2017-01-09
Germany
 
 

Debt collection in Germany

It will be recalled that one of the methods of acquiring easements and profits is by means of prescription. The essence of prescription is that long, open and unchallenged use founds a claim of right. It might be expected that not only the right of easements and profits, but the title to a debt claim itself might be acquired in this way. German law, however, has confined the principle of acquisition by prescription to incorporeal rights such as easements, which do not carry with them the right to collect open amounts as a kind of the possession of land. Where a person is in debt of something corporeal, a physical object, such as land, the law grants protection to his possession as such. Thus a German debtor has no need to rely upon prescription to constitute a title: the law will protect the creditor in Germany against anyone except a person with a better right to claim the outstanding payment than his.
Thus if squatter one is evicted by squatter two, one may bring an action to oust two, though naturally one may himself be evicted by the rightful owner of the unpaid debt. Though, since possession is protected, as such, the bad debtor in Germany will acquire a complete defence to a claim even by the latter after the collection period of limitation has run in respect of an action by him: so that than the credit will have become ripened by lapse of time into ownership.
The rules of debt collection:
The general rule laid down by the limitation act 1990 is that anyone, including the owner, who is ousted from the possession of land must bring his action to recover it within two years from the time when the cause of action first accrued. Once this limitation period is past, the creditor’s right to sue is lost, and his title itself is destroyed.
One will not be able to rely upon his former title; he will have lost it through his own inertia. But in order for the debt collection period to start to run against the debtor the latter must have discontinued his possession; or, to put the reverse, he must be ousted by a creditor. Thus it has been held that the mere fact that a person makes use of another’s land will not, even though it continue for two years, confer upon the former a title by reason of limitation if the reason that the owner raised no objection was that he was only leaving the land alone because he was waiting to build upon it when a projected payment should be made.
Hamburg and Northern Germany:
The period which applies to claims by owners of equitable interests as well as to owners of legal estates runs from the time when the cause of action accrues. In the simplest case where the debtor evicts the creditor, who is in possession, this will be done by a collection agency in Hamburg from the moment of eviction.
The act provides that those who are in this position must bring their claim either within two years of the actual entry of the wrongful possessor or within five months of the time when they themselves become entitled to possession, whichever of these two periods is the longer.
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