The Legal Debt Recovery Process in Singapore

Jeremy Cheong

Jeremy Cheong


+65 8800 8074

Debt recovery can apply to various types of agreements or contracts. For example, an informal agreement could be made between friends for one to lend money to the other. Alternatively, two businesses might sign a formal contract giving rise to a loan with specific repayment terms.

In both scenarios, there is a possibility that the borrower (i.e. the debtor) does not repay the funds or that the repayment terms are not complied with. The lender (i.e. the creditor) will then need to explore their options for recovering the outstanding debt.

In most cases, resolving matters outside of court will be advisable. If a settlement can be reached through negotiations, this will usually reduce legal costs and delays. Even if matters cannot be resolved this way, the court will look favourably upon the parties’ attempts to settle before resorting to court proceedings. Parties can engage in discussions themselves or instruct lawyers to assist with negotiations before considering issuing a claim.

The creditor should seek legal advice on their situation, as the process will vary depending upon several factors. However, for any type of debt recovery matter, there are 5 key steps the creditor should take:

(1) Establish the identity of the debtor

The creditor must know from whom they seek repayment to begin the process. This may sound simple, but different options will be open to the creditor depending on whether the debtor is an individual or a company.

The creditor will also not want to waste time undertaking the debt recovery process if the debtor cannot pay. Investigations will, therefore, need to be carried out to determine what assets the debtor has in Singapore. This will include looking at a company’s or an individual’s financial circumstances and whether they own any assets that could be used to discharge the debt.

If the debtor’s financial situation indicates that they will not be able to pay, it may not make commercial sense to pursue them for the debt. Alternatively, the creditor could propose repayment in instalments, or they may wish to accept a much lower payment to satisfy the debt.

A lawyer can assist with the initial investigations and advise the creditor on the best options for them, depending upon their situation.

(2) Issue a Letter of demand

If the creditor decides to continue the debt recovery process, they should send a letter of demand to the debtor as soon as possible. This is a formal document which details the creditor’s claim for repayment and notifies the debtor of potential legal action.

The letter serves two primary purposes:

  1. it encourages the debtor to respond, allowing the parties to begin negotiations; and
  2. it can be used as evidence in court to demonstrate the creditor’s claim and their attempts to settle amicably.

The letter must be drafted to contain all the necessary information, including the debtor’s details, the outstanding debt, and the date by which the creditor seeks for this to be paid. If the debt is not repaid by that date, the letter should state that the creditor intends to commence proceedings through the court.

(3) Negotiations

Assuming the debtor responds to the letter of demand, the parties can then begin negotiating. Depending upon the circumstances, the creditor may be prepared to accept a reduced payment in the interest of avoiding court proceedings. Alternatively, they may be willing to accept a payment plan.

The creditor should seek legal advice regarding their options to ensure they do not agree to an unreasonable proposal from the debtor. A lawyer can also help the creditor draw up the final settlement to ensure the terms reflect what has been agreed.

Sometimes, a debtor may seek to draw out negotiations to divert the creditor from pursuing any further legal action. The creditor should be wary of this and consider issuing a claim in court if negotiations are not progressing.

(4) Court proceedings

If either the debtor does not respond or the parties cannot reach a settlement through negotiations, it will be necessary to issue court proceedings. The creditor must prepare and file a claim with the court to start the process.

The options available in terms of what type of claim to issue and where to issue it will depend upon the amount of the loan and the debtor’s ability to pay:

Loans under S$20,000

The creditor should file their claim with the Small Claims Tribunal (SCT). The fees for lodging a claim in the SCT are relatively low, and the creditor does not necessarily need to hire a lawyer to assist.

The creditor cannot file their claim in the SCT if the amount owed is over S$20,000 unless both the creditor and debtor agree to raise the limit to S$30,000.

The SCT operates quickly, and any decision made regarding the debt can be enforced as a court judgment.

Loans over S$15,000

If the debt owed is over this amount, but the debtor is not in a financial position to pay, the creditor can commence bankruptcy proceedings against them. However, the creditor is unlikely to recover the entire amount owed, as any assets owned by the debtor will need to be divided and used to pay off any other creditors they may have.

Loans over S$20,000

The creditor may file their claim with the civil court. This is the most suitable option for debts that are larger, and where the creditor has satisfied themselves of the debtor’s ability to pay.

If the creditor can prove to the civil court that the debt is owed to them, the court will issue a judgment stating this.

(5) Enforcement

Once the creditor has obtained a judgment in their favour, it is hoped the creditor will repay the monies that are owed in full. However, the debtor may still refuse to pay, so the creditor must enforce the judgment.

The creditor can enforce the judgment in one of two ways:

A Writ of Seizure and Sale (WSS)

This involves the creditor asking the court to appoint an officer (or bailiff) to seize the debtor’s assets and sell what is necessary to repay the debt owed. It should first be established whether the debtor has any assets which can be seized and sold.

The creditor must file an application for a WSS with the court. This application should provide details of the assets that have been identified by the creditor which can be used to repay the debt.

Once the WSS is issued, the bailiff will attend the debtor’s premises to seize those assets. The debtor will then have 7 days to settle the debt, and if they still fail to do so, the seized property can then be sold. The creditor can file a request to proceed with auction to allow them to sell the assets at a public auction.

A garnishee order

This will apply only where the debtor is owed funds by a third party. The creditor can seek direct repayment from this third party to settle the debt. The third-party (otherwise known as the garnishee) will be obligated to pay the creditor as opposed to the debtor. This type of order can also be issued against the debtor’s bank so that any funds held in their bank account can be used to discharge the debt.

The creditor must file a summons and signed affidavit to allow the court to grant a provisional garnishee order. A date will then be set for the parties to attend court to allow the garnishee to argue why the order should not be finalised. The court will hear from both parties before passing their judgment, and the order will be made final if they find in favour of the creditor.


A creditor should always consider contacting the debtor first to see if matters can be resolved. They will need to consider court proceedings if a settlement cannot be reached. It is recommended that the creditor speak to a lawyer at an early stage to receive advice on their situation.

Jeremy Cheong

Jeremy Cheong


+65 8800 8074

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