Does someone owe you money? Legally speaking of course. This article can provide you a brief overview on ways you can obtain judgment against your debtors.
Debt recovery is a legal process that allows you to recover the debts that are legitimately owed to you by individuals, corporate entities or organisations, i.e. debtors. These debts may arise from a breach of contract for service, contract for sale and purchase, or even a loan agreement.
Before we dive into some of the ways we can obtain a judgment for debt recovery in Malaysia, let us deal with the preliminaries, i.e. things to take note of before filling a claim in court.
1. If your debtor is an Individual
- Run an NRIC search with the National Registration Department (NRD) to ascertain the registered address of the debtor. A sum will be payable, and the search report will be made available in about 7 days.
- Run a bankruptcy search with the Malaysian Insolvency Department (MID) to determine the status of the debtor. If the debtor has been declared bankrupt, the pursuit of such debt may not be worth the while.
- Engage a lawyer to send a Letter of Demand to the debtor at his/her registered address. The Letter of Demand is to include details on debt in question, and a specified period of time for the debtor to settle such debt.
2. If your debtor is a Corporate Entity or Organisation
The process is more or less similar to that of an individual. In this case, you will be make a company search via Companies Commission of Malaysia (CCM) website to ascertain the business and registration address. This process is instant, and requires a sum to be paid for the provision of a search report. The search report will divulge information on the business and registered address of the debtor, as well as its solvency status.
As with most legal cause of action, the time limit to file a claim against your debtor is 6 years from the time of which the event of default started. If judgment is successfully obtained, creditors have 12 years to enforce the judgment against the debtor.
HOW TO OBTAIN JUDGMENT AGAINST A DEBTOR?
Creditors are to file their claim through a Writ of Summons together with a Statement of Claim in court against the debtor. Here, the creditor will be expected to provide evidence for the debt due and owing, including that Letter of Demand sent to the debtor.
Once the Writ is sealed, i.e. approved by the court, you will have to send the relevant legal documents alongside a letter to the debtor, requesting the debtor to Enter Appearance in court to contest the claim.
So what happens next?
1. If the debtor enters appearance
You will have two options to follow:
A. A normal trial will commence and judgment will be awarded by the court based on the merits of the evidence provided by both parties.
B. Alternatively, you can opt to file an application for Summary Judgment against the debtor. This option is usually taken in straightforward cases whereby documentary proof of the your claims are strong and clear.
2. If the debtor does not enter appearance
If the debtor does not enter appearance in court, the creditor can obtain a Judgment in Default against the debtor. This may also apply to creditors who could not be located or is evading the legal action.
WHAT IS THE EFFECT OF OBTAINING A JUDGMENT?
Judgment do not equal recovery of your money.
The next step after obtaining a judgment in your favour as a creditor would be to commence execution proceedings such as filing for petitions for winding-up or bankruptcy, or proceed with filing a writ of seizure and sale.
The fastest process is through the filing of a Summary Judgment against the debtor. So take note to always keep your business and transactional documents in good order.