Laws and practices related to third party debt collection abroad - how does it work?

Collecting a debt internationally involves navigating through the laws and regulations of different countries. Generally, debt collection must follow the laws of the country where the debtor (the one owing money) is located. This means that legal actions and collection processes can vary significantly depending on the country in question.

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Swedish law for collecting debts from foreign companies

When a Swedish company wishes to collect a debt from a customer in another country, the laws of the respective country generally apply. However, Swedish law does provide certain opportunities to influence the process, especially if the parties have agreed to Swedish legislation and Swedish courts as the forum for dispute resolution.

In many cases, the debt collection process begins with voluntary payment reminders and collection demands. If the customer does not pay, legal action may be required in the debtor’s home country, meaning the case must be handled according to that country's laws and court systems. The EU Payment Order is an alternative for cross-border claims within the EU, allowing for the collection of undisputed debts without resorting to foreign courts.

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Foreign companies collecting debts in Sweden

‍If a foreign company has a claim against a Swedish company, the collection must follow Swedish law. Debt collection in Sweden is regulated by the Debt Collection Act (1974:182) and the General Data Protection Regulation (GDPR). All collection actions must adhere to fair collection practices, meaning the debtor cannot be subjected to undue pressure or unreasonable demands.

If a Swedish customer fails to pay after reminders and collection requests, the creditor can apply for a payment order from the Swedish Enforcement Authority (Kronofogden). If the debt is confirmed but still unpaid, Kronofogden can take enforcement actions, such as wage garnishment or asset seizure. In case of a dispute, the creditor must turn to Swedish courts.

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International cooperation and local experts

‍Since laws and regulations vary greatly between countries, having local legal expertise is crucial for international debt collection. Through our network of debt collection specialists, we ensure that each case is handled according to the applicable laws and is tailored to the business culture and practices in the respective country.