Debt Collection in Singapore
Debt Collection in SingaporeUpdated on Thursday 17th September 2020
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The legislation on debt recovery in Singapore
From the beginning, it must be noted that Singapore does not prescribe a specific legislation with regards to debt collection proceedings, as this jurisdiction has a good Days Sales Outstanding index. With regards to payments, Singapore is known as having a very good payment culture and this means that in practice, businesses do not deal with late payments.
This happens sometimes, but it is not very common for companies and natural persons to pay their financial obligations after the due date. Still, late payments are regulated under the local legislation and the basic law on this matter is given by the Insolvency Law, which prescribes the manner in which companies can deal with late payments. Following the regulations of this law, debt collection in Singapore will be generally carried out in the local courts. For in-depth advice on this procedure, our team of lawyers in Singapore can be of assistance.
Amicable settlement in debt collection cases in Singapore
The first step towards debt collection in Singapore is an amicable settlement between parties. If that fails, before starting legal proceedings, an assessment of the company’s assets is important and verification with the Singapore Companies Register is also useful in order to check the company’s activity.
It is also very important to verify the debtor’s solvency status because if an insolvency procedure has commenced, debt recovery is no longer possible. If debt collection in Singapore is possible, the first step would be to notify the debtor about the outstanding amount by sending out dunning letters.
In the case in which the debtor does not provide an answer to the dunning letter, the debtor may be visited by a collection officer for the purpose of reaching an amicable settlement. Our attorneys in Singapore can provide legal counseling in debt collection procedures.
What can debt collectors do in Singapore?
Persons who are debtors should know that when they are contacted by debt collection specialists, such persons will follow specific regulations that are prescribed by the Code of Conduct. The Code of Conduct that is applicable when dealing with debt collection in Singapore is not a rule of law, but more of a guide as to how such specialists can conduct their activities without harassing persons who must repay outstanding debts.
The Code of Conduct was created by the Credit Collection Association of Singapore, which stipulates that when a debt collector agent will contact in person a debtor, the company hiring the debt collection specialist can’t sent more than 5 agents to a person’s address, be it a natural person or a legal entity. However, in practice, most of such cases are handled by a single debt collection specialist.
It is also important to know that debt collection specialists do not have the same powers as governmental agencies and their main purpose is to reach an agreement between the creditor and the debtor, by creating a suitable environment – for instance, the debt collection agent will try to recommend a repayment scheme that can be actually respected by the debtor and accepted by the creditor. Debt collectors who harass the debtor can face the following:
- debt collectors who end up in physically hurting the debtor can be charged with a fine of S$ 5,000;
- severe cases can be charged with this fine, but also with an imprisonment of 2 years;
- in the case in which a debtor has injuries that can be considered “grievous hurt” due to the harassment of the debt collection specialist, then the latter can receive a sentence of up to 10 years in prison;
- any form of vandalism done by the debt collection agent at the premises of the debtor can be charged with a fine of S$ 2,000;
- in the case in which the person will conclude any action that can fall under the regulations of the Miscellaneous Offences Act in relation with the debtor, a fine of S$ 1,000 will be charged.
How is the debt assessment done in Singapore?
When dealing with debt collection in Singapore, the creditor will want to recover an outstanding claim from a debtor. Sometimes, the debtor may simply forget to pay when the due date is and in this case, he or she will simply receive a reminder and pay the respective sum of money.
In other cases, the debtor will not pay in due time because he or she simply does not have the required capital to do so. This can also happen in the case of companies. In this particular situation, the debt collection agent and a lawyer will try and assess the company’s assets, in order to observe the most suitable option for repaying a debt to the other party.
Our team of lawyers in Singapore can provide in-depth legal representation on the legislation regulating companies in this country, as well as on the debt collection procedures addressed to corporate entities. As a general rule, the most suitable option is to reach an amicable agreement with the creditor, especially when the debtor does not have any money to participate in a litigation case.
Thus, the lawyer or the debt collection specialist will try to verify specific situations regarding the financial status of the debtor. In the case in which the debtor is a company, the specialists will verify the financial situation of the business, the income of the company, the assets that can be taken from the debtor and used to repay the debt, these being just some of the basic aspects that will be verified in this particular case.
Please mind that if we refer to personal loan cases, in which a person lends money to another person, the process for debt collection in Singapore states that the entities will need to follow the basic steps for the recovery of the debt. The case will be treated as a civil case and you may find out more information on this process from our team of lawyers in Singapore.
Court proceedings for debt collection in Singapore
Singapore’s legal system is comprised of State Courts that are divided between the Magistrate Court and District Courts and the Supreme Courts that is made up of the High Court and the Court of Appeal. The procedure on debt collection in Singapore stipulates that the court where the case will be held will vary based on the amount that has to be collected from a debtor.
For debts not exceeding S$10,000, the plaintiff may file a petition with the Small Claim Tribunal. Civil cases with debts that do not exceed S$60,000 are handled by the Magistrate Court, while cases in which the debt ranges between S$ 60,000 and S$ 250,000 will be handled by District Courts. The High Court will rule in cases where the amount to be recovered exceeds S$250,000.
When starting the procedure for debt collection in Singapore, the entity that needs to recover the debt will send a demand letter to the debtor, in which the debtor is invited to pay the required amount, which includes interest for late payments. The creditor will file a writ of summons the court will serve to the debtor.
After this, the debtor will be entitled to a period of 8-14 days to file a defense. After all the documents are filed by both parties, the court will examine the case and will rule a decision. You can contact our Singapore law firm for legal representation in litigation cases or debt collection in Singapore.