employees went to bankruptcy in 2019, almost one per day. In the last three months of the year, 100 failed. The difficulties of SMEs are concentrated in the manufacturing industry. Some face forced transformation issues linked to sustainable development, in the automobile for example. As a result of the bankruptcy of SMEs, the number of jobs threatened by bankruptcy increased slightly in 2019, by 1.6%, to 175,000. How will the coming year go? Growth is expected by economists to a level comparable to that of 2019, that is to say from 1.2% to 1.3%. For 2020, there is no fear of a sharp increase in the number of bankruptcy but it seems unlikely that we will fall below the threshold of 52,000 collective proceedings. We could be around 53,000 failures for the year 2020.

 

Hypermarkets in France a new deal. A lot of Hypermarkets make losses.

anglais, News, , , , ,
Hypermarkets the new deal

Hypermarkets in France

Hypermarkets in France a new deal.

In France, consumption declined in most Hypermarkets in 2019. The glass is half empty or half full. Optimists will find that two thirds of the Carrefour Hypermarkets in France make money. Pessimists will point out that a third of the park pulls down the result of the branch. The issue is also sensitive to Auchan, the other chain of very large Hypermarkets. In its December issue, the trade magazine “Linear” examined the “evil of self-service hypermarkets” and advanced “the real numbers”. The trade magazine recalls that the self-service hypermarkets Carrefour, Auchan and Casino recorded sales of 2.7 billion euros between 2014 and 2018, of which one billion for the first two. Consumer habits are changing. Consumers commute less and tend to local supermarkets. The shift from non-food shopping to e-commerce and specialized supermarkets also explains the dissatisfaction of certain Hypermarkets. “Linear” keeps its figures from union sources. According to this information, the decline in sales is associated with a decrease in profitability. Carrefour France’s hyper integrated and franchised companies reportedly had a current operating deficit of 132 million euros in 2018. For comparison: Auchan Retail France generated a profit of 479 million in 2014. Operating profit (80% of activities are carried out by Hypermarkets) decreased to -155 million. The magazine also confirms that “89 businesses would make losses” at Carrefour Hypermarkets SAS ‘191 locations in 2018. The Carrefour Group does not comment on these figures, which it does not publish. In an interview with “Linear,” Marie Cheval, general manager of consumer markets, only states that 41 Hypermarkets will launch Rebond, “an operating model that inspectors entrust to directors to compensate for deteriorating profitability.” Dejan Terglav, General Secretary of FGTA-FO from Carrefour, responds to “Les Echos” and assesses all these figures as “likely”. He fears that the group will default to leasing around twenty hypermarkets. Carrefour has started to revive its consumer markets. 2018 is the first of the Group’s transformation plan that has invested particularly in competitiveness and prices. This strained numbers and margins. Kepler Cheuvreux underlined this “conscious strategy”. Since then, sales space reductions have been initiated, such as the rental of space to Darty. The Hypermarket soldier needs to be saved.

Judgment debt collection costs, compensation of collection fees.

anglais, Newsletter
Judgment debt collection costs

Judgment debt collection costs

The Court of Appeal of Aix-en-Provence has just lifted a first-instance decision rejecting the claim of the creditor under Article L.441-10 II of the French Commercial Code. Once again, Inkasso costs decided to grant the creditor compensation equal to his adviser’s fees, which was justified by the notification of the fee agreement.

Our readers know our litigation in favour of professional creditors, so they will be fully reimbursed for the costs of recovering their debts.

We demand nothing more than the application of the provisions of Article L.441-10 II of the Commercial Code (formerly L 441-6, paragraph 8), which some judges – now a minority – do not take into account. The commented judgment debt collection costs confirmed that this resistance is unjustified.

A professional creditor has instituted proceedings against his debtor at the TGI of Aix-en-Provence in order to obtain payment for his unpaid bills and compensation for the legal fees (fixed and performance fees) incurred in this case.

Although the Tribunal granted the creditor the main claim, it granted him only a small amount of compensation under Article 700 of the Code of Civil Procedure.

