Legal Debt Collection And Recovery In Malaysia
Collecting debt in Malaysia can be troublesome and difficult to deal with especially if your debtor intentionally avoids your call or contact. In most cases, your debtor may even choose not to repay you although he/she is financially capable of repaying you.
Generally, to collect your debt legally in Malaysia, here are the few steps to follow before resorting to a legal action:
- Send a friendly reminder or notice in writing to your debtor on the amount due and when it is payable.
- In the event if the first reminder or notice is ignored or no reply whatsoever, you are advised to engage a lawyer to collect the debt on your behalf for higher chance of recovery of the debt. Usually, our lawyer will first issue a letter of demand for the due payment stating the amount and terms of payment before resorting to a court or legal action.
- In most circumstances, the debtor will respond and if possible, negotiations can be initiated to discuss on the repayment options to ensure that the creditor is being repaid accordingly to the agreed terms. This can be done through a lawyer to ensure that repayment of debt is done without going through the court or legal process.
- A separate repayment agreement can also be prepared to ensure that the debtor follows the terms of repayment strictly in the best interest of the creditor.
- If the above steps are nonviable or practical considering the debtor is not repaying the debt, then the final step is to initiate a court or legal process to recover the due payment legally.
More often than not, engaging a lawyer can help individuals or companies to collect debts successfully to ensure that the creditors are being repaid.
This includes providing repayment options that are practical to both the debtor and creditor to ensure that the desirable outcome is achieved which is to get the debtor to repay the debt.
Interest of late payment should also be discussed and agreed by both parties beforehand and must be done in writing to prevent any dispute.
Commencing Legal Action For Recovery Of Debt In Malaysia.
Before commencing a legal action or sue for debt recovery in Malaysia, a mediation or alternative dispute resolution will be considered before starting a full legal action. This is to give both the debtor and creditor a last chance to work on the repayment of debt.
If it is not possible and if the debtor refused to settle this amicably, then the only course of action is to start a legal action or proceedings against the debtor for the recovery of debt.
In a legal proceedings, the court will ensure that the sum is undisputed or if the claim is a good claim for debt repayment before the court grants a court order to ensure that the debtor repays the creditor. Usually, the debtor may also be required to repay the legal cost by the creditor.
Bear in mind that under the law in Malaysia by virtue of the Limitation Act 1953, a claim can only be brought against the debtor within 6 years from the date of the repayment of debt due. Any claim after the lapse of 6 years may be difficult.
Debt Recovery And Execution Of Court Order In Malaysia
The ultimate aim to start a legal action against the debtor is to ensure that the due amount is being repaid. This can be done if the court order is obtained.
However, if the debtor is not able to readily provide for the required sum or due payment, the enforcement procedure or seizure of assets can be taken by the creditor against the debtor if the court has granted a decision in the creditor’s favor.
- Seizure and sale action: to seize the property and auctioning it to the public;
- Writ of possessions: to take over the property of the debtor legally;
- Garnishee or attachment proceedings: to freeze the bank accounts and the acquire/transfer the funds in those accounts or to require the employer of the debtor to pay the creditor first;
- Judgment debtor summons: to file or start a bankruptcy action against the debtor.
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