Debt Recovery in Pakistan
Debt Recovery in Pakistan can be, at times, very simple and very complex. In this article, we will guide you on the different ways people (and companies) can Recover and Collect Debts in Pakistan, whether they are in Pakistan or if the Person / Company that is owed money (or the debtor) is out of Pakistan.
When both Parties are in Pakistan, then the process is pretty simple. When the Debtor is in Pakistan and the other party (the Recoverer / Victim) is out of Pakistan, the matter can be resolved in a number of ways (which we will discuss). When the Debtor is out of Pakistan and the Recoverer/Victim is in Pakistan its the trickiest. When both parties are abroad, then perhaps Filing for Debt Recovery should only be done if the Debtor or Associates (related to the debt) are in Pakistan.
Debt Collection in Pakistan
To collect Debt in Pakistan successfully, a few characteristics of debt matters must be individually assessed and analyzed. These characteristics are scrutinized upon each assignment of Debt Recovery in Pakistan and include (but are not limited to):-
- Are the individual/owner of the company in the Country?
- Does the Debtor have liquid assets (in the form of Cash either on their person or in the bank)?
- Do they have assets in Pakistan? (This can be in goods such as vehicles or as immovable property)
- Which part of Pakistan they are in?
- Is there enough evidence against them to pursue the matter in Court?
- Would they need to be pursued through court or would an out-of-court arbitration be enough to resolve the matter?
What information is required to Proceed with a Recovery Suit in Pakistan?
In essence, there are 4 ways you can recover money from someone in Pakistan. Those 4 ways are:-
- Pursuing them Through Court via Legal Framework:- This is by far the most costly and effective way. If the party doesn’t show up to court then the matter would be decided ‘ex-parte’ / ‘in absentia’ and the person recovering the amount could direct the court to seize the assets of the debtor until the amount is paid.
- Using Arbitration:- In some cases, arbitration proceedings could be used to try and resolve debt recovery matters and debt collection cases in Pakistan. A Legal Notice with an invitation to resolve the matter amicably could sometimes be the push the debtor needs to realize that the victim is looking for their debt to be repaid one way or the other.
- Implementing an Overseas Judgement in Pakistan:- In some cases, a person would reside abroad (i.e. the UK, USA, Australia, Dubai, Singapore, etc.) and would borrow money from personal individuals or banks. They would run up huge amounts of debts and come to Pakistan with the hope and intent of avoiding these debts. If the individual has a court order from another country, they merely need to attest (Via a Document Attestation Service) the whole Court order (and decree) from the Ministry of Foreign Affairs (from their own country) and the Pakistani Embassy (of their Country). Once that’s attested and notarized, they provide us with a Power of Attorney and we can do the rest.
- Implementing a Pakistani Judgement Abroad:- In a similar step to the above, the person chasing the debt would file a case in Pakistan (against the debtor at his last known address)
How effective are courts in Pakistan when recovering Debts?
Courts in Pakistan are very effective in recovering debt amounts, providing that the person or company involved has assets in Pakistan. When dealing with Overseas matters, courts are more likely to expedite the process, in the interest of Justice.
A Factor that may sway the effectiveness of the outcome of the debt recovery matter would be the individual’s or company’s financial climate in regard to repaying the loan. If the company is unable to pay the loan amount and expenses, then the courts would facilitate a part payment plus monthly recurring payments.
Arbitration Vs Legal Case
Depending on the independent circumstances of each case, Arbitration may be a better and easier solution for resolving the matter. Arbitration is when a mediator gets between the creditor and the debtor to try and resolve the matter. There are no Court cases required, and all agreements are done in writing and thus legally binding.
We have many clients who have benefitted from this service, especially when amounts are under USD 10,000,000 and the debtor has liquid assets and property. On some occasions, such as when people are dealing with Software houses and App Developers in Pakistan via Third Party Platforms, we have found that arbitration works very well and is rather effective in these instances.
What are the fees for Debt Recovery and Debt Collection in Pakistan?
The fees vary depending on the complexity of each case. For debt recovery matters, we would have to first assess the case (which is beyond the remit of legal advice, so there would be a consultation cost to review the matter) and we would quote a price accordingly, depending on how best we can handle the matter.
If investigation becomes a part of the nature of work, then naturally it would increase the price of the case. It is beneficial for you, as a litigant, to have as much information about the debtor as possible. In some cases, we may be able to legally trace the information for you.
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