How do I recover a debt from a personal loan made to a friend in Singapore? Does it matter if I have an IOU?

If a friend owes a debt and refuses to pay, your limited options may include hiring a debt recovery firm to recover the debt for you, via legal negotiations. A google search with the words “Singapore Debt Recovery”, or something similar, ought to suffice. Alternatively, leaf through the yellow pages, or use’s “Find a Debt Collector” service to get in touch with our partnering firm.

If negotiations fail, you might want to consider legal recourse, especially if a substantial amount of money is involved. Do note that the Small Claims Tribunal (“SCT”) does not handle claims involving loans, according to this checklist. However, if the circumstances involve a contract for the sale of goods or provision of services, the SCT has the power to adjudicate over the matter. To recover a loan, it may be wise to consider engaging the services of a lawyer. Alternatively, you could approach a Community Legal Clinic to seek free legal advice.

Your case would be stronger if you could adduce compelling evidence proving the existence of the loan. These may include witnesses, SMSes, email exchanges, IOUs, bank transaction statements and the like. It is probably a poor idea, evidentially wise, to scrawl a couple of words such as “John owes Peter $5.” on a piece of napkin, and expect this to pass off as an IOU. If you’re unsure of how to make your own, feel free to visit the following links to download some standard form “Unsecured Promissory Notes”.

A “Promissory Note” is basically an IOU, a statement containing details of the loan, the identities of the parties involved, the payment frequency, date, and method of payment.

Business Forms provided by SME Toolkit

Promissory Note provided by ExpertLaw

If the loan you are thinking of making to a friend involves a large sum of money, you might want to get security for the loan, and include this in the IOU. A security could be a car or a house. In the event that your friend becomes a bankrupt, these secured properties could be used to repay your loan.

Hiring a lawyer to draft an IOU is not strictly necessary, though one would be able to provide much more valuable advice, if the sum of money involved is large.

The Moneylenders Act does not apply to personal lenders of money, and instead applies to money lending businesses.

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