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Debt Collection in Singapore

Debt Collection in Singapore

The legislation on debt recovery in Singapore

From the beginning, it must be noted that Singapore does not prescribe a specific legislation with regards to debt collection proceedings, as this jurisdiction has a good Days Sales Outstanding index. With regards to payments, Singapore is known as having a very good payment culture and this means that in practice, businesses do not deal with late payments

This happens sometimes, but it is not very common for companies and natural persons to pay their financial obligations after the due date. Still, late payments are regulated under the local legislation and the basic law on this matter is given by the Insolvency Law, which prescribes the manner in which companies can deal with late payments. Following the regulations of this law, debt collection in Singapore will be generally carried out in the local courts. For in-depth advice on this procedure, our team of lawyers in Singapore can be of assistance. 

 Quick Facts  
Law on debt collection
in Singapore 

• Insolvency Law regulates certain legal matters on debt collection in Singapore;
• there is a Code of Conduct for debt collectors. 

Amicable settlement available (yes/no) 


Who can collect debt in Singapore 

 • the party who needs to recover a sum of money can first address the issue; 
• then, if the debtor is not responsive, the debt collectors;
• cases heard in courts can be represented by lawyers. 
Code of Conduct for debt collectors (yes/no) 


Rules of law applicable to debt collectors 

• the Code of Conduct; 
•      the Bankruptcy Act; 
• Personal Data Protection Act;
• Protection from Harassment Act; 
• Banking Secrecy Act. 

Overseas debt collection (yes/no)  Yes
Rules for overseas
debt collection in Singapore 
The debt collector has to verify the law applicable in that jurisdiction and will follow the debt collection rules applicable there, while respecting the local timezone.  
Court proceedings for debt collection (yes/no)  Yes 
Courts responsible in hearing debt collection cases • Small Claims Tribunal;
• the Magistrate Court;
• the District Court; 
• the High Court.  
Debt thresholds required to address to a court  For claims with a value of maximum $20,000 the court in charge will be the Small Claims Tribunal. Claims above $250,000 are addressed to the High Courts. 
How is debt collection initiated  In the amicable agreement stage, the creditor sends a letter to the debtor, in which the outstanding value is evidenced. If the debtor will not provide an answer, the services of the debt collectors/lawyers will be requested by the creditor. 
Period of time to file
a defense 
8-14 days 

Responsibilities of

debt collectors 

• contact the debtors;
• talk or meet with the debtor; 
• analyze the financial situation of the debtor;
• find a suitable repayment scheme that will suit both parties;
• abide by the rules of the Code of Conduct.  
Fines for debt collectors (yes/no)  Yes, applied for debt collectors who do not respect the
Code of Conduct.  
Legal services on debt collection offered by our lawyers  Assistance on the applicable law and the most suitable option to follow depending on the nature of the client (creditor/debtor), as well as legal representation in court proceedings.  

Amicable settlement in debt collection cases in Singapore

The first step towards debt collection in Singapore is an amicable settlement between parties. If that fails, before starting legal proceedings, an assessment of the company’s assets is important and verification with the Singapore Companies Register is also useful in order to check the company’s activity. if you need assistance on this, or on other legal matters, such as for Singapore PR application.  

It is also very important to verify the debtor’s solvency status because if an insolvency procedure has commenced, debt recovery is no longer possible. If debt collection in Singapore is possible, the first step would be to notify the debtor about the outstanding amount by sending out dunning letters.

In the case in which the debtor does not provide an answer to the dunning letter, the debtor may be visited by a collection officer for the purpose of reaching an amicable settlement. Our attorneys in Singapore can provide legal counseling in debt collection procedures.

What can debt collectors do in Singapore?

Persons who are debtors should know that when they are contacted by debt collection specialists, such persons will follow specific regulations that are prescribed by the Code of Conduct. The Code of Conduct that is applicable when dealing with debt collection in Singapore is not a rule of law, but more of a guide as to how such specialists can conduct their activities without harassing persons who must repay outstanding debts. If you are a foreigner and you have recently migrated to Singapore and you are dealing with a debt, please address to our team for legal advice.  

