Debt Recovery Proceedings in Singapore

There might arise circumstances when you lend someone money, business services, or goods and they refuse to pay you back. That someone might be a trusted friend, a client, or even a company. The amount is now stuck and you’re not getting it back. In such circumstances, the friend, client, or the company becomes a debtor. This is where debt recovery proceedings come into play.

To start a debt recovery proceeding, one needs to know who the debtor is. A debtor is a person who owes you money. This is the same person who has refused to pay you back. One needs to figure out if the debtor has the financial resources to pay back the money owed. It is also important to know whether the person has outstanding debts valued at $15,000 or more and if that person has filed for bankruptcy. If the value of debt is the said amount and no bankruptcy has been filed, then commencing a bankruptcy proceeding against that person is an option. A debtor may feel threatened and repay the amount since bankruptcy results in personal restrictions.

Assessing the assets of the debtor is the second most important step. If the debtor has no financial resources to repay the amount, commencing legal proceedings against him might be a waste of time. This is where one should hire a lawyer as they can evaluate the net worth of the debtor and if he can indeed pay the amount back. Lawyers can assist you with the following:

1. The financial circumstances of the business.
2. Available assets for attachment, if any.
3. For an individual debtor, their employment status.
4. For an individual debtor, their employment status.

The main objective of a debt recovery proceeding is to recover the money the debtor owes you. Thus, if the debtor is in a tight financial situation, it might not be economically viable to commence a civil proceeding against such a person. In such scenarios, negotiation with the debtor on a payment plan might be a better option and much more cost-effective. A lawyer can also help in formulating a payment plan for the debtor to pay you back after evaluating all the circumstances.

One can hire a debt collector who is a specialist in debt collection to collect the owed amount from the debtor. The objective of the debt collector is to reach an agreement between the debtor and the creditor by creating a suitable environment for the repayment of the money. Singapore does not have any legislation in place for debt collection proceedings, instead, debt collectors follow a Code of Conduct when dealing with debt collection in Singapore. It must be noted that debt collectors may take actions that might turn out to be illegal for the recollection of the amount from the debtor. Although no legislation is in place, their actions might still be susceptible to criminal charges. For example, threats, abuse, insulting words, behavior that causes the debtor to believe that unlawful actions will be taken against him, etc. The debt collectors in such a scenario may be charged accordingly. A debtor may also report a creditor to the authorities or file charges if they believe that the creditor was behind such harassment caused to him.

There are several options available for the recovery of the debt. These options can be categorized broadly into two groups. They are out-of-court options and in-court options. Out-of-court options are those options when debt can be recovered without commencing any legal proceeding against the debtor. In-court options are generally used when out-of-court actions fail and one has to commence legal proceedings in a court.

The steps for the recovery of debt are unique in each case. One should hire a lawyer to figure out the best option for debt recovery. The general procedure for debt recovery is mentioned below.

Even after the court passes a judgment in favor of the creditor, the debtor may still refuse to pay the money owed, back to the creditor. In such a scenario, a creditor must enforce the order passed by the court either through a Writ of Seizure and Sale (WSS) or by obtaining a Garnishee Order. After a judgment is passed in favor of the creditor he becomes the judgment creditor and the debtor, who owed him money, becomes the judgment debtor.

One of the ways to enforce an order in favor of the creditor is by requesting the court to authorize a Bailiff to seize and sell the property of the debtor to recollect the amount owed to the creditor. Officers of the court called Bailiffs are empowered to handle enforcement proceedings. For example, if a debtor, even after the order passed by the court, refuses to repay the money owed but owns a piece of expensive jewelry, the court may grant Bailiff the power to seize that expensive jewelry and sell it to recover the amount owed to the creditor. The Bailiff can access the debtor’s premises to seize the property. Such property may be sold in public auction to recover the debt amount.

One should consider the following factors before filing a Writ of Seizure and Sale.

1. Whether the judgment debtor is bankrupt.
2. If the judgment debtor has any assets which are applicable for seizing.
3. The total amount of the debt owed.
4. If there are other enforcement proceedings against the debtor.
5. The premises to be searched belong to the judgment debtor or not.

1. After making an application through one’s lawyer, an Appointment Letter informing about the execution date will be sent to the creditor, once such an application is successful.
2. On the given date one must arrive at the Bailiff’s Section of the State Courts with the Appointment Letter, Official Receipt of Payment, a signed Letter of Authorization, and duly signed Indemnity.
3. The next step would be to go to the premises to seize the property the creditor has identified. The premises might or might not be accessible and if not the Bailiff will leave a notice at the premises. If the premises are accessible, then the Bailiff will give guidance on what assets can be seized.
4. After a few properties have been seized, the judgment debtor will be given seven days to pay up the debt amount. A valuation report of the seized property is also required at this stage.
5. If the debtor still refuses to pay back the owed amount, the creditor can proceed with selling the properties in a public auction by applying for a Request to Proceed with Auction. An auction date will be fixed within 3 to 5 weeks and the Bailiff will inform the creditor about the same.

A garnishee is someone who owes the judgment debtor money. This is another way to enforce an order in favor of the creditor. Through a garnishee order, a garnishee is obligated to pay the judgment creditor instead of the judgment debtor. A garnishee can be a person or a bank. The proceedings for a garnishee order are governed by Order 49 of the Rules of Court. Thus if a debtor has money in a specific bank account, the creditor can ask that bank instead to pay him the debt owed by the debtor directly. Since technically a bank “owes” the client the money the client deposited in the bank, a garnishee order can be directed towards a bank as well.

1. The creditor has to apply for a provisional garnishee order by filing summons supported by an affidavit.
2. Once the provisional garnishee order is granted, a date will be set for the proceedings, where the garnishee can contest why such order should not be made final. Meanwhile, the debt owed by the garnishee to the judgment debtor will be “frozen”.
3. If the garnishee does not contest the proceedings or fails to show up, then a final order will be passed. In the case of a contest, the judgment will be passed after hearing both parties.
4. If another party claims that the garnishee owes him money too along with the judgment debtor, the matter will be determined after the court orders such a party for an appearance in the proceedings.
5. Once a final order is granted, the garnishee is obligated to pay the amount stated in the judgment to the judgment creditor.

Personal loan cases are civil cases rather than criminal cases and thus filing a complaint with the police is not the right way to recover the debt amount from the debtor. The police will not be able to assist if someone owes money to someone else.