Debt recovery: what justifies the costs to be incurred?
If you engage the services of a debt recovery agency that works based on No Cure, No Pay, be sure to pay close attention. There may be a catch somewhere. The term suggests that you do not pay anything if they do not collect. In practice, however, it turns out that afterwards, when a claim is not collected, you are still faced with file or administrative costs. Often, No Cure, No Pay debt recovery is therefore not entirely free-of-charge, in which case the term is not used correctly. Thus, when dealing with No Cure, No Pay it is always important to reach a clear agreement on what you will pay if nothing is collected. But even if money is indeed recovered, it is important to have a transparent agreement. This prevents surprisingly high fee percentages for your debt recovery afterwards.
Honest about the cost to be incurred
Bierens Debt Recovery Lawyers considers No Cure, No Pay an incorrect term when not used properly. Therefore, we prefer the concept of No Win, No Fee. If we do not collect, this means you will not pay a fee but merely our administrative costs. Part of obtaining justice for the creditor also means that we are clear and transparent about the costs that you will incur.
If we do not recover your claim, you will pay a fixed amount of administrative costs. For the costs in your country, please check the ‘fees’ on our website. These costs are not a fee but merely cover the costs we incur in order to take a minimum number of steps towards the debtor (such as administrative charges and information and credit reports). You are ensured of quality because your case will be handled by one of our attorneys.
No costs for a successful debt recovery
In many instances though, you will pay nothing. We think that justice for the creditor means that the debtor pays these costs. Whenever we partially or fully collect, that is a “Win.” In case of a “Win,” a “Fee” is owed, but both in national and international debt recovery cases we recover that from the debtor as much as possible.
Fairness requires that we mention that not all costs can be recovered from the debtor in all cases, for instance, because there is a difference in (international) regulations which does not allow the recovery of costs. Also, sometimes the additional costs to be incurred do not outweigh the expected result. In that case, these charges will be partially or fully passed on to you. Depending on your conditions and the legal options in your debtor’s country, you will receive on average of 95% of the principal amount in the Netherlands. Abroad, this is 85% on average.
So, No Win, No Fee is not concerned with whether you are incurring costs, but it is related to owing a legal fee or not. This is unrelated to the issue of who will eventually pay that legal fee. In most cases, that will be your debtor. We consider that fair, and that’s what we aim for.