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The cost of debt collection in Malaysia depends on the agency’s fee structure and the complexity of the debt situation. It’s advisable to get a clear understanding of all potential costs before engaging an agency. Contact us at RecoverDebt to discuss the fee for your case.
In Malaysia, the Limitation Act 1953 typically sets a limitation period of 6 years for most debts. After this period, a creditor may not be able to enforce legal action to collect the debt. However, this does not mean the debt is erased; it just becomes unenforceable in court.
To legally collect debts, you should follow the legal framework, which includes sending a formal demand letter, negotiating payment terms, and possibly engaging a licensed debt collection agency. If these steps fail, legal action through the courts may be necessary.
- Initial contact: The creditor or a debt collection agency contacts the debtor to inform them of the outstanding debt.
- Verification: The debtor is given the opportunity to verify the debt details.
- Negotiation: The creditor and debtor negotiate payment terms, which might include a payment plan.
- Reminder communications: If the debtor fails to respond or pay, further reminders and notices are sent.
- Final notice: Before proceeding to legal action, a final notice or demand letter is usually sent, warning of potential legal consequences.
- Negotiated settlements: Agreeing on a reduced payment amount or a payment plan.
- Mediation or Arbitration: Using a neutral third party to help reach a mutually agreeable solution.
- Debt restructuring: Altering the terms of the debt agreement to make repayment more feasible for the debtor.
- Selling the debt: Transferring the debt to a third party, often at a reduced amount.
- Writing off the debt: In some cases, particularly if the cost of recovery is likely to exceed the amount of the debt, a creditor may choose to write off the debt as a loss.
- Restructuring or reorganisation: This involves restructuring the company’s debts and operations to improve financial stability.
- Voluntary arrangement: The company can enter into an agreement with its creditors to pay off debts over time.
- Mergers or acquisitions: The company could merge with or be acquired by another company.
- Selling the business or assets: Selling parts of the business or assets to pay off debts and keep the company afloat.
- Temporary suspension of business: Temporarily ceasing operations to stabilize finances.
- Liquidator’s fees: Payment for the services of the liquidator.
- Legal fees: If legal proceedings are involved.
- Administrative costs: Costs associated with notifying creditors, holding meetings, and other administrative tasks.
- Disposal costs: If assets need to be sold or disposed of.
- Settlement of debts: Payment of outstanding debts to creditors.
- The total cost can vary widely depending on the size and complexity of the company and the winding-up process.