Debt recovery is a process of seeking payment from individuals/businesses when the amount payable is due but remains unpaid.
Option 1: Court Action
Step 1: Issue a letter to demand to your debtor to serve as a reasonable notice that you will initiate legal action if the debt continue fail to pay. A letter of demand also assists in building up evidence of indebtedness.
Step 2: Makes sure you are within the time limit to commence legal action. The limitation period is generally 6 years from the date on which the money is due for payment.
Step 3: Determine which court you will file your action depending on the amount due:
| Amount of Claim | Types of Courts |
| 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 |
* Don’t worry if the debtor went missing, you may still commence legal proceedings and apply to the Court to enforce the judgment against assets of him/her. You may also apply a court order to summon the debtor before the Court to examine his/her financial status. If the debtor still refuses to appear in Court, he/she can be arrested and imprisoned.
Option 2: Debt recovery without going through trial:
In straightforward claim, you may apply for a “summary judgment” where the Court will determine your claim based on affidavit and documentary evidence only, without going through a trial. It is also possible to obtain a judgment without going through a trial when the debtor fails to file a defence or failed to attend court when summoned.
*** What if the debtor already declared bankrupt?
You may file a Proof of Debt in the Insolvency Department concerning your debt. Secured creditors will have priority over unsecured creditors in relation to the distribution of insolvent company’s assets.
