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Engage a lawyer to collect debt

Engage a professional debt collector to collect debt

Set up your own in-house debt collection team

What makes debt collection difficult in China?

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Engage a lawyer to collect debt

It is expensive and not many lawyers enjoy collecting debt for clients because it is difficult to do so. (See the section on What makes debt collection difficult in China?). Be prepared to pay Rmb 100,000 and above for negotiation, investigation, litigation, out-of-pocket expanses and enforcement. Enforcement may cost more than litigation itself. If you get a low quote from your lawyer, it is likely that he is not really looking into enforcement of the judgement. In China, the winning party will never be able to claim back lawyer fees from the loosing party.

Careful planning is necessary before suing. Conduct detailed investigation especially the ability of the debtor to pay. Like the rest of the world, shareholders of a limited company in China are not liable to pay out if the company cannot pay. You may sign the contract and deliver the goods or services because you thought the company is a member of a credible company group. At the end of the day, your right is only good against the company you are dealing with and not the entire group. Because the debt problem in China is so bad, it is quite common for well-known company groups give up their subsidiaries.

Everyone says that there is no law in China and so, why bother to hire a lawyer to collect debt?

The legal system in China is not perfect but it is not as bad as you think. Many so-called cases of bad judgements or inability to enforce judgement can be explained. You may not need or want to hire a lawyer to collect all your debts but your lawyer is another tool in your tool box where at times, he or she may come in handy.

Is it important to engage a lawyer who has good relationship with the judges?

Yes. However, relationship is not everything. Remember one thing, your opponent's lawyer should have equally good relationship as yours. Hence, the relationships cancel each other out. Ultimately, it is important to see how to make your case stronger.