How To Recover Your Debt In Singapore?
A client was asking me this question yesterday. I shared with him. I think there may be others who may benefit from my response, just hope to share here…
What happens when your usual letters to your Debtor have been ignored without any response?
You can then take these 4 steps :
1. Issue a Demand Letter or Letter of Demand to your Debtor by your Lawyer
2. Failing which, you apply to issue a Writ of Summons to summon your Debtor to Court
3. Apply to Issue Writ of Seizure to take possession of any assets at your Debtor’s office and sell them
4. Start legal proceeding to sue your Debtor Bankrupt
Do not ignore your creditors’ Letters of Demand, Statutory Demands, or Writs of summons from the Court.
You can be made a bankrupt even if you refuse to respond to your creditors or decline to accept service of their documents.
Let me elaborate in layman’s term here …
1. A LOD, i.e. a Letter Of Demand (of payment)
* is letter stating a legal claim (usually drafted by a lawyer ) which makes a demand for restitution or performance of some obligation, owing to the recipients’ alleged breach of contract, or for a legal wrong.
* It is advantageous to send a demand letter asserting that the other side appears to be in breach and requesting assurances of performances.
* Demand letters that are not responded to may constitute admissions by silence.
* Also, a demand letter will often generate a denial letter stating the basis for rejecting your side’s claim, and is sometimes a good indication of what defenses will be raised if suit is brought later.
2. Writ of Summon
* is a court document used to commence legal proceedings in Singapore.
* In most cases, the writ is preceded by a letter of demand, which is usually sent on behalf of a claimant by his lawyer.
* If the letter of demand is not complied with, the claimant may then choose to resort to legal action.
Service of the writ :
* The filing of a writ of summons (usually electrionically, using eLitigation) by a plaintiff or his lawyer commences legal proceedings against the named defendant.
* Subsequently, the writ will be processed by the Courts for issuance.
* The issued writ is then served by the solicitor’s clerk or a process server on the defendant or his solicitors (where the solicitors have been instructed to accept service of legal processes on behalf of the defendant).
* The writ must be served within the time limit permitted by the Court, but it is possible to request for a time extension.
* It is the obligation of the plaintiff (or his lawyer) to serve the writ onto the defendant.
* Legal proceedings do not continue until service is effected.
* While there are exceptions, personal service of the writ is usually mandatory.
* Personal service is effected by delivering a copy of the writ to the defendant by hand.
* In Singapore, some law firms instead choose to notify the defendant with a letter sent to their doorsteps, requesting the defendant to collect the writ at the firm’s office.
* Where the defendant complies, service is also effected.
* Where a plaintiff commences legal proceedings against a company, service of the writ may be effected by serving the writ on an officer of the company (such as a director), or by leaving it at or sending it by registered post to the registered office of the company.
3. Writ of Seizure and sale
* An order issued by a court after all other attempts at collection have failed that empowers a creditor to confiscate and liquidate a defaulter’s property for the purpose of recouping all or a portion of the outstanding debt.
4. Bankruptcy Application
* is filed in the High Court by either the debtor or a creditor.
* The debtor owes debts of at least $15,000 which he cannot repay. The High Court may then declare him a bankrupt at the court hearing.
Creditor’s application for bankruptcy :
* Before filing a Bankruptcy Application, a creditor will issue a notice known as a Statutory Demand, demanding payment from a debtor.
* If the payment is not met within the deadline stipulated in the Statutory Demand, the creditor will file a Bankruptcy Application against the debtor in the High Court and a court hearing date for the case will be set.
* If payment is not made by the hearing date, the High Court may proceed to make a Bankruptcy Order and declare the debtor a bankrupt.
Are there other costs involved in filing a bankruptcy application?
* Any creditor who wishes to file a Bankruptcy Application in the High Court must pay a deposit of $1,850 to the Official Assignee for the administration of the bankrupt’s estate.
* The creditor applying for the bankruptcy may recover this deposit if there are sufficient funds in the bankrupt’s estate.
* The deposit of $1,850 will not be refunded to a bankrupt who has applied for his own bankruptcy.
* If the Bankruptcy Application is dismissed by the High Court or if it is withdrawn, the Official Assignee will retain $50 as preliminary administration costs under the Bankruptcy (Fees) Rules and refund $1,800 to the creditor who has filed the bankruptcy application.
Hope you don’t have to go through this Debt Recovering process.
Always Credit screen your Customer or always do up a Shareholders’ Agreement to avoid having to go into debt-recovering mode with either your default customer or your errant shareholder.
Good Luck !
If you need help, feel free to contact us at :
(O) +65 63851011
(M) +65 90880669