The video below offers a short presentation on debt collection in Singapore

The Code of Conduct was created by the Credit Collection Association of Singapore, which stipulates that when a debt collector agent will contact in person a debtor, the company hiring the debt collection specialist can’t send more than 5 agents to a person’s address, be it a natural person or a legal entity. However, in practice, most of such cases are handled by a single debt collection specialist

It is also important to know that debt collection specialists do not have the same powers as governmental agencies and their main purpose is to reach an agreement between the creditor and the debtor, by creating a suitable environment – for instance, the debt collection agent will try to recommend a repayment scheme that can be actually respected by the debtor and accepted by the creditor. Debt collectors who harass the debtor can face the following: 

  • debt collectors who end up physically hurting the debtor can be charged with a fine of S$ 5,000;
  • severe cases can be charged with this fine, but also with an imprisonment of 2 years;
  • in the case in which a debtor has injuries that can be considered “grievous hurt” due to the harassment of the debt collection specialist, then the latter can receive a sentence of up to 10 years in prison;
  • any form of vandalism done by the debt collection agent at the premises of the debtor can be charged with a fine of S$ 2,000;
  • in the case in which the person will conclude any action that can fall under the regulations of the Miscellaneous Offences Act in relation with the debtor, a fine of S$ 1,000 will be charged.  

What are the main stipulations of the Code of Conduct in Singapore?

We have presented above some of the main requirements that debt collectors have to abide by, in accordance with the rules prescribed by the Code of Conduct. The Code also imposes the limitations of debt collectors towards debtors. The main rules of law, which are prescribed under the country’s national law and that must be respected by debt collectors also refer to the Bankruptcy Act, Personal Data Protection Act 2012, Protection from Harassment Act and the Banking Secrecy Act. 

The above mentioned acts are included in the Code of Conduct as part of the legal framework regulating this sector of activity. Our team of lawyers in Singapore can present extensive information on the provisions which refer to the debt collection procedures and to the obligations of the debt collectors or of debtors and creditors, as prescribed by the above mentioned rules of law. 

The common principles that have to be followed for debt collection in Singapore mainly refer to several areas, as follows: dealing with debtors who have financial difficulties or with debtors facing mental health issues, as well as dealing with those involved in disputes and complaints. 

Other important principles refer to confidentiality matters and data protection and the measures referring to compliance with the debt collection process. The debt collector specialist is legally required to process data on debtors in accordance with the regulations of the Data Protection Principles and the information on such persons or legal entities can be obtained only from legitimate sources. 

What happens in overseas debt collection cases?

Although the debt collection situation can appear in Singapore, in the relation between a client and a company, or between a company and another business, or any other situation in which a party owes money to another party, it can happen that the debtor who is liable to the payment of a certain amount of money in Singapore to be in another jurisdiction when the debt collection process is started. 

If this is the case, our law firm in Singapore can present in-depth information on the legal procedure that will be started, but you should know that some of the basics of this process are presented in the list below. The following steps can be started with the assistance of a debt collector specialist or with the help of our lawyers in Singapore

  • the debt collector specialist will verify the legislation on the matter that is applied in the respective country;
  • the person will adhere to the rules and regulatory guidance that is imposed in the said country;
  • the specialist will verify if certain permits or licenses are needed in accordance with the procedures applicable in the foreign jurisdiction;
  • the person must also perform his or her specific work activities in accordance with the time zone of the country where the debtor is;
  • the debt collector must also respect any national holiday that is celebrated in that country. 

One of the obligations of debt collectors is to suspend any debt collection activity towards a debtor in the case in which the person (or the company) provides evidence on the lack of financial funds. This is also applicable if the debtor is seeking financial assistance for his or her personal situation. 

Here, one has to know that in the case in which the debtor does not have financial funds to pay the debt, then the debt collector is obligated to suspend any interest added to the current value of the debt (this is also applied to fees, charges and other types of additional taxes). 

