Meginmál

Debt collection

  • Primary collection is the first stage of collection measures due to an unpaid claim (debt).  
  • At the start of the collection measures, a written debt collection warning must be sent, informing the debtor that further collection measures can be expected if the claim is not paid within the prescribed period (minimum 10 days). The debtor pays a fixed fee for the collection warning.   
  • If the debtor does not pay a claim within the period specified in the debt collection warning, the creditor may initiate another level of debt collection measures known as interim collection. 
  • Interim collection is optional and involves collection measures that are more onerous than primary collection measures.
  • In interim collection, collection costs may be imposed on the debtor.
  • If a claim goes into interim collection, the debtor pays for an interim collection letter, two reminders and one phone call. Rules on the maximum costs that can be claimed from the debtor at the interim collection stage.
  • Legal collection is the last stage of debt collection measures and a claim that is still in arrears despite primary and interim collection measures then goes into legal collection.  
  • Legal collection means that legal procedures can be applied, e.g. enforcement actions. Examples of enforcement actions are seizure, freezing of assets, forced sale, etc. 
  • The cost of legal collection can be very high. Rules on the maximum amount of debt collection costs do not apply to legal collection. 
  • Legal collection is conducted by lawyers.
  • Creditors can initiate collection measures themselves or entrust the task to a debt collector. 
  • Lawyers, public entities, commercial banks, savings banks, other credit institutions and investment firms can carry out debt collection measures without a debt collection licence.
  • Other parties need to have a debt collection licence from the Central Bank of Iceland to be able to collect debt.
  • Check if a claim has gone into primary collection procedures.
  • Carefully review the collection costs and check whether they are in accordance with the regulation on the maximum debt collection costs.
  • If the debtor cannot pay a debt due to financial problems, you can seek free advice from the Debtor’s Ombudsman Office.