Debt recovery typically involves three main steps:
- Understanding Your Debtor
- Obtaining a Court Judgment
- Enforcing the Judgment
This is a general guide and not legal advice.
Step 1: Profiling and Negotiation
Before initiating legal proceedings, gather as much information as possible about the debtor:
- Who is the debtor?
If it’s an individual and the debt is at least $15,000, bankruptcy proceedings could be an option. For companies, consider whether you have a personal guarantee and identify the directors. - Does the debtor have assets in Singapore?
If the debtor lacks money or assets, legal action may be pointless. A lawyer or debt collector can help assess the debtor’s financial status.
In cases where legal action is not economically viable, negotiating a repayment plan may be a better alternative. However, legal advice is recommended to avoid being misled.
Step 2: Getting a Court Judgment
If negotiation fails, a court order may be needed to force repayment:
- Debts up to $20,000
File a claim with the Small Claims Tribunals. It’s cost-effective and doesn’t require a lawyer, but certain types of claims like personal loans are excluded. - Debts over $20,000 or outside Small Claims’ scope
File a civil suit in court. Legal representation is advisable, as lawyers can assess the feasibility and strategy of your claim. The process usually starts with a letter of demand, followed by legal action if necessary.
Step 3: Enforcing the Judgment
Even after a favorable judgment, the debtor may still not pay. In such cases, enforcement measures like seizure and sale of property may be needed to recover the debt.
Can You Go to the Police?
No. Personal debts are considered civil matters, not criminal offences. Therefore, the police cannot help—you must use the civil recovery process.
Final Note
Debt recovery can be complex and time-consuming. To avoid such situations, businesses should implement safeguards such as requiring advance payments, obtaining guarantees, and setting credit limits.