Since the debtor lodged an appeal against this decision, the creditor partly intervened in order to obtain the compensation due to him under Article L.441-10 II of the Commercial Code. He wanted to enforce a judgment debt collection costs.

The Court of Appeal of Aix-en-Provence (September 26, 2019, No. 16/19309) upheld the applicant’s claim and ruled again: “If the recovery costs are higher than the flat-rate compensation [€ 40 per unpaid bill] It provides that the creditor may claim additional compensation for the reasons given, and Company X, by submitting the fee agreement, founds that the attorneys’ fees amount to € 10,295.26 TTC and is therefore entitled to receive the payment of that amount by Company Y for the in – law costs and appeal procedure. ”

This judgment therefore consolidates the case-law according to which, as soon as the creditor justifies the costs incurred, the judge is obliged to apply Article L.441-10 II of the Commercial Code without having the power to reduce the amount charged for legal fees, which is freely determined between him and his client. It is a clear judgment debt collection costs.

In summary, it is clear from this settled case-law that the creditor’s compensation must cover all the flat-rate and successful fees of his lawyer; that it includes both the costs incurred in the first instance and the costs incurred; finally, that the claim of the creditor is justified by the mere submission of the fee agreement with his lawyer.

Is the message heard by the bad payers? We hope so!

 

Georges Vonfelt GEVO

Who pays debt recovery costs in Europe

anglais, Unpaid debt, , , ,

piggy-bank-2889046__340

Who pays debt recovery costs in Europe In Germany the debt recovery costs charged to private or professional debtors are fixed by law. The list of debt recovery costs is detailed by the legislator, which goes as far as quantifying the amounts that can be claimed for a simple reminder letter. This is a major difference between France and Germany, France going so far as to prohibit the recovery of individuals. The German Federal Ministry of Justice and Consumer Protection wants to reduce debt recovery costs by 50% with a new draft “law to improve consumer protection in collection costs”. German professionals are “upwind” against this reform, their arguments being presented below. This reduction in debt collection costs would affect not only debt collection agencies and lawyers, but also creditors facing higher costs. According to the recovery professionals, this would be a reversal of the polluter-pays principle. Typically, two to six months elapse between receiving and closing a file. And in cases where a trial becomes inevitable, the handling of the case will take three to six yearsThe objective remains to recover the claim amicably. In this regard, even before the first reminder letter, many test steps, data comparisons and solvency checks are performed. On this basis, an individualized debt recovery strategy in relation to the debtor’s situation is determined. In this way, recovery professionals can decide, through which communication, how often and for what purpose, to manage this file. The German project stipulates that consumers will only be required to pay the debt recovery costs of a collection service provider or a lawyer if they have been informed in time. The project would impose the information of the debtor by an undeniable and proven action of the financial risks it incurs if it does not pay its bills. The decrease in the recovery costs payable would result in a profound change in the profitability of the German debt collection services. For the German recovery professional’s two possibilities open up to them: either the collection service providers reduce the scope of their activities by adapting them to their revenue prospects. Or the creditors bear part of the costs of the collection service. For the Germans it is a reversal of the polluter-pays principle. Because it is not the creditor who misbehaved, but the debtor, and this one, should pay for his bad behaviour. The Germans also want to differentiate between private and commercial debtors. Late payments in companies must be as low as possible. In order to achieve this objective, the German legal system is expected to inflict serious legal consequences on debtor companies that do not respect their commitments. In general, the German collection professionals ask that we move away from the flat-rate collection costs and replace it with a gradation of these costs related to the difficulty of collection. The problem of recovering unpaid bills is a hot topic in all developed countries. Very often individuals are protected and for companies the commercial relationship that we are trying to maintain is a real obstacle to rigorous practices in terms of debt recovery costs. Prevention is one of the first levels to be used to first make every effort to ensure that payment delays are reduced to the minimum. The development of digital and new means of payment will certainly change the situation by significantly reducing outstanding payments. However, it is indisputable that we must penalize the bad coaters and the professional latecomers who use and abuse supplier credit. Finally, it is up to the legislator to put in place simple and inexpensive judicial systems and procedures to sanction bad faith behaviour. It is absolutely abnormal that in very many cases no proceedings are initiated because the costs to be incurred are disproportionate to the unpaid claim. The professionals of bad faith are perfectly informed. Georges Vonfelt GEVO

Commercial desertification of the city centre is not inevitable a german small city example for revitalization.

