Debt Recovery Without Ruining Your Business Relationship

“He’s a friend of mine, I want to get my money back but I do not feel like to urge him for repayment…” Many clients hesitate commencing debt collection because debtors are their friends, colleagues, sometimes a member of family. I explain possible remedies, however, he asks following question; “Is there any way I can get my money back without ruining my relationship with the debtor?

Many clients consider DEMAND LETTER first since claiming a litigation against debtor is too much a burden for them. However, when creditor and debtor are in a close relationship as friend, colleague or family, Demand Letter is not a good strategy for debt collection. (1) Firstly, the debtor who receives your Demand Letter gets disconceted and angry. Being a formal notice through national postal services, Demand Letter can make your debtor very angry. (2) Secondly, Demand Letter does not give the opponent any obligation to answer. Of course, in your Demand Letter, you have requested the reimburstment with deadline you want. However, you cannot force the debor for repayment, even for its answer. Actually, your debtor will not make repayment and will not make a response to your letter. It is obvious that this will make you even more angry. (3) Demand Letter itself if a fairly incomplete means of collection. The effect of the suspension of statute of limitations shall also be retained after six months from your Demand Letter.

If that so, other Non-litigation Remedies like PHONECALL, TEXT MESSAGE or Email will be a proper answer? Phonecall, Text and Email are convenient and debtor will not be so angry as Demand Letter. However, (1) most debtors do not consider its debt seriously if they are requested for repayment by phone or text, they just accept them as a trivial message from a business partner. (2) In addition, telephone, text, e-mail, etc. may be forged at any time in the future. In other words, if the dispute between you and your debtor continues in the court in the future, your debtor may submit an email which exepmts its debt exemption email that you have never sent before as court evidence.

The answer is simple. CIVIL LAWSUIT. In light of my experience so far, the most appropriate response is to file a lawsuit right away. (1) In Civil Lawsuit, the court will deliver your complaint directly to debtor. That is, your message is delivered through a fair and authoritative national institution, the court. This makes your debtor to realize that the situation is more serious than he thinks. (2) Somtimes, Civil Lawsuit may facilitate early resolution of disputes through impartial and skilled judicial mediation. The courts of the Republic of Korea are often invited to settle in cases where the facts are sufficiently discussed in the first instance. In other words, through settlement, the court manages both parties to reach a favorable result and prevent unnecessary expenses for second and third trials. When the case is concluded by settlement, parties are likely to feel “I have come to a consensus with the other party in consideration of various situations”, this makes both parties feel more satisfied than ordinary judgment, which will make at least one party to feel “regardless of my argument, the court has ruled and rendered final judgment without enough consideration”. (3) In many cases, if the remedies of demand letter or email, message, phonecall do not have an appropriate effect, eventually it will lead to a Civil Lawsuit. In other words, if you try other remedies first, the overall time for collection will be longer. And it often takes more time and money, which means that you and your debtor may have to stay longer in an uneasy state of conflict. In other words, through Civil Lawsuit, you can minimize conflict time with your debtor.

There are several remedies for debt collection, but when it is difficult to recover debt by Demand Letter of Other Non-litigation Remedies, Civil Lawsuit helps.



Attorney at Law, Korea | Provides International Debt Collection Services in South Korea | |

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