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Debt Collection in Labuan

Updated on Monday 25th May 2020

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Debt-Collection-in-Labuan.jpgAmong the business issues an entrepreneur deals with is recovering their money from debtors. The debt collection procedure in Labuan intervenes when companies or clients no longer pay and respect the financial terms for the services provided. One should ask for complete support offered by our team of company formation specialists in Labuan if he/she is interested in the ways in which he/she can recover the money. There are varied methods linked to the debt collection in Labuan, but it is best to talk to our advisors for complete information.
 

What types of debts can investors deal with in Labuan?

 
Loan payments, utility bills, bank credits or rental payments are among the debts for which the payment date is not respected and considered, leading to several problems. Business to business debt collection refers to the process of recovering undue payments from a client and not a consumer. This can occur in numerous business relationships, most notably those that involve third parties.
 
Several practices can make it easier to deal with debt collection in Labuan, if this procedure becomes mandatory during the course of running the company:
 
  • Transaction records: it is advisable to keep an updated record of all your ongoing transactions; the information on issued invoices is also required for accounting purposes, however, it is helpful to keep information on all of your debtors;
  • Keep a debtor record: this is a step that links to the previous point; if you keep an updated record of your transactions you may notice repeating patterns from companies and you can choose not to work with them in the future, to avoid the same problem when it comes to collect undue payments;
  • Initiate the procedure: a good practice of starting to send demand letters can be useful in order to ensure that you do collect the debt; below, our Labuan company formation agents describe this first step;
  • Choose to work with a specialized company: as described below, a team of specialists in debt collection will be able to take your case to court, if need be. 
 
If your company needs debt collection services, you might direct your attention to our team of advisors in Labuan. Our team of agents who specialize in company formation in Labuan can also help you take the necessary steps to deal with business-to-business debt collection. 
 

What is the amicable procedure for debt collection in Labuan?

 
The amicable procedure in recovering debts in Labuan is a recommended method instead of dealing with the courts of law in this jurisdiction. The pre-legal debt collection, as it is known, involves a series of stages through which the money can be recovered:
 
  • the demand letter: a payment notice and a letter of demand showing the amount of money to be paid can be offered to the debtor;
  • • a payment plan: the debtor can be presented with a paymant plan that will be mutually advantageous for both parties; an installment contract with new terms can be issued for the borrowers;
  • follow-up: the debt collection agency involved in the process will establish a communication between the companies/individuals and the debtors;
  • reminder: the new payment date, as stipulated by a contract in this direction can be reminded by our agents;
  • ongoing supervision: if a payment is in made in several stages, the agents will supervise if the terms are respected.
 
Hiring a team of debt collection agents will yield satisfactory results in many cases. However, it is advisable that the creditor starts by contacting the debtors himself, in order to highlight the importance of their own business relationship (if this business link is a valuable one and the creditor is keen on doing so). Before working with a dedicated team, the business owner in Labuan can try to make a business call or even schedule a meeting. If needed, our team of debt collection agents can also offer you needed advice for negotiation during this personal approach, before stepping in for your business. 
 
You can get in touch with our company formation representatives in Labuan if you are interested in debt recovery or if you want to set up a Labuan trust company.
 

What is the judicial debt collection phase like?

 
Even if it is time-consuming, debt collection can be issued in the court of law, if the amicable procedure provided no positive results.
 
Labuan is a federal territory of Malaysia and the procedure starts at the High Court of Sabah when a claim is made in this sense. with evidence like bills, contracts, agreements, etc.
 
According to statistics from the Office of the Chief Registrar of the Federal Court of Malaysia, there were:
  • - 10,178 civil cases were registered at the High Court and  292 at the Court of Appeal in January 2020;
  • - in February 2020 there were 10,756 registered cases in the High Court and 286 in the Court of Appeal;
  • - in December 2019 there were 10,331 registered cases with the High Court.
For more information on the Courts in Malaysia, you can reach out to our team of agents.
 
When the court proceedings start, the creditor will need to prove the existence of the business relationship with the debtor. The following documents can be used: the loan agreement, the services agreement, an account statement as well as proof of the attempts to contact the debtor, such as copies of the demand letters (the debtor’s response letters can also be used). It is good to know that the debtor is not obliged to be present in the court of law, leading to new hearings for both parties involved.
 
We mention that recovering the money with the help of justice and the courts of law might prolong for several years, a reason why the amicable procedures need to be considered and properly implemented.
 
When possible, it is recommended to resort to arbitration, if such as clause exists in the agreement between the two parties. This procedure can be less time consuming that litigation and will allow parties to obtain the same results. Our consultants can provide you with more details about arbitration and how you can rely on this alternative dispute resolution method. We can assist you from the earliest stages of concluding agreements, right after you have registered an offshore company in Labuan.
 

How can a debt collection specialist help you?

 
As seen above, working with a debt collection agents has certain advantages, even if it may be advisable to remain in contact with the company that owes a payment in order to salvage the business relationship.
 
A debt collection specialist, like the ones from our team that also specialized in company formation in Labuan, can help you understand the process and follow the steps that will help you recover the due amount. By making sure that you follow the basic procedure, it will make it easier to prove in court, if it comes to this step, that you have taken all the reasonable measures to ensure that an amiable debt collection is possible.
 
When a business is having financial issues only temporarily, outsourcing your case to a debt collection agency may mean that you will not have to worry with constant checkups on that said business. The agent will be the one to report the status of the payment or will inform you on the steps that should be taken in case the debtor company files for insolvency.
 
We invite you to contact our company incorporation agents in Labuan for complete support and information about debt collection.
 
 

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