Property Law

1. What is Debt Recovery?
Debt recovery is a process to recover a debt owed by individual or company.

2. Is there any time limit to recover the debt?
The time limit to recover the debt is 6 years from the date the cause of action accrued (when the debt become due and payable). If there is a valid judgment against the debtor, generally the time limit to recover the same is 12 years from the date of the judgment. However, it is advisable to execute the judgment within 6 years as the leave of Court is needed if parties intend to execute the judgment after 6 years.

3. Is there any minimum amount to recover the debt?
There is no minimum amount to recover the debt.
The amount claim shall only determine which Court the suit will be filed.
- Less than 100,000.00 – Magistrate’s Court
- More than 100,000.00 & less than 1,000,000.00 – Session’s Court
- More than 1,000,000.00 – High Court

4. Is it necessary to do debtor’s background search?
It is advisable to do an IC Search/ Company Search / Bankruptcy Search/ Winding Up search on the debtor before proceed further.
The search shall determine whether it is worth it to proceed further or not.

5. What is the legal procedure to recover the debt?
a) Letter of Demand
Gives notice to the debtor on the debt owe stating the details of the debt.
Gives 14 days to the debtor to settle or to respond.
Will require evidence of indebtness if the matter goes further.
The priority is to recover the debt. Thus, if there is no necessity to file the summon, we shall negotiate further on the possibility of the settlement.
b) Summon
After the expiry of 14 days, if the debtor still evading /neglecting to settle the demand, summon will be filed in the Court.
The time consumed will depend on the complexity of the case.
If no appearance entered by the defendant/ debtor, client can record a judgment in default against defendant; it would take less than 3 months.
If the case is a straight forward case, client can go to summary judgment to save time and cost (after the defendant enter an appearance) ; it would take between 4 to 5 months if there is no further appeal.
If it is a complex case, client needs to be prepared for full trial; it would take 6 months or more.
Judgment can be recorded for the debt, interest (up to six years) and legal fees.
c) Execution
Once judgment is recorded against the debtor, client can execute the judgment to recover the debt owed (if summon not satisfied).
There are few ways to execute the judgment i.e.: Judgment Debtor Summon, Writ Seize and Sale, Possession of Immovable Property, Garnishee proceeding, bankruptcy and winding up (company).

The above information is intended for educational or reference purposes only as such it should not be used to inform or affect any personal decisions or for any personal use. If you are in any doubt, please contact us for further information.