- Debt recovery is when one (Creditor) takes legal action to recover outstanding debts from individuals, enterprises, or other companies (Debtor) once there has been a breach in the terms of a contract or a refusal or delay on the debtor’s part in payment of the outstanding debts.
- Any action for debt recovery will include legal proceedings filed in the Civil Courts. There is no specified minimum amount that must be owed before one can initiate any legal action. That said, the sum claimed will determine the court which you are to file your action in as follows:
|Up to RM5,000.00||Magistrates Court / Small Claim Procedure (by individuals only)|
|Up to RM100,000.00||Magistrates Court|
|Up to RM1,000,000.00||Sessions Court|
|Above RM1,000,000.00||High Court|
WHAT’S THE PROCESS
- We request that our client, the Creditor provide us with information in relation to the said debt. This information will include any contracts, purchaser orders, invoices that may have been issued for goods or services rendered, any correspondences or communication between parties, any proof of previous payments done, supporting documents including, creditor’s aging list, contracts, receipts, invoices, purchase orders, bills etc. ie. Any documents that can support the fact that monies are due and owing to the Creditor.
- We will undertake the necessary legal searches on the Debtor. The said searches include a Company/Enterprise Search, NRIC search, bankruptcy search and/or Winding Up Search. This is done to determine the status of the Debtor and to obtain the latest business or registered address of the Debtor.
- Although a letter of demand is not a mandatory requirement in some circumstances, we always advise the client to commence with a letter of demand to formally set the facts of the dispute, the debt sum and give the Debtor a specific period of time to either settle the debt or respond to the claim for settlement.
- Once the timeline for settlement has passed, we then will proceed with commencing legal action against the said Debtor to claim the outstanding debt whether it is for goods sold and delivered or services rendered.
- If the client’s documentation and paperwork are comprehensive and in some circumstances, there has been some kind of admission of debt by the Debtor (although not mandator, this is a bonus), we will file a Writ and Statement of Claim followed by an application called Summary Judgement.
- Summary Judgement proceedings are meant to be a fast track process for straightforward cases where the facts of the case and supporting documentation are clear, to a point where the Court does not have to set the matter down for a full trial. Summary Judgement applications are dealt with by way of filing of documents and witnesses need not be called to give evidence. It is primarily based on documents that are filed by way of Affidavits and a final submission by lawyers before the Judge.
- There are times when a Debtor may see fit to file a counterclaim for example, for damages or for a further claim against the Creditor. This too may be dealt with by way of Summary Judgement if the documentation and clarity of the matter permits it.
- In the alternative, if the matter is complicated and there are issues that require witnesses to give evidence, then the matter will be set down for trial.
- Once the Court decides on the matter, then a Court Order will be granted either allowing the claim or dismissing it.
- If the claim is allowed, then the Creditor has a right to enforce the said Order if the Debtor refuses or neglects to settle the outstanding debt pursuant to the Court Order. If either party is unhappy with the decision, then either party may file an appeal to a higher court, subject to jurisdiction issues.
HOW DO I ENFORCE AN ORDER I HAVE OBTAINED AGAINST A DEBTOR?
- If a Creditor wishes to enforce the Court order by winding up or bankruptcy proceedings, an application will have to be filed under insolvency legislation.
- If the Debtor refuses to settle the outstanding debt as set out in the Court Order, then the Creditor can initiate enforcement proceedings against the said Debtor.
- These are the modes of enforcements of a Court order:
- Winding-up Proceedings.
- Garnishee Proceedings.
- Writ of Seizure and Sale.
- Charging Orders.
- Writ of Possession of Immovable Property.
- Bankruptcy Proceedings; and
- Judgment Debtor Summons.
If you have any queries, please feel free to contact us at email@example.com. Or call us at 03- 6419 0949.