Debt Recovery Lawyer Reveals Why Hiring Debt Collector Is Costlier Than Choosing The Legal Route

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I ONCE had an SME client who was owed RM150,000. Instead of engaging a lawyer, he hired a “debt collector” who pitched him on a success fee basis: 10% upfront and another 20% upon success.
The offer looked attractive because two law firms had quoted him RM50,000–RM60,000 in legal fees for court litigation. He thought he was saving money.
The debt collector’s team started by messaging and calling the debtor. When there was no reply, they escalated their approach by showing up outside the debtor’s office, shouting demands in front of staff and customers to pressure repayment.
But this debtor was not a pushover. A lawyer friend advised him to file a police report for harassment and to threaten a defamation suit.
‘Engaging thugs’
My client ended up being hauled into the balai (slang for police station) for questioning. He had to withdraw the debt collector – not a single sen recovered – while he had already burnt RM15,000 in upfront fees.

Word spread in the industry that he was using gangster tactics. It was a bad look.
Eventually, a mutual friend referred him to me as a lawyer who works on a success-based model with only a minimal basic fee (far less than what the debt collector had charged him).
He was very happy with the offer as it was results-oriented and confirmed my engagement swiftly.
The case itself was actually very straightforward. The debt was undisputed and there was no real defence. I compiled the documents, issued a formal demand via registered mail and WhatsApp –  and then I called the debtor directly.
I introduced myself as Lawyer Cheu from Rule & Co, acknowledged the earlier “unfortunate incidents” and told the debtor my aim was to resolve the matter amicably.
Cordial settlement
We had a 20-minute call that consisted mainly of me apologising for the rough tactics used before; and explaining that both sides ultimately wanted the same thing: resolution.
Image credit: Consumer Association of Penang (CAP)It also turned out he was Foochow. So am I. That broke the ice immediately (Foochows are a very tribal bunch. LOL).
Within a week of cordial discussions, he offered a six-month repayment plan. My client wasn’t keen on instalments but I advised him that a sincere plan was better than spending more money to go to court. He agreed and we drafted the settlement terms.
Over the next six months, I followed up on every instalment. The debtor paid in full and on time. The debt was recovered. The matter ended amicably. They apparently patched up and are now back on good terms.
This is how debt recovery should be done. Not with rough-and-tumble intimidation. People want “face”. Businesses want their image intact. The right way is to recover debts legally, professionally and cleanly. 
Rudi Cheu is a debt recovery lawyer at Rule & Co Advocates & Solicitors. He can be reached at+6010-202 8095 or visit www.rulecolaw.com for more details of his services.
The views expressed are solely of the author and do not necessarily reflect those of MMKtT 
- Focus Malaysia.

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