Bankruptcy often occurs when a person or business is unable to repay its outstanding debts. This mainly occurs when a person is in dire need of financial assistance and gets a loan of a large sum of money to cater for the issue.

However, it reaches a point where the individual or business is unable to pay the debt. The bank can decide to liquidate their property to get back the money the debtor got as a loan. The bankruptcy process starts with a petition filed by the debtor.

On the other side, debt recovery is the recovery of money owed. It can be recovered in different ways. For example, if someone had taken a mortgage loan and is unable to pay it off. The property can be sold by the creditors so that they can get the money they had loaned the individual.

Taking out loans and borrowing money can get rough when you are unable to pay. However, in the process, a debt collector can be sent to you to know the loan status. Creditors are often worried about whether the debtors will pay their loans. Hence, debt collectors can get the debtors to pay by reminding them through calls, email, or sending SMS to the debtors.

How to deal with debtors in Singapore to pay their debts.

When a creditor notes that a debtor is delaying to pay their loan even after sending a debt collector. They can take matters into their own hands and sue for bankruptcy.

There are various debt recovery methods that a creditor can use to get payment from a debtor.

1)     In court – small claim tribunal

If a creditor chooses this option, they submit a claim. This is normally done in the small claim tribunal to start the bankruptcy proceedings. This also depends on the amount of money that is owed and the cost that the creditor will have to pay.

This is the most ideal option if a person owes money worth less than  $10,000 to a creditor. The creditor has all the rights to file a claim online. This is through the CJTS – Community Justice Tribunals System.

This is great when a modest amount is owed. However, you need to have all the relevant information needed to show the debt validity.

2)    Civil proceeding

The other option is taking the issue to court for civil proceedings However, this option is only viable if the debtor owes the creditor a large sum of money – the court proceeding is expensive. However, the creditor needs to show evidence of the debt to ensure they obtain a viable judgment.

The enforcement can be made through WSS or garnishee order in Singapore. The WSS is ideal if the debtor owns things that are worth value sufficient to pay the debt.

On the other side, a garnishee order is useful when there is a third party involved. In this, the third party owes the debtor some amount of money. Hence the third party will need to pay the creditor on behalf of the debtor.

3)     Bankruptcy proceedings

This type is essential when money owed is more than $15000. However, for this, the creditors only recover a percentage of the debt from the debtors’ assets. It is important to analyze the debtor’s financial state before starting the bankruptcy proceedings as a creditor.

Most are normally made by debtors to term themselves as bankrupt. If in Singapore, the creditors can only take the applications against debtors who reside, own property, or a business in Singapore.

There is also the debt repayment scheme that is formulated to ensure repayment of debts within 5 years. This helps create a great relationship between creditors and debtors.

4)    Negotiating a settlement

This is a great and cost-effective option. In this, the creditor negotiates with the debtor on the best repayment plan to ensure they finish the debt. This can even be done by the creditor providing a longer payment plan.

This is great when both parties comply. You can even negotiate on reducing the loan needed to be paid by cutting off the interest.

5)    Hiring a debt collection agency

It is another secure way is contacting a debt collection agency to help get in touch with the debtor. Debt collectors can help to set up a great repayment plan for the debtor to pay the loan.

Debt collectors are often third parties and not part of the lending businesses. They also don’t harass at all. This can be a great option if communicating with the debtor is becoming in vain. You will find that most loan lending businesses, get paid once a debt collection agency is involved. They tend to negotiate well with debtors without being favored.

6)    A letter on demand

A lawyer can also be considered to send a letter on demand to the debtor. This will help make the debtor aware of the consequences if they don’t pay the loan. The letter can also show the severity of the situation to the debtor. It is important to have one of the best relations between creditors and debtors.


All these methods can essentially help a creditor to get their loan back. If it is a small amount of money using a debt collection agency, a letter on-demand or negotiating a settlement are the best.

However, if the money at stake is a large sum, it is better to go to court. This is to prevent the debtor from evading loan repayment. Debt recovery in Singapore is essential to ensure both the creditor and debtor are satisfied.