Debt collection, late payments and recovery proceedings

The Finnish Competition and Consumer Authority (the FCCA) supervises debt collection

The FCCA’s website clarifies rules for late payments and collection, and instructs consumers in cases when they cannot pay their bills and payments by their due date. For example, the maximum amount of collection charges collected from a debtor are stipulated by law.

Debtor’s right to ask for suspension of voluntary debt collection and for transfer to recovery proceedings

A debtor is entitled to ask for suspension of debt collection compliant with the Act on Debt Collection and for the matter to be transferred to judicial recovery. It is advisable to make the suspension request when it is obvious that collection is pointless and only increases the debtor’s collection charges.

After the suspension request, the creditor can dun his/her receivables from the court or seek recovery proceedings. The creditor may continue other kind of collection only if he/she does not demand collection charges from the debtor.

Recovery proceedings

If the creditor does not gain the result desired from voluntary debt collection, he/she can dun his/her receivables through recovery proceedings. In order to take his/her receivables to recovery proceedings, the creditor must first seek grounds for recovery proceedings, usually a district-court decision.

Many public debts (such as taxes, statutory insurance fees, public transportation penalty fare, health care fees and other public fees) as well as maintenance debts can be collected through recovery proceedings without a court decision.

Distrainors’ aim is that the debtor pay his/her debts voluntarily upon a payment request. If no payment is received, for example, wage, pension, daily allowance, business income or assets can be subjected to recovery proceedings. Assets can be auctioned.

Recovery proceedings have a deadline

In recovery proceedings, debts can be collected until the debt is wholly paid or expired.

If foreclosure to collect the debt has been made within the deadline of expiration or if the debt has been announced for sale as stipulated by the Execution Act, expiration of the deadline does not prevent collecting payment from the foreclosed assets.

Debtor's right to installment-free months

When the debtor's wage has been continuously almost continuously repossessed for a year, the recovery proceedings will be terminated for a fixed term (installment-free months) if:

  1. foreclosure has been executed as earnings-limit foreclosure (in which case the debtor’s wage is at max. twice the amount of the protected portion); in earnings-limit foreclosure, the debtor is entitled to two installment-free months per year or
  2. the debtor’s necessary housing costs or other living costs after recovery proceedings are too high compared to the remaining amount or
  3. there is a special reason for the termination (for example, acquisition of eyeglasses or a household appliance).

Based on points 2) and 3), at max. altogether three installment-free months per year can be granted at the debtor’s request.

On the same basis, it is not possible to give installment-free months and at the same time limit the amount of foreclosure. When collecting maintenance payment, installment-free months can be given and recovery proceedings postponed only on serious grounds.