Debt Collection in Bangladesh

The debt collection process in Bangladesh begins with an assessment of the debtor’s solvency, business sector, business history, availability of documentary evidence of the debt, ongoing court cases and enforcement proceedings, and the ability to dispute the debt. This assessment determines the strategy that will be used on behalf of the client in the collection process.

If the debtor has no ongoing court cases or outstanding judgments for debt collection and is actively engaged in business activities, then it is advisable to use the out-of-court debt collection stage.

This stage involves active negotiations with the debtor to reach an agreement on payment of the creditor’s claims or other possible settlement options (e.g. return of goods, transfer of the debt to a third party, exchange of services or goods).

Interaction with the debtor begins immediately after sending a notice by mail, email, phone or instant messengers. This process involves intensive communication with the debtor in order to exert constant pressure. The main objective is to establish contact with key decision makers to achieve early debt collection.

The average time for informal out-of-court collection is up to 60 days (except in cases where a payment plan is agreed upon). If this stage does not bring the expected results or after an initial analysis it becomes clear that it is not applicable, then it is necessary to proceed to collection through the courts.

Before initiating judicial collection, it is worth paying attention to the limitation period. The limitation period for debt collection is 3 years. The limitation period is interrupted if the debtor acknowledges the debt obligation by written confirmation or partial payment. After the interruption, the limitation period begins to count anew.

The legislation of Bangladesh provides for judicial debt collection in the usual and simplified procedure.

The usual judicial procedure is carried out by filing a statement of claim with the court, after which the court checks the compliance of the claim with the requirements of the law and, if so, registers the claim. If the claim has been properly registered, the defendant must be issued a summons to appear in court and respond to the claim. The summons must be sent to the defendant within 5 days from the date of registration of the claim.

The defendant must, within 30 working days from the date of service of the summons, file a written statement in his defense. If there are valid reasons, the response period may be extended to 60 working days. If the defendant fails to file a written statement in his defense within the specified period, the court will consider the claim unilaterally.

The defendant must raise in his written statement all issues that show that the claim cannot be satisfied, and also give his reasons for each statement of fact the truth of which he does not admit. Each statement of fact in the claim, unless it is directly or indirectly refuted or indicated as inadmissible in the defendant’s statement, shall be considered accepted.

On the date specified in the summons for the defendant to appear and testify, the parties must appear in the courthouse in person or accompanied by their lawyers for the hearing of the claim. If the defendant fails to appear in court and fails to provide valid reasons for such failure, the court may enter a default judgment against the defendant, except in cases where the court doubts the validity of the claim.

If the parties appear at the first hearing, the court must find out from each party or its lawyer whether he admits or denies such statements of fact that are made in the claim or written statement (if any) of the opposing party and that are not expressly admitted or denied by the party against whom they are made. The court must record such admissions and denials. If the parties admit the statements of fact, the court may immediately issue a decision. For statements denied by the parties, the court formulates a list of issues that must be considered for the correct decision of the case. The court begins to consider the case, paying particular attention to the analysis of the evidence and documents presented. These materials help the court to understand the issues at issue, identify key disagreements between the parties, and assess the validity of their positions. During the proceedings, the court examines the factual circumstances and legal arguments, which allows it to gain a full understanding of the situation. Once all issues of fact and law are clear, the court concludes the hearing and makes a decision based on its analysis and assessment of the evidence presented.

The simplified judicial procedure is used to recover debts on bills of exchange and cheques. This procedure is similar to the general procedure, but is carried out in an accelerated manner, which allows for a quicker consideration of the case and a decision.

A decision of the court of first instance may be appealed to the High Court within 30 days from the date of the contested decision. A decision of the High Court may be appealed to the Court of Appeal within 2 months from the date of the contested decision. The decision of the Court of Appeal is not subject to further appeal.

Once the judgment has entered into legal force, the creditor must initiate enforcement proceedings. A judgment may be presented for enforcement within 12 years from the date of entry into legal force. A foreign judgment may be presented for recognition and enforcement within 6 years from the date of entry into legal force. As part of the enforcement of a court decision, the creditor’s claims may be satisfied by seizing and writing off funds from the debtor’s accounts; seizing the movable and immovable property of the debtor with their subsequent sale; seizing and confiscating securities; seizing and confiscating company shares.

An alternative option for debt collection is to use the bankruptcy procedure of the debtor. The creditor has the right to initiate this procedure if the following grounds exist: 1) the amount of the debt is more than 500,000.00 Bangladeshi taka; 2) the debtor committed an act of bankruptcy during the year preceding the opening of the bankruptcy procedure. According to the provisions of the Bankruptcy Law, the debtor commits an act of bankruptcy in the following cases: the debtor transfers his property to third parties with the intention of evading the claims of his creditors or postponing their fulfillment (if the debtor is an individual, then this condition also applies to the property of the second spouse or children of the debtor); the debtor leaves the territory of Bangladesh; the debtor uses fraudulent means or conspiracy to obtain a judgment or directions contrary to the interests of its creditors; the debtor has notified the creditor in writing that it has suspended the payment of its debts or intends to do so. At this stage, if the debtor’s assets are not sufficient to fully satisfy the creditors’ claims, it is possible to set aside actions by the debtor that were taken with the intent to harm the creditors. Such actions include, but are not limited to: giving preference to one creditor over others; making transactions at reduced prices or without reciprocal obligations on the part of the counterparty. In general, the court may set aside any transfer of property by the debtor, his legal representative, heir or other authorized person made within 15 years before the date of declaration of insolvency, if the court finds that the purpose of such transfer was to evade payment of debts. As a result of the cancellation of the above actions, it is possible to return back to the debtor what he lost from such actions and thereby increase the liquidation estate to satisfy the claims of creditors and cover the costs of implementing the bankruptcy procedure.

If you have any questions or need support for international debt collection in Bangladesh, our company is ready to provide its expert assistance to effectively resolve your financial issue. Contact us to get additional information and professional support from specialists of the leading debt collection agency.

# DEBT COLLECTION AGENCY BANGLADESH

16.10.2024

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