Singapore Debt Collection and Letter of Demand

When someone owes you money and refuses to pay, the process of debt collection in Singapore can feel stressful and overwhelming. Whether it’s a personal loan, unpaid invoice, or business debt, understanding your legal options—and knowing when to issue a Letter of Demand (LOD)—can help you recover what’s rightfully yours efficiently and lawfully.



In this guide, we’ll explain how debt collection works in Singapore, the importance of a Letter of Demand, and the key steps you can take to protect your rights.

What is Debt Collection in Singapore?

Debt collection is the process of recovering money owed by an individual or company. In Singapore, it generally involves several stages, starting with direct negotiation to discuss repayment. If this fails, you can engage a professional debt collection agency such as Swift Debt Recovery to handle the process on your behalf. In more serious cases, you may need to take legal action, which often begins with sending a Letter of Demand or filing a claim in court.

It is important to note that Singapore law protects both creditors and debtors. Debt recovery must always be conducted professionally and within the law. Using harassment, threats, or intimidation to collect a debt is illegal and can lead to criminal charge

What is a Letter of Demand (LOD)?

A Letter of Demand is a formal legal document sent to a debtor requesting repayment of an outstanding debt. It is often the first legal step taken before court proceedings. Typically drafted by a lawyer or a professional debt recovery service, a Letter of Demand clearly states the amount owed, the due date for repayment, and a deadline—commonly between seven to fourteen days—for the debtor to respond. It also warns that legal action will follow if payment is not made within the specified timeframe.

Issuing a Letter of Demand signals to the debtor that you are serious about recovering your money. This formal notice provides an opportunity for the debtor to settle the matter amicably before legal action becomes necessary.

Why a Letter of Demand is Important

Sending a Letter of Demand offers several key benefits. First, it serves as legal proof that you have made an effort to recover the debt through reasonable means before approaching the courts. Second, it can strongly encourage settlement, as many debtors choose to repay once they realise that legal action is imminent. Finally, it is a cost-effective solution compared to filing a lawsuit, often helping you avoid the higher expenses and longer timelines involved in court proceedings.

How to Issue a Letter of Demand in Singapore

To issue a Letter of Demand, you should first gather all evidence that proves the debt exists, such as contracts, invoices, emails, or payment records. While it is possible to draft the letter yourself, engaging a lawyer or a reputable debt collection agency ensures that the letter is professionally written and legally sound, which makes it more effective. Once the letter is prepared, it should be delivered to the debtor through registered mail, email, or by a legal representative to guarantee that it is received.

If the debtor ignores the Letter of Demand, the next step is to escalate the matter to the courts. For smaller claims of up to S$20,000, you can file a case with the Small Claims Tribunal, while larger amounts may require filing a civil claim in the State Courts or High Court.

Tips to Avoid Future Debt Issues

Preventing debt problems begins with good financial practices. Always use written agreements for any loan, service, or business transaction, and ensure that payment terms and due dates are clearly stated. You can also include penalties for late payments to encourage timely settlement. For businesses, it is wise to screen clients or tenants in advance to reduce the risk of working with individuals or companies that may have a history of defaulting on payments.

Professional Debt Recovery Services in Singapore

If you find debt recovery to be time-consuming or emotionally draining, engaging a reputable debt collection agency in Singapore can be a practical solution. Agencies like Swift Debt Recovery specialise in handling both personal and corporate debt collection, drafting Letters of Demand, negotiating repayment plans, and assisting with legal proceedings when necessary. By outsourcing the process to professionals, you can focus on your personal or business matters while experts work to recover what you are owed.