Debt Collection Agency Hong Kong
Amicable Debt Collections Hong Kong
1. General information
Cosmopolite Collections deal directly with the collection processes through our experienced and professional debt collectors. Hong Kong are a cosmopolitan city with a mix of foreign and local capital companies from large multinationals to small and medium enterprises.
Our collectors are proficient in determining the best strategy to pursue payment from many different types of debtors.
The legal languages are Chinese and English, with Cantonese as the country’s most widely spoken language, and traditional Chinese the most common written language. All written correspondence is sent to debtors in English.
Hong Kong have a small geographical area, and our collectors can perform site visits to debtors if the situation requires it.
1.2. Local agents
We can use a local agent or a local debt collection agency (LDC) to trace the status of the debtor and make a site visit to them if appropriate.
A trace report is used to find out all information on the debtor, such as if the debtor is still trading and the number of staff the debtor has in their office. As well as producing a trace report, the LDC can also help collect monies.
1.3. Interest
There is no statute or regulation that governs interest charges. They are freely negotiable between the buyer and the seller and should be clearly stipulated in the contract.
It is not common practice to charge late payment interest during the amicable phase, as debtors usually refuse to pay.
1.4. Debt collection costs Hong Kong
In Hong Kong, debt collection costs are not chargeable to debtors unless stipulated in the contract or obtained by a judgment from the court.
1.5. Prescription
The general prescription period in Hong Kong is seven years starting from the last payment chasing action date.
1.6. Accepted and most common payment methods
The most common payment methods are bank transfers and cheque payments.
1.7. Sources of information
In Hong Kong, only the company registration information is made public. No financial information is available. A credit information agency can provide a company credit report with more information.
As this information is from their own sources or can be gathered during an interview with the company, the accuracy of the details cannot be guaranteed.
2 Retention of title
The use of retention of title (ROT) is not common in Hong Kong, especially for small and medium enterprises. The ROT clause must be stipulated in any contract; otherwise, it is difficult to enforce.
3. Legal collections Hong Kong
3.1. General information
The Hong Kong legal system uses British Common Law, inherited from the United Kingdom when Hong Kong were still a British colony.
Once the amicable collection is proven to be unsuccessful, Cosmopolite Collections would evaluate the situation thoroughly in order to determine if legal action is recommended.
Legal action in Hong Kong is considered effective and inexpensive.
Once our solicitor receives the case, the solicitor will serve legal demand letters to the debtor, while also contacting the debtor to establish if there is any chance of settling the matter without starting legal action. If the debtor still fails to settle the debt at this stage, legal action will commence.
3.2. Legal system
There are three types of courts in Hong Kong:
- small claims tribunal,
- district court and
- high court.
Small claims tribunal
Deals quickly, informally and inexpensively with claims not exceeding HKD 50,000. Although the tribunal is a court, the rules and procedures are less strict than in most of other courts, and no legal representation is allowed. The filing fee is less than HKD 120 and depends on the claim amount.
District Court
Deals with claims not exceeding HKD 1 million.
High Court
Deals with claim amounts above HKD 1 million.
Small claims tribunals are not allowed by law to employ any third party as representatives, including solicitors, meaning the claimants should attend the court hearings themselves.
For other courts, legal proceedings are commenced by serving a writ of summons to the defendant, who will normally have 14 days to file a defence.
A notarised statement of claims is required. If the defendant files a defence or request for a payment plan due to financial difficulties, the claimant has 14 days to reply.
If both parties could not enter into a consent, the judge may call for court hearings before granting a judgment.
If the defendant does not respond to the summons before the deadline, the claimant may apply for a default judgment.
However, if the defendant files an opposition to the default judgment after it has been served with a satisfactory explanation, the court may allow the setting aside of the judgment and reactivate the procedures as stated above.
On 1st January 2010, a new Practice Direction on mediation came into effect. It applies to all civil proceedings in the court of first instance and the district court. Mediation is a voluntary process, in which a trained, impartial third person or mediator helps the parties in dispute reach an amicable settlement that is responsive to their needs and acceptable to all sides.
Parties are strongly encouraged to explore the possibility of mediation before taking their dispute to court.
Once a court judgment is obtained in favour of the claimant, Cosmopolite Collections will carefully evaluate what type of enforcement is most effective and favourable to our client.
3.3. Required documents
For the legal proceedings, we need copies of the contract, invoices and a clear statement of account indicating payments and credit notes, as well as all correspondence between the buyer and the seller.
