missing-debtor-bannerIf the person who owes you money is not responding or you are unaware of their whereabouts, all hope need not be lost. We set out below the steps that you can take in such a situation.

In the course of your business, you may come across the predicament where you are owed money from debtors whom you have not been able to contact or are unresponsive, or whose whereabouts are now unknown. What should be your course of action in such a situation?

There are usually two (2) types of commercial debtors – companies and natural person (individuals).

  1. Company /Identification Card search
    Your first step may be to try to ascertain the whereabouts of the debtor. A company search at Companies Commission of Malaysia can be conducted in order to check whether a company has relocated or there has been any changes to its address. If the debtor is an individual, you can perform an Identification card search at the National Registration department to obtain the home address of the debtor.
  2. Try the alternative address obtained
    You may then choose to send a Letter of Demand to the address obtained in an attempt to settle the matter without having to commence a court action. If the debtor is a company, it will likely have two (2) addresses listed – business address and registered address. You can send the Letter of Demand to both addresses. You may also want to copy the directors of the company (details of the directors are obtainable through the company search) to increase the chances of a response.
  3. Commencing an action and substituted Service
    If you do not wish to start with a Letter of Demand or there is no response, the next step may be to proceed with legal action in court. Even if the debtor is missing or unresponsive, this is a worthwhile endeavor, as you will see below. According to the Court rules, the cause papers must be served personally on an individual. Again if the whereabouts of the individual is unknown, this may not be possible and hence an application for substituted service would have to be made. Upon obtaining the approval from court, substituted service may be effected by usually putting a notice of the Court Notice Board, advertisement in the local newspaper followed by a notice at the last known address of the debtor. Service on a company may be effected by leaving the papers at the registered office, sending by registered post to the office, or handing a copy to the secretary, director or other officers. Where, after service is effected, the debtor fails to enter an appearance in Court or fails to put in a defence, a Judgement in default can be obtained. But what you should do with the judgement since you have no idea where the debtor is? You may consider doing the following:
  4. Winding Up
    If the debtor is a company, upon obtaining the Judgement in default you can Petition for winding up provided the debtor owes you at least RM500.00. However, if a Company is wound up, you may or may not recover your debt depending on the extent of the Company’s assets and its other liabilities.
  5. Bankruptcy
    Similar to Winding up, when it comes to an individual you can proceed with a Bankruptcy Petition if the amount owed is at least RM30,000.00

Even though the above two methods are the more common avenues by which you can proceed, there are also some other ways by which you can try to recover the money owed once you have a judgment in hand

If you have knowledge of your debtors banking accounts you may proceed to apply for a garnishing order to attach the funds in order that it can be paid out to you to settle the debt. In certain circumstances, a writ of execution (seizure and sale, or possession of immovable property) may also be resorted to.

Hence, although debtors may be unresponsive/missing, the above are some courses of action you may consider and your debt may not after all be a total loss as you may have thought.

 

CCLC (Disputes and Litigation) represents clients in all stages of a dispute from pre-Court negotiations, to filing an action in court and conducting the matter all the way through to trial and final judgment. We also assist in execution proceedings, and provide general advisory.