Sometimes people can’t repay their loans because they’re going through hardship themselves. They might be forced to borrow from their friends or families.

Although it’s difficult for the person who defaults on the loan, it’s equally challenging for the lender.

And if you’re here, chances are you’re the lender.

But you’ve come to the right website because we’ll tell you everything you need to know about debt recovery. We’ll discuss the usual three steps of the process, then move on to some valuable tips.

Keep reading below.

Disclaimer: This article is primarily a guide that reviews your alternatives, and you should seek legal counsel if you need personalised advice.

Step 1: Profiling And Negotiations

There are typical steps of debt recovery in Singapore.

The first part of debt recovery is genuinely understanding your debtor, their needs, and their reasons for defaulting on the loan. That way, you’ll increase your negotiations’ success.

Let’s start with the first question:

Who’s Your Debtor?

You either lent money to a person or a business.

In the first case scenario, if the person you’ve borrowed money to has a debt of over $15,000, they can file for bankruptcy.

Explain to the person that bankruptcy stops interest from accumulating and freezes legal charges, bringing other restrictions. For example, they won’t be able to secure another loan anytime soon.

Second case scenario:

Your debtor is a company. At this point, you have to learn:

– Who the directors are

– The assets the company has in Singapore

– The company’s financial circumstances, such as income and attachment-available assets

It would also be helpful if you had a personal guarantee for the loan.

If the person or company owing you money simply has none, the proceedings are in vain. That’s why you need legal help and maybe even a debt collector to find the answers to the questions above.

What happens if you make a civil claim even if the debtor has no money and no assets?

It’s your right to sue the debtor, but it’s not economically viable. You’ll spend money making that claim, and you may not recover either this money or the original debt.

Here’s what to do instead:

Negotiate another payment plan that suits both you and the debtor. We’ll discuss more of this plan later.

You can also ask a lawyer/ debt collector agency to ascertain whether that person/ company really has no funds.

Step 2: Court Judgment

If you can’t negotiate with your debtor, the next step is obtaining:

– An Order of the Tribunal or

– A Court judgment

There are two scenarios to consider:

Your Debtor Owes You <$20,000

In this case, you can address the Small Claims Tribunal because:

– It’s affordable

– You don’t need a counsellor

On the downside:

– The maximum amount is $20,000, although you and your debtor both agree to $30,000 tops.

– Some cases, such as loans, aren’t under the competence of the Small Claims Tribunal.

Your Debtor Owes You >$20,000

In this case, you have to file a civil claim. In this case:

– Consider hiring a lawyer, even if you can represent yourself, because they know how to profile debtors. Besides, they know the best strategies that fit different scenarios, so they’ll advise you towards the most profitable outcome.

– The lawyer will send your debtor a letter of demand, asking them to repay the loan.

– If your debtor still refuses, the lawyer will file the civil claim.

Step 3: Debt Enforcement

There are two possible outcomes at step 2:

– The court rules in your favour

– The court rules in your debtor’s favour

Obviously, you can’t do anything else in the second scenario. Your hassle’s not over in the first situation either. After all, what if your debtor still refuses to pay?

What If Your Debtor Still Refuses To Pay?

Here are your options:

Order Of Tribunal – Small Claims Tribunal

This order of tribunal has a deadline written on it. So, if your debtor is willing to pay, they’ll respect this deadline.

Writ Of Seizure And Sale

If the debtor refuses to pay, this Writ of Seizure and Sale allows the bailiff to take and sell the debtor’s assets to recover your debt.

Writ Of Delivery

In this case, the court orders your debtor to deliver any movable property to you.

Writ Of Possession

This writ is intended for tenants who don’t want to leave certain premises. So they’re served the writ of possession to leave the landlord’s house.

Examination Of Judgment Debtor

This examination of the judgment debtor is basically a court order that asks your debtor to appear before a judge and answer questions about their property. The judge can also request this person to show clarifying documents supporting their claims.

Garnishee Proceedings

Let’s say your debtor can’t give you your money back because they’ve also lent cash to somebody else. This somebody else is called a third party. So, the court can give them a garnishee order to pay you back that cash instead of summoning the original debtor.

Committal Order

If the debtor still refuses to pay or doesn’t follow the directions of a court order, you can sue them again. Now, your debtor will receive another punishment, such as a steep fine or even imprisonment.

Foreign Enforcement

If your debtor has assets abroad, your lawyer will assist you in enforcing the court order in that country. However, they must watch out for any particularities in the area’s jurisdiction.

Tips To Consider For Debt Recovery In Singapore

Now that you’re familiar with the basic three steps of debt recovery in Singapore, you can learn some valuable tips to make things easier:

1. Watch Out For The Law

If you decide to hire a debt collector agency, watch out. Sure, debt recovery in Singapore isn’t guided by specific laws, but that doesn’t mean your debt collector can act in any way they want to.

Here’s the thing:

The Protection From Harassment Act strictly prohibits threats, harassment and stalking. Conversely, the Penal Code prohibits injuring anyone.

So, no:

– You can’t write O$P$ on anyone’s doors

– You can’t show up in groups of ten to intimidate people

– You can’t harass their bosses

– You can’t wait for them in front of their girlfriend’s houses

– You can’t threaten their parents – although debt collectors are legally allowed to tell debtors’ families about their bad debts, they should avoid harassment

If you do these things, you’re facing steep fines and jail time.

2. Watch Out For Limitation Periods

Did you know there’s a limitation period for each IOU and debt claim?

For example, if you have an IOU:

– With a repayment date: you should start legal proceedings within six years of that date

– Without a repayment date: start legal proceedings within six years of the cause of action date

3. Always Be Open To Negotiations

Negotiating another repayment plan is better than taking anyone to court because it means:

You have more chances of debt recovery.

– You won’t incur any legal fees.

Examples of debt restructuring include:

– Extending the repayment duration so that the monthly installment is lower

– Deferring the interest

– Changing the payment dates

4. Communicate Wisely

Most creditors who want to recover their debts will pay home visits. However, that’s not the wisest strategy.

Instead, try:

– Letters of debt recovery

– 30/60/90-day notices

– E-mails

These tools are better because:

– You can include restructuring alternatives inside the letter or your intention to negotiate.

– They leave a paper trail that will be very useful if your case ever gets to court.

Phone calls can also work because they elicit more emotional involvement, and so the debtor will be more willing to negotiate if they feel shame or guilt. Conversely, if you know the debtor well, you can contact their family to ask for help or for them to guarantee the loan.

5. Hire A Debt Collection Agency

Hiring an agency is a wise solution for debt recovery because:

– You may be too busy to follow all the steps to get your money back

– It keeps things professional between you and the debtor, especially if they’re an acquaintance of yours

However, make sure the agency follows the rules in place for debt recovery. They shouldn’t break the law – we already discussed examples of harassment, threats, and violence.

But here’s another thing:

Your debt collector shouldn’t impersonate another entity, especially a law enforcement agency like the police.

Debt Recovery In Singapore

Recovering your debt is based on a lot of hard work, but the results are worth the effort. So, remember that negotiations are the best policy in this event. Even if you won’t get your money on the spot, communicating with your debtor increases your chances of retrieving the loan.

Another essential thing in debt recovery is following the proper legal protocol.

So, you should hire legal counsel and follow their advice. Your lawyer will be able to profile your debtor much better, and so they’ll adopt the right recovery strategy.

You can also hire a debt collector agency, but make sure they follow the law.

And, of course, try to avoid getting in this situation again. For example, you can demand upfront payments from companies or ask for bank/ personal guarantees.