3.4. Interest and costs in the legal phase
For the legal proceedings, we need copies of the contract, invoices and a clear statement of account indicating payments and credit notes, as well as all correspondence between the buyer and the seller.
4. Enforcement
4.1. Enforcement in debt
The most common types of enforcement include:
Writ of fieri facias
Bailiffs are appointed to attend the debtor’s registered premises to seize the debtor’s goods for sale.
The proceeds from the sale of the goods would be used for partial payment of the judgment debt. If a third party claims to own the goods, then the third party may raise an action claiming ownership of the same.
Examination order
A verbal interview is conducted with the director of the debtor’s firm in order to obtain further information on the financial status of the company.
Garnishee order
To seize any monies contained in the debtor’s bank account.
Cosmopolite Collections have to prove that the debtor’s bank account has a credit balance. This stage of enforcement is always completed after the examination order has finished.
Prohibition order
If we suspect that the directors of the debtor company may leave the country, we may apply for a prohibition order to prevent them from leaving Hong Kong. The immigration officer will detain the targeted individuals once we know they intend to depart Hong Kong.
Sufficient evidence should be provided in order to grant a prohibition order by the court. As it can be regarded as a contradiction of the Law of Human Rights, a prohibition order is very difficult to obtain.
Bankruptcy/winding-up petition
To wind up (limited liability company) or bankrupt (unlimited liability company or an individual) the debtor. This a relatively costly procedure. As an unsecured creditor, we should carefully evaluate the chance of getting any dividend.
4.2. Expected time frame
It generally takes one to two months.
5. Insolvency proceedings
5.1. General information
There is only one type of insolvency proceedings in Hong Kong and no bankruptcy protection in Hong Kong.
6. Arbitration and mediation
Arbitration and mediation are not very common in Hong Kong, and only large companies will include this requirement in their business contracts.
Hong Kong is a special administrative region of China, with a population of around 7.5 million people. The capital city of Hong Kong is Victoria City, and the region is divided into 18 districts. Hong Kong is a semi-autonomous territory with a high degree of autonomy, governed by the "one country, two systems" principle. The official languages of Hong Kong are Chinese and English, and the currency is the Hong Kong Dollar.
Collecting business debts in Hong Kong can be challenging for foreign businesses, as the legal system and procedures for debt collection may differ from those in other countries. It is generally advisable to seek the assistance of a local debt collection agency or lawyer who is familiar with the legal and cultural specifics of the region.
There are a number of debt collection agencies operating in Hong Kong, and the industry has been present in the region for many years. One of the main credit bureaus in Hong Kong is the Credit Reference Agency Limited (CRA), which is a private company responsible for maintaining a database of credit information for individuals and businesses in the region. Some of the private credit reporting companies operating in Hong Kong include Experian, Equifax, and TransUnion.
In Hong Kong, debt collection laws are generally the same throughout the region, although local laws may also apply in some cases. It is therefore important for creditors to be familiar with the relevant laws and regulations in order to ensure that they are able to effectively collect their debts.
There are several benefits to using commercial debt collection services in Hong Kong, including:
- Expertise in local laws and cultural norms: A local debt collection agency will have a thorough understanding of the legal and cultural specifics of Hong Kong, which can be crucial for effectively collecting debts in the region.
- Access to local networks and resources: A local debt collection agency will have connections and resources within the local business community, which can be useful for tracking down debtors and collecting debts.
- Ability to negotiate settlements: A local debt collection agency may be able to negotiate settlements or payment plans with debtors in a way that is more effective than if the creditor were to try to collect the debt themselves.
- Improved recovery rates: A professional debt collection agency will have the expertise and resources to recover debts more effectively than an individual creditor might be able to on their own.
- Reduced risk of legal action: A local debt collection agency will be familiar with the legal procedures for collecting debts in Hong Kong and can help creditors avoid the risk of legal action.
- Time-saving: Using a debt collection agency can save creditors a significant amount of time and effort, as the agency will handle the process of tracking down debtors and negotiating settlements on behalf of the creditor.
- Cost-effective: In many cases, using a debt collection agency can be more cost-effective than trying to collect debts on one's own, as the agency will handle the entire process and will typically only charge a percentage of the recovered amount.
Our debt recovery agency has a very high success rate in Hong Kong thanks to our multi-lingual debt collectors located in the region and in China.