Newsletter, , , , ,

Commercial desertification of the city centre is not inevitable.A German city of 19,000 inhabitants Wassenberg has tried an interesting experiment to put an end to the commercial desertification of the city centre.

In Wassenberg the initial observation reflected a situation “dark and desolate”

One retailer after another had to close his store. Few passers-by were lost in the shopping street. The city of 19,000 inhabitants in North Rhine-Westphalia was hoping for help. Thanks to a marketing consultant the revitalization was a success. Wassenberg has had a fate in recent years, shared by many small and medium-sized German cities: the commercial desertification of the city centre. The reasons for this situation are identical throughout Germany (as in France).

On the one hand, young people prefer to spend their money on online shopping rather than in downtown stores.

On the other hand, the big cities of the region, often through shopping centres, attract customers ready to buy. Wassenberg faced a particularly high number of competitors. Many people preferred to go shopping in Aachen, Düsseldorf, Mönchengladbach or Cologne. In addition, Wassenberg is on the Dutch border. Its inhabitants are within a 20-minute drive of a very popular factory outlet called Roermond.

 

It all started with a market analysis that consisted of studying neighbouring cities by asking the question: what do they offer in terms of businesses?

It quickly became clear that there would be no point in attracting a new H & M or Lidl as the demand for this type of product is being met by local competition bids.

The marketing expert then examined the demographics and purchasing power of the population and found that the population was mostly high-income, mature people. In order to survive as a small town against the big rivals, you had to occupy niches to fight again the commercial desertification of the City centre.

To determine these niches any offer that existed within a radius of 20 km around the city was eliminated. The commercial desertification of the city centre has been halted thanks to a new concept based on four “growth pillars”:

 

Culture,

pleasure,

tourism

and events.

 

The aim was to create themed outlets for which development potential has been identified and which do not exist in neighbouring cities.

For the “pleasure” growth pillar, restaurants have been opened.

For the “Tourism” growth pillar, new businesses have been created for hikers and leisure enthusiasts. A nature park is located near the Schwalm-Nette region, on the border of the Netherlands.

For the growth pillar “culture”, artists such as painters and musicians were approached, and they were able to choose empty stores for readings, lectures and exhibitions.

At the heart of the concept is the growth pillar “events”.

It has been set up a night market once a month. As with all other pillars, this market should only offer quality products, not cheap clothing or other hardware items such as sale. On the other hand, this new market offers home-brewed draft beer, wines, bread, cheeses and typical culinary specialties.

The market has brought people back to the city, which has also benefited existing local businesses. There was suddenly a central anchor event. In the past, people dreamed of the big city. Today, they find parties, drinks and good food in their own city. Result: citizens feel good and are connected to the city again. It is a new acceptance that has not existed for decades. Today, people say, “This is my city.”

Meanwhile, nearby cities like Erkelenz and Geilenkirchen have followed suit and have also established night markets: “Plagiarism is always the best compliment of less inspired contemporaries.”

You have to offer what the online retailer cannot offer: a combination of services and products, more personalized. Today, Amazon and local retailers often offer the same products. Then, retailers are surprised to see that people are learning and testing products locally, but then go to Amazon and order there.

