A Quick Guide to Debt Recovery in Singapore

Last updated on February 1, 2024

In many debt recovery cases, debtors fail to pay not because they do not wish to but because of their insufficient financial resources to meet all their many existing financial commitments. Hence, they will have to prioritise whom should be paid first.

To increase the likelihood of successful recovery, it is important to first have a basic understanding of the debt recovery process. There are generally 3 parts to this:

  1. Getting to know your debtor(s)
  2. Court processes for debt recovery
  3. Enforcement of the court judgment

Get to Know Your Debtor(s)

First, you have to understand your debtor’s profile to decide the best method for debt collection. Is the debtor an individual or a company? What assets does the debtor have that are located in Singapore? What are the financial circumstances of the debtor?

In the event where the debtor is an individual that simply has no money or assets to repay the debt, it may not be advisable to commence legal action. A ‘soft’ approach may be preferable to reach the desired outcome of getting the debt repaid. For example, you might consider negotiating a payment plan over a stipulated period of time to accommodate the debtor’s financial circumstances.

In other situations, it may be better to get a court judgment first so that you can collect your debt whenever the debtor’s financial situation becomes better, subject to limitation periods. Bankruptcy and winding up petitions are some available options at your disposal.

Preliminary Overview of the Court Processes

Some of the court processes include evidentiary requirements to substantiate claims, procedural timelines, and enforcement options.

The court processes begin with getting an Order of the Tribunal or a court judgment.

If the amount of debt owed is up to $20,000, your best recourse would be to file a claim with the Small Claims Tribunals. This is for a case that falls under the Small Claims Tribunals’ jurisdiction. The claim limit can be increased to $30,000 if the debtor agrees to bring the matter before the Small Claims Tribunals.

On the other hand, if the amount of debt owed is more than $30,000, or if your claim does not fall under the jurisdiction of the Small Claims Tribunals, you will need to file a civil claim with the courts.

What A Debt Recovery Lawyer Can Do for You

It is always preferable to get the advice of a lawyer. A lawyer who is experienced in debt recovery can advise you on whether pursuing the matter through civil court or a collection agency is the more economically viable option. Some debtors may also feel more pressured to pay up when receiving demand letters written by a lawyer because they would wish to avoid legal proceedings.

A good lawyer will also be willing to invest time in assessing the debtor’s financial circumstances (e.g. assets available for attachment/their anticipated income from their trade debtors/sensitivity to bankruptcy proceedings).

What to Look Out for in A Debt Recovery Lawyer

Successful debt recovery is mainly realised through the skillful employment of effective techniques. Thus, hiring a debt recovery lawyer with extensive experience in dealing with debtors of similar profiles is likely to go a long way towards successfully recovering your debt. For example, the lawyer can profile your debtor to determine your chances of recovering your debt, as well as apply persuasive techniques and positive pressure.

A lawyer who has litigation experience is also a bonus, in the event that the debt recovery process becomes complex and you are required to enforce your rights by bringing a case before the courts.

You can find experienced debt recovery lawyers on our platform.