An unpaid invoice is a commercial problem before it is a legal one. The right response depends on three questions: is the debt disputed, can the debtor pay, and what will recovery cost? This guide walks through the options.
Start with a letter of demand
A clear letter of demand from a lawyer, setting out the amount, the basis and a deadline, resolves many debts. It also helps on costs later: it shows you gave the debtor a fair chance to pay.
Check the time limit
Under the Limitation Act 1959, a claim in contract is generally barred six years after the cause of action arose. A written acknowledgment or a part-payment can restart the clock, so keep that correspondence.
Choose the right forum
- Small Claims Tribunals: certain claims, such as for goods or services, up to $20,000, or $30,000 if both parties agree in writing. Lawyers do not appear.
- Magistrate’s Court: claims up to $60,000.
- District Court: claims above $60,000 and up to $250,000.
- High Court: claims above $250,000.
- Arbitration: if the contract has an arbitration clause, the claim may have to go there instead.
Judgment without a full trial
If the debtor does not respond to a claim, you can apply for default judgment. If they respond but have no real defence, you can apply for summary judgment. Many debt claims end at one of these points.
Statutory demands
For an undisputed debt of more than $15,000, a statutory demand is a strong tool. If a company fails to pay within three weeks, it is presumed unable to pay its debts, which supports an application to wind it up under the Insolvency, Restructuring and Dissolution Act 2018. Individuals face bankruptcy proceedings on a similar basis. If the debt is genuinely disputed, though, the court will not let a statutory demand be used to force payment, and you may be ordered to pay costs.
Turning a judgment into money
A judgment is only paper until it is paid. Enforcement options include seizing and selling the debtor’s property, attaching money owed to the debtor (such as a bank balance), and examining the debtor in court about their assets. Where assets are abroad, recognition and enforcement in another country may be needed.
Is it worth it?
Before you spend on a claim, find out what the debtor owns and whether the costs of recovery could exceed the debt. We will give you that view at the start.
Common questions
How long do I have to recover a debt?
A claim in contract is generally time-barred six years after the cause of action arose, under the Limitation Act 1959. Acknowledgments and part-payments can affect the period.
Which court will hear my claim?
The Magistrate’s Court hears claims up to $60,000 and the District Court claims up to $250,000; larger claims go to the High Court. The Small Claims Tribunals hear certain claims up to $20,000, or $30,000 if both parties agree in writing.
Is a statutory demand quicker than suing?
It can be, for a clear debt. If the debtor does not pay or settle within the time allowed, you can apply to wind up a company or make an individual bankrupt. It is the wrong tool for a genuinely disputed debt: the court may set the demand aside and you may face costs.
What if the debtor ignores the judgment?
You can enforce it, for example by seizing and selling assets, attaching money owed to the debtor, or examining the debtor in court about their means.
Akesh Abhilash is a Singapore disputes lawyer with eleven years in practice, acting in commercial, cross-border and criminal matters before the Court of Appeal, the High Court, the State Courts and international tribunals. Read his profile.