Please mind that if an interest is added to the value of the debt, the respective interest is stipulated under a contract or other similar document. You can find out how interest is calculated from our team of lawyers in Singapore

A special category of debtors is the one of persons who have to pay a debt and who are dealing with mental health issues. Here, the debt collector has to obey the rules prescribed by the Data Protection Act 2012 and The Personal Data Protection Commission. However, the debt collector is entitled to request documents that attest the current mental situation of the respective person. 

Our team of lawyers in Singapore can assist persons who fall under this category and can offer legal advice and legal representation in the case they will need it. Our lawyers can represent clients in front of the court, but you must know that our team is also qualified in finding a suitable way to repay the respective debt that will be agreed by both the creditor and the debtor. The latter option is the most convenient to all parties involved in the procedure. 

How is the debt assessment done in Singapore?

When dealing with debt collection in Singapore, the creditor will want to recover an outstanding claim from a debtor. Sometimes, the debtor may simply forget to pay when the due date is and in this case, he or she will simply receive a reminder and pay the respective sum of money. 

In other cases, the debtor will not pay in due time because he or she simply does not have the required capital to do so. This can also happen in the case of companies. In this particular situation, the debt collection agent and a lawyer will try and assess the company’s assets, in order to observe the most suitable option for repaying a debt to the other party. 

Our team of lawyers in Singapore can provide in-depth legal representation on the legislation regulating companies in this country, as well as on the debt collection procedures addressed to corporate entities. As a general rule, the most suitable option is to reach an amicable agreement with the creditor, especially when the debtor does not have any money to participate in a litigation case. 

Thus, the lawyer or the debt collection specialist will try to verify specific situations regarding the financial status of the debtor. In the case in which the debtor is a company, the specialists will verify the financial situation of the business, the income of the company, the assets that can be taken from the debtor and used to repay the debt, these being just some of the basic aspects that will be verified in this particular case.  

Please mind that if we refer to personal loan cases, in which a person lends money to another person, the process for debt collection in Singapore states that the entities will need to follow the basic steps for the recovery of the debt. The case will be treated as a civil case and you may find out more information on this process from our team of lawyers in Singapore

Court proceedings for debt collection in Singapore

Singapore’s legal system is comprised of State Courts that are divided between the Magistrate Court and District Courts and the Supreme Courts that is made up of the High Court and the Court of Appeal. The procedure on debt collection in Singapore stipulates that the court where the case will be held will vary based on the amount that has to be collected from a debtor

For debts not exceeding S$10,000, the plaintiff may file a petition with the Small Claim Tribunal. Civil cases with debts that do not exceed S$60,000 are handled by the Magistrate Court, while cases in which the debt ranges between S$ 60,000 and S$ 250,000 will be handled by District Courts. The High Court will rule in cases where the amount to be recovered exceeds S$250,000. 

When starting the procedure for debt collection in Singapore, the entity that needs to recover the debt will send a demand letter to the debtor, in which the debtor is invited to pay the required amount, which includes interest for late payments. The creditor will file a writ of summons the court will serve to the debtor.

After this, the debtor will be entitled to a period of 8-14 days to file a defense. After all the documents are filed by both parties, the court will examine the case and will rule a decision. You can contact our Singapore law firm for legal representation in litigation cases or debt collection in Singapore. 

If you are interested in other legal matters, such as if you want to know details on the law on immigration to Singapore, you can always rely on our lawyers. You can find out information on the visas available in this country or the basic requirements for permanent residency. 

You can also request legal advice from our team in the case in which you want to become a citizen.  

Our immigration lawyers in Singapore have the necessary legal experience and knowledge to represent you in any of the matters presented above. You can also contact us in the case you already live in Singapore and want to reunite with your family members. 

Our lawyers can present the visa options and the procedures you family members should start in order to relocate here.  

Our law firm is also able to assist foreigners in the process of obtaining a residency permit in Singapore. The permit is issued based on the reason of arrival and in most cases it refers to employment opportunities or investment projects in this country. 

The document can also be issued for family reunification purposes or for foreigners who want to enroll in university classes.