The gradual disappearance of city centres is also due to the development of shopping centres. While many cities think that these huge buildings will be an economic engine, the marketing specialist of Wassenberg thinks the opposite: “These blocks of concrete make disappear the animation and the diversity of the city centres and are already gradually exceeded”, explains the expert. According to this expert, shopping centres are an indicator of urban mismanagement: architects were often responsible for designing large sales areas. Only when the buildings are in the process of completion will developers begin to look for tenants for commercial space. In fact, it would be necessary to do exactly the opposite of doing marketing studies before instead of creating commercial surfaces through architecture and only eventually to ask: who is supposed to go? ”

Instead of shopping centres, you have to rely on a concept he calls Emma Quartier. Many small shops with individual offers, which do not compete but complement each other. “I do not go downtown because I want to buy a jacket at H & M, but because I want some spice”, for example

Kirsten trusted the concept and opened her “Dumb in the Café Post” shop: “I’ve always dreamed of owning a boutique, but it’s always been difficult,” she says, and then she learns about the projects. of the city of Wassenberg in a newspaper and she said

“It’s my chance, if it’s not now, it’ll never be”

His concept, a shop where different artists can exhibit their works and where they have the opportunity to use a free workshop. She found her local thanks to the help of the municipality. In the meantime, she moved and expanded her store, so that not only artists can be staged, but one can also have breakfast in the morning and a coffee and cake in the afternoon, workshops are made available, lectures and readings are organized. The move from the periphery stores to the centre of the city was also initiated this operation was called: healthy shrinking. It is in the interest of all companies looking for qualified personnel to offer businesses and sufficient animation to motivate newcomers to settle in this type of city.

Why does it work in some cities and not at all in others? “Because this must be a top priority, if the mayor puts trade as a top priority for his city and is fighting for it, it will make the process easier. Wassenberg Mayor Manfred Winkens is looking forward to a new life in his city. “By 2020, we will propose nearly 60 different cultural events,” he said. “From art exhibitions to outdoor events such as the book market, the medieval market, cabaret nights and concerts.”

This example cannot be transposed as is in France because the concept of “ droit au bail” to lease is completely unknown in Germany. These notions are a real brake and handicap an average French city in the fight against the commercial desertification of the city centre. I was recently confronted with the following ubiquitous situation: on the outskirts of Strasbourg for a commercial space of less than 200 m2 empty for a long time and for which the owner asks a rent of 4.000 € per month the taker was obliged to fulfil a lease entitlement of € 50,000. For years, the “ droit au bail or pas de porte “ has been considered in many studies as obstacles to French growth and Europe has often expressed its wish to see a modernization reform initiated on this subject.

Georges Vonfelt GEVO Sarl

B to C debt collection costs in France a nightmarish situation when debtor is an individual.

anglais, News, , , , , , , , , , , ,

adult-2449725__340

B to C debt collection costs in France a nightmarish situation. The B to C debt collection costs in France were the subject of a new judicial decision dated September 26, 2019. This decision concerns the collection costs charged to individuals by the collection agencies. The decision of the Administrative Court is as follows. The collection of damages from the debtor must, except to qualify as deceptive marketing practices, be preceded by a justification of the nature and amount of the damage alleged. According to the judges the only fact for the administration to note that neither the proof of bad faith, nor that of the reality and the quantum of the damage, were reported, was sufficient to reclassify the damages and interests in debt collection costs constituting deceptive marketing practices. The burden of proof of the bad faith of the debtor and the loss suffered is on the creditor. Failing this, the collection firm is exposed to heavy criminal penalties for deceptive marketing practices. The context of this decision is related to the practices of some French recovery firms that try to make debtors pay damages by referring to Article 1231-6 of the Civil Code. The root of the problem is related to the small amount of the claims in the B to C files. To make their actions profitable some collection firms do not hesitate to claim substantial damages from the debtors to cover the debt collection costs incurred. The Court’s decision confirms that in practice and for debtors with a private person status, it is in fact impossible to claim recovery costs except to risk very heavy penalties. How to produce receipts for debts of a few tens of euros. And it is equally true that not paying small bills for an individual is a real lawless area, the debtor not in fact risk anything to pay his bills when he sings, if he decides to pay. No one is going to expose the debt collection costs of proceedings for a claim of a few tens of euros.