Debt Recovery Lawyers in Malaysia
Our debt recovery lawyers help businesses and individuals in Malaysia recover unpaid money, from the letter of demand to judgment and enforcement, including winding-up petitions against companies and bankruptcy proceedings against individual debtors.
- Letters of demand
- Summary judgment applications
- Winding-up and bankruptcy
- Online consultations
How We Can Help
- Letters of demand to individuals and companies
- Civil claims in the Magistrates', Sessions and High Courts
- Summary judgment where the debtor has no real defence
- Statutory demands and winding-up petitions against companies
- Bankruptcy notices and petitions against individual debtors
- Enforcing judgments through seizure, garnishee and debtor summons
Explore our debt recovery guides
Reviewed by Ms. Khoo Ai Theng, Founder, Advocate & Solicitor of the High Court of Malaya. Last updated October 2026.
Why Choose Us?
15+ Years
Legal experience
21 Days
For a company to pay a demand over RM50,000
RM100,000
Minimum debt for a bankruptcy petition in 2026
6 Years
To sue on most debts, Limitation Act 1953
Debt recovery in Malaysia: the law and the right court
Debt recovery means getting paid what you are owed, by agreement where possible and through the courts where not. Most debts are contractual, so the claim is for the price of goods or services, a loan, rent or another sum due under an agreement, plus interest and costs where the contract or the law allows.
The court depends on the value of the claim. Under the Subordinate Courts Act 1948 (Act 92), the Magistrates’ Court hears claims of up to RM100,000 and the Sessions Court claims of up to RM1 million, while larger claims go to the High Court. Procedure in all three is governed by the Rules of Court 2012.
For claims of up to RM5,000, an individual can use the small claims procedure in the Magistrates’ Court under Order 93 of the Rules of Court 2012. Lawyers cannot represent the parties at the hearing, and the Magistrate’s decision is final, with no appeal. The procedure is for individual claimants, so a company owed a small sum files an ordinary claim instead. For unpaid construction work, statutory adjudication may be an alternative; see our CIPAA adjudication guide. Businesses with many overdue accounts can read our corporate debt recovery guide.
Start with your documents and a letter of demand
A debt claim is only as strong as its paperwork, so gather the documents before anything is sent. Keep:
- the contract, quotation or purchase order, and any terms and conditions
- invoices, delivery orders and signed acknowledgments of receipt
- statements of account and records of any part payments
- emails, letters and WhatsApp messages in which the debtor admits the debt or promises to pay
- details of any guarantor and a copy of the guarantee
A lawyer’s letter of demand states the amount due, how it is made up and a deadline to pay, with notice that proceedings will follow. Many debtors pay or propose instalments at this stage, and any settlement should be recorded in writing. A written acknowledgment of the debt, or a part payment, generally restarts the six-year limitation period, so keep these carefully. If the debt is disputed, the reply will show where the dispute lies. Our pre-litigation advisory guide covers demands and settlement in more detail.
Suing for a debt: the court process step by step
If the demand is ignored, the claim is filed in court. A typical sequence:
- The writ and statement of claim are filed and served on the debtor.
- The debtor has 14 days after service to enter appearance. If not, judgment in default can be entered.
- A defence is generally due 14 days after the time for appearance ends, and judgment in default may again follow if none is filed.
- Where the debtor has entered appearance but has no real defence, the creditor can apply for summary judgment under Order 14 of the Rules of Court 2012. The debtor must then show a triable issue to avoid judgment.
- Defended claims go through case management and trial.
An undefended claim can reach judgment soon after the time for appearance or defence expires. A contested trial takes much longer, depending on the court’s calendar, the documents and the number of witnesses. Unpaid invoices often come with wider arguments, such as defective goods or late delivery; see our breach of contract guide.
Winding-up and bankruptcy when a debtor will not pay
When a debtor has no genuine dispute but will not pay, a creditor can petition to wind up a company or to make an individual bankrupt.
A creditor owed more than RM50,000 can leave a notice of demand at the company’s registered office under section 466(1)(a) of the Companies Act 2016 (Act 777). If the company fails to pay, secure or compound the debt within 21 days, it is deemed unable to pay its debts, and the winding-up petition must be filed within six months after the notice expires. A company with a genuine dispute can challenge the petition, and the creditor risks costs. See our winding-up guide.
Bankruptcy under the Insolvency Act 1967 needs a final judgment and a debt of at least RM100,000. If the debtor does not comply with a bankruptcy notice within seven days, that is an act of bankruptcy, and the petition must be presented within six months. Social guarantors cannot be made bankrupt, and other guarantors need the court’s leave first. Under section 33C, as amended from 6 October 2023, a bankrupt is generally discharged automatically three years after submitting a statement of affairs, if they have paid the sum fixed by the Director General of Insolvency. In Budget 2027, the government announced the threshold will rise to RM150,000 from 2027.
