Debt Collection Procedures in China


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Collecting debts accrued in or through China has various complications such as language and cultural barriers in place that cause problems for many businesses. Foreign laws, customs and processes lead to challenges many companies did not consider, which means a debt collection service may need to be hired for assistance.

Collection agencies are hired often to better assist with collecting debts in China and when someone living or working in this country cannot pay his or her lenders. These entities are fluent in the language, laws and custom of the nation along with knowing how to handle certain procedures. Recovery of funds is important, and this means knowing what to do and how to proceed with these matters. Another way to initiate collecting money lent or other debts is to network with various companies that have already started these processes. It is important to have someone that speaks the local languages, and this may require the hiring of a translator.

Creating relationships overseas is important for business and ensuring that debts are paid correctly. For those that have not paid back the monies owed, it is important that local laws and regulations are obeyed and adhered to properly. The network of debt collectors may assist in these processes, but if that is not possible, a lawyer may be needed to enforce the country regulations. If the issue is with a supplier, vendor, contractor or manufacturer, it may be necessary to research additional methods of acquiring payment. This could mean a lawyer is needed for information purposes.

Collector Agencies

Using a debt collecting agency in China is popular for a variety of reasons, but these entities are able to keep credit reports secret and other matters private when confronting various persons that owe debts. Creditors have the same ability as those in the United States with placing items on the credit report of consumers. This could lead to other collection agencies eventually turning up, but this does cause credit issues for the private citizen. While many businesses are attempting to collect on these debts, some companies are patient to wait out those that cannot purchase certain items without the assistance of wiping numerous items off the credit report to return the score to an optimal level.

Having a good credit score has become more important as the years pass for purchasing vehicles, houses and launching business ventures. This means expunging negative items on the credit report. Through collection agencies, both the consumer and company are able to benefit from a mutually helpful program of paying the debts back. Only domestic agencies in China are able to collect debts from those that have accrued them. This means a company or agency that calls China home is able to accomplish this specifically. This also means that while a business owner may personally attempt to collect funds from a debtor, it is easier, faster and does not require as much energy or money to use a collection agency much of the time.

The Rules and Procedures

The Ministry of Public Security and the State Administration for Industry and Commerce has set forth regulations that permit only Chinese law firms to conduct debt collections through agencies and companies within the country. This means that no other business or entity may be involved in acquiring payment for debts that are owed. Most of the rules regarding these matters are similar with other international regulations. However, in China the agencies hired and used to collect monies are given more freedom to invent creative ways to acquire the funds as well as more aggressive tactics and techniques to employ. This may mean involvement with family and other loved ones.

Notices of the debt may be sent to co-workers, loved ones, associates and others that have contact with the person that owes the money. Other tactics such as placing large signs on the property may occur. However, when a company or person needs to collect a debt, it is important to understand the laws and the rules for doing so, or the business may be in violation of these stipulations. It is important to consult with a legal consultant or lawyer so that the owner of the organization is aware of how to proceed with these matters and which agency to contact. This may mean directly hiring a domestic debt collecting business.

Chinese Legal Help

When in China, it is important to hire a Chinese lawyer to protect the interests of the company. This legal professional may have contacts for hiring debt collecting agencies, and he or she knows these rules and regulations.

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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer.

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