The Timeline: How Long Before A Debt Is Written Off In Singapore?

Personal Finance

The Timeline: How Long Before A Debt Is Written Off In Singapore?

August 28, 2023

The process of debt collection can be both straightforward and complex. Debt recovery may appear to be a relatively straightforward endeavour to reclaim due debts.

However, it is crucial to recognise that every debt recovery process depends on the specific events and context surrounding the debt. Hence, obtaining legal counsel to receive accurate guidance before further action would be advisable.

Although there is a lack of specific legislation governing the recovery procedure of debt in Singapore, particular guidelines and statutory limitations govern this process. These regulations aim to guarantee that the parties involved have undertaken all necessary and appropriate measures before initiating legal proceedings in any court in Singapore.

Let’s examine the debt recovery process in greater detail and see the timeline of how long before a debt is written off in Singapore.

The Statute Of Limitations In Singapore

The Singapore Limitation Act establishes a legally defined ‘deadline’ for debt recovery claims. Typically, debt claim necessity is necessary within six years from when the debt upholds equitable treatment for all relevant stakeholders.

This limitation act deadline guarantees that applicants start their legal action with appropriate effort while allowing respondents to gather and present any required evidence to refute the claim.

Legal Advice Significance

Given that the determination of the time of accumulation of debt falls within the realm of legal inquiry, it may be advisable to consider engaging legal counsel if there are concerns regarding the potential expiration of a debt belonging to an individual.

Protocol Of Singapore Courts For Business-To-Business Claims

Protocol Of Singapore Courts For Business-To-Business Claims

As of 1 October 2019, businesses filing claims against each other in Singapore must follow the Singapore Court’s pre-action protocol. Consider procuring legal counsel and support to aid in formulating a formal letter of claim, particularly in cases involving debt recovery between corporate entities.

The Letter Of Claim Criteria

According to the pre-action protocol, the letter of claim must contain all relevant information regarding the claim, such as:

  • The creditor’s name.
  • The origin of the debt.
  • The appropriate interest rate.
  • The magnitude of the debt.
  • The actions done to settle the debt by the involved parties.

Implications Of Not Adhering To The Pre-action Protocol

Although violating the pre-action protocol might not wholly invalidate the debt collection claim, the Singapore court has the authority to impose penalties on the party who breaches the pre-action protocol. These court protocol implications may include mandating the payment of fees, even if the borrower is successful in their suit.

Solicitor’s Role In Debt Recovery Against A Company In Singapore

The initiation of a debt collection suit towards a company gives rise to several legal inquiries due to company liaison challenges and the inherent inability of a company. This is, as opposed to an individual, to express its position. Communication by a company usually consists of interactions facilitated exclusively by its employees, agents, and representatives.

Hence, it is imperative to obtain legal counsel regarding the legitimacy of your claim for debt collection. Also, it’s crucial to conduct due diligence before legal proceedings initiation.

Legal Counsel Importance

Engaging the services of a legal professional can provide valuable assistance in comprehending the company’s financial capacity before initiating legal proceedings. Obtaining the services of a legal professional can also assist in the solvency assessment status of the company and evaluating the appropriateness of commencing legal proceedings.

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Scenario: Liquidation Of A Company In Singapore

In the event of a company liquidation procedure, recovering debt from said company involves submitting proof of debt to the appointed liquidator.

Process Of Proof Of Debt Submission To The Appointed Liquidator

The submission of proof of debt can occur irrespective of whether the obligation will be repaid at the time of filing. Following submitting the evidence of debt, the appointed company liquidator will thoroughly examine and verify the accumulated debt.

The liquidator possesses the authority to either fully or partially accept or decline the debt collection claim.

Asset Distribution Sequence And Repayment To Creditors

Regrettably, the submission and approval of the evidence of debt do not assure the repayment of debts to lenders.

Typically, the unsecured lender, commonly a lender without collateral, will receive payment after compensation from the secured and preferential lenders. Payment will come from the remaining company’s assets following the distribution process.

Company Debt Termination Post-dissolution

Upon the issuance of the winding-up order and subsequent distribution of assets, the business shall undergo dissolution, thereby eliminating any outstanding debts the corporation owes.

Approaches To Claim Towards A Company In Singapore

Before initiating legal proceedings, it is advisable to contemplate other possible alternatives:

Engaging In Negotiation With Company Representatives

Occasionally, engaging in a negotiation process to achieve a mutually agreeable resolution with the company’s creditor may yield a more advantageous result. Please arrange an official conference to engage in negotiations for a schedule of payments. Gain a comprehensive understanding of the practical alternatives at your disposal for recovering debts.

Consider using the services of a legal professional who can assist in formulating a comprehensive payment arrangement. This measure will help safeguard your legal entitlements and prevent the potential loss of your claim.

Inform The Company’s Accounting Staff

In the context of larger corporations, it is possible that the notification of the debt owing to an individual might not have been appropriately communicated to the relevant department. Contacting the respective department to verify whether the debt is being duly addressed is advisable.

Collection Agency Collaboration In Singapore

Individuals lacking the time to proceed with their claim may engage third parties for assistance. However, it is advisable to ensure that the procedure for collecting debts is per legal regulations to safeguard the integrity of your debt recovery claim.

Seek Legal Aid

Individuals can engage the services of a legal professional to obtain assistance with the preparation and submission of a Demand letter or Claim Letter. If the debt remains uncollectible, it may be prudent to contemplate initiating legal proceedings in courts in Singapore.

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The process of recovering debt in Singapore may seem easy. However, with the appropriate legal aid, you will experience a smooth process with fairness and diligence and have a high chance of recovering the debt. The timeline of how long before a debt is written off in Singapore is six years. Singapore law provides explicitly for the six-year limitation.