Guidelines for the Handling of Installment Agreements Between Debt Collectors and Debtors

CIRCULAR Guidelines for the Handling of Installment Agreements Between Debt Collectors and Debtors

CIRCULAR: 5/2013 DATE: 24.05.2013 THE CIRCULAR APPLIES TO: Foreign collection agencies Branches of foreign collection agencies

FINANS TILSYNET P.O. Box 1187 Sentrum 0107 Oslo

Guidelines for the Handling of Installment Agreements Between Debt Collectors and Debtors 2 | Finanstilsynet

Introduction Section 17 of the Debt Collection Act stipulates that the debtor is obliged to reimburse the necessary costs incurred by the creditor in out-of-court debt collection. The maximum liability for reimbursement of out-of-court collection costs for the debtor is further regulated in the Debt Collection Regulations. It appears that the maximum rates under certain conditions, including installment agreements, may be increased. In its supervisory practice, Finanstilsynet will base the following guidelines on the collector's handling of installment agreements.

Main Rule The debtor's liability for reimbursement to the collector arises when the collector has been commissioned by the creditor to collect the claim, and when the payment deadline in the debt collection notice has expired, cf. Section 9 of the Debt Collection Act. When the collector and the debtor agree on an installment plan with more than four installments, the maximum rates according to Sections 2-2 and 2-3 of the Debt Collection Regulations may be increased by 1.5 times the collection rate, cf. Section 2-4 of the Regulations. The collector has the opportunity to agree on an installment plan and add installment fees to the case according to Section 2-4 of the Regulations if all of these conditions are met, regardless of whether a payment request according to Section 10 of the Debt Collection Act has been sent. The time point at which an increased fee can be added to the installment agreement is when the agreement is entered into between the debtor and the collector. It has no significance for the debtor's liability for reimbursement whether the claim is actually paid down over four installments or fewer, provided that it is agreed between the parties that the claim shall be paid with five installments or more.

Exceptions There is no opportunity to claim installment fees in a case that has been submitted to the conciliation board, the district court, or the enforcement authority. The collector may not claim installment fees if the installment agreement is agreed upon after one of these authorities has handled the case.

Imposition of Heavy Fees During Installment Agreements According to Section 2-3 of the Debt Collection Regulations, the collector may as a main rule impose heavy fees on the individual claim if the debtor does not meet the payment deadline in a payment request according to Section 10 of the Debt Collection Act by more than 28 days, i.e., on day 43 after the dispatch of the payment request. "Heavy fees" generally means a doubling of the light collection fee that is required in the payment request. If an installment agreement extends beyond day 43 after the dispatch of the payment request, there is an opportunity to impose heavy fees on the case in addition to the installment fees. The collector must, however, inform the debtor that heavy fees are imposed on the claim during the installment agreement on day 43 after the payment request is sent to the debtor, so as not to waive this possibility of claiming heavy fees in addition to the installment fees.

Installment Agreements for Consolidated Claims If two or more claims are consolidated after light or heavy fees have accrued in the individual cases, the fees in these cases shall be consolidated. The same applies in cases where installment fees have accrued for the claims that are consolidated. There will only be an opportunity to impose multiple installment fees on one installment agreement if several cases where installment agreements have been agreed are consolidated, and the installment fees in these cases have legally accrued before the consolidation into a common installment agreement.

Anne Merethe Bellamy director for market supervision Wilhelm Mohn Grøstad section chief

Contact persons: Advisor Oda Stensrud, tel. 22 93 97 61, e-mail: oda.stensrud@finanstilsynet.no Special Advisor Stein Tore Næprud, tel. 22 93 98 07, e-mail: stein.tore.naeprud@finanstilsynet.no

FINANS TILSYNET P.O. Box 1187 Sentrum 0107 Oslo POST@FINANSTILSYNET.NO WWW.FINANSTILSYNET.NO