Enforcing a judgment, time limits and costs
A judgment is only useful if it is paid. If the debtor still does not pay, the main enforcement tools are:
- a writ of seizure and sale, under which the court bailiff seizes and auctions the debtor’s movable property
- garnishee proceedings, which redirect money owed to the debtor, such as a bank balance, to the creditor
- a judgment debtor summons under the Debtors Act 1957 (Act 256), where the debtor is examined on oath about their means and can be ordered to pay in instalments
- charging orders and prohibitory orders over shares or land
- bankruptcy or winding-up proceedings
Time limits apply at both ends. In Peninsular Malaysia, a claim for a contract debt must generally be filed within six years under the Limitation Act 1953, and a judgment can be enforced for up to 12 years, with the court’s leave needed for execution after six years. Sabah and Sarawak have their own limitation laws. Costs depend on whether the claim is defended, the amount, the number of parties and how much enforcement is needed. A costs order against the debtor usually covers only part of your legal fees.
How NZSK handles debt recovery
We treat debt recovery as a litigation matter from the first letter, with actual payment as the goal.
- At a consultation, online or in person at our Puchong or Mont Kiara office, we review your contract, invoices and statements of account before advising.
- We look at what the debtor appears to own and whether it is still trading, using public searches where useful, because the right route depends on what can realistically be recovered.
- We then recommend a route: a demand and negotiated settlement, a civil claim with summary judgment, a statutory demand, or bankruptcy.
- The same team takes the matter from the letter of demand through judgment, enforcement and any appeal.
Partner Khoo Ai Theng (Maxine Khoo), an Advocate and Solicitor of the High Court of Malaya admitted in 2014, acts in civil and corporate litigation. We act for businesses and individuals in Kuala Lumpur, Selangor and the rest of Malaysia. Businesses with regular overdue accounts can arrange ongoing support through our corporate advisory retainer.
Frequently Asked Questions
Debt recovery in Malaysia can take anything from a few weeks to more than a year. A debtor may pay after a letter of demand, and an undefended claim can reach judgment in default soon after the time for appearance or defence expires. A claim defended to trial takes much longer, depending on the court and the number of witnesses. Enforcement adds time if the debtor still refuses to pay after judgment.
A letter of demand is the usual first step in recovering a debt in Malaysia. It sets out the amount due and a deadline to pay, often prompts payment or an instalment offer, and shows the court the debtor had a chance to settle. Some contracts require notice before action. For a winding-up petition based on a statutory demand, the notice under section 466(1)(a) of the Companies Act 2016 must be served and its 21 days allowed to run.
In Peninsular Malaysia, a claim to recover a contract debt must generally be filed within six years from when the cause of action accrued, usually when payment fell due, under the Limitation Act 1953. A written acknowledgment of the debt or a part payment generally restarts the six-year period. Once you have a judgment, it can be enforced for up to 12 years, with leave needed for execution after six years. Sabah and Sarawak have separate limitation laws.
Yes, if you are an individual and the claim is for RM5,000 or less. Malaysia's small claims procedure under Order 93 of the Rules of Court 2012 runs in the Magistrates' Court, the parties present their own cases without lawyers at the hearing, and the Magistrate's decision is final with no appeal. A company cannot bring a small claim and must file an ordinary claim instead. You can still take legal advice before filing.
In Malaysia, a creditor owed more than RM50,000 can serve a notice of demand at the company's registered office under section 466(1)(a) of the Companies Act 2016. If the company does not pay, secure or compound the debt within 21 days, it is deemed unable to pay its debts, and a winding-up petition can be filed within six months after the notice expires. Winding-up is not suitable for a debt that is genuinely disputed.
The minimum debt for a creditor's bankruptcy petition in Malaysia is RM100,000 under the Insolvency Act 1967, the level in force since 1 September 2021. In Budget 2027, tabled on 9 October 2026, the government announced it will rise to RM150,000 from 2027, so check the figure when you act. The creditor also needs a final judgment, must serve a bankruptcy notice, and must petition within six months of the debtor's failure to comply.
If a debtor in Malaysia ignores a judgment, the creditor can enforce it. The options include a writ of seizure and sale of movable property, garnishee proceedings over money owed to the debtor such as bank balances, charging and prohibitory orders, bankruptcy or winding-up, and a judgment debtor summons under the Debtors Act 1957, which can result in an instalment order. Which tool fits depends on what the debtor owns and whether it is a company or an individual.
The cost of debt recovery in Malaysia depends on the amount claimed, whether the debtor defends, how many parties are involved, whether summary judgment is possible and how much enforcement is needed after judgment. A successful creditor usually recovers part, not all, of its legal costs from the debtor through a costs order. We give a fee quotation after the consultation, once we have reviewed your documents and agreed the route.
Need to recover an unpaid debt?
We advise once we have reviewed your documents at a consultation, online or in person, at our Puchong or Mont Kiara office. Bring the contract, invoices, delivery orders and statement of account, and book on +603 8604 6580 or WhatsApp 012-401 4799.
- (+60)12-401 4799 | (+60)3-8060 0267
- [email protected]
Consultation by appointment at Mont Kiara, Kuala Lumpur and Puchong, Selangor, or online.
