Debt Recovery in Singapore

Last updated on April 1, 2022

Let’s say you lent money to a friend using an IOU.

Or you provided a business service or goods to a client.

And then your friend or your client refuses to pay you. What happens next?

Generally, there are 3 parts to the debt recovery process:

  1. Getting to know your debtor
  2. Court judgment for the debt
  3. Enforcement of the judgment if the debtor still does not pay up

Please do not treat the following as legal advice. It can only be a rough guide that gives you an overview of the options available.

Profiling and Negotiating

To increase your chances of debt recovery, you should have as much information about your debtor as possible. Here are some basic questions:

Who is the debtor?

You have to know who to claim from if you wish to start a legal process.

If the debtor is a person, and the amount of debt owed is at least $15,000, bankruptcy proceedings are an option. Because bankruptcy brings about personal restrictions, it may encourage the debtor to pay up if he can.

If your debtor is a company, do you have a personal guarantee? Who are the directors of the company?

What assets does the debtor have in Singapore?

All the proceedings are useless if the debtor simply has no money. A lawyer and possibly a debt collector can assist you in conducting checks on the debtor:

  • What are the company’s financial circumstances?
  • Are there assets available for attachment?
  • Does the company have income?
  • If the debtor is an individual, does he have a job?

There may be situations where it is not economically viable to spend money on a civil claim in the first place. Although some costs are recoverable, it is still contingent on you being able to recover your debt from the debtor in the first place.

If the debtor is in a tight financial situation and simply has no money and no assets to pay you with, it may not be worthwhile to begin a legal process. Instead, negotiating on a payment plan may be more cost-effective.

However, do seek legal advice to ensure you’re not being taken advantage of if a debtor claims he has no money to repay you.

Getting a Court Judgment

Getting an Order of the Tribunal or a court judgment is the next step towards compelling payment should the above fail.

If the debt owed is up to $20,000

Your best recourse would be to file a claim with the Small Claims Tribunals. That’s because lodging fees are inexpensive and you do not need to hire a lawyer to file a claim at the Small Claims Tribunals.

However, there are limitations:

  • The limit on the claim amount is $20,000 unless there is the consent of both sides to raise the limit to $30,000.
  • The Small Claims Tribunals also does not hear all kinds of cases. For example, loan cases are excluded.

If you are owed more than $20,000, or your claim does not fall under the jurisdiction of the Small Claims Tribunals

You will need to file a civil claim with the courts. This follows the normal civil litigation process.

Although you can represent yourself, it is advisable to get a lawyer. A lawyer will usually profile your debtor to determine your chances of getting your money back and the best strategy of doing so. He should also advise on the economic viability of proceeding with the cases.

Before filing the claim, the lawyer will usually first send a letter of demand. A letter of demand should not be expensive, but at the same time it may not be enough to compel the other side to pay up.

The cost of proceeding further with a writ depends on the complexity of your case, and what the other side does in defence.

Enforcement of the Debt

Even if you get an Order of the Tribunal or a court judgment, it is not the end of the story. If the debtor still does not pay up, the next step is enforcement proceedings.

There are different options for enforcing your court judgment and each will have its own process. Most will end up enforcing by an order for seizure and sale of property.

Instead of Debt Recovery, If Someone Owes You Money Can You Go to the Police?

Unfortunately, you can’t go to the police if someone owes you money. Personal loan cases are treated as civil cases instead of criminal cases, so the police will not be able to assist you. You will have to go through the debt recovery process mentioned above instead.

It should be obvious by now that debt recovery is not an easy process. To avoid being in such situations, businesses can make use of commercial measures such as upfront payment, bank and personal guarantees, credit limitation, etc. That way, the risk of incurring bad debts is mitigated.