Is Debt Collection Legal in Hong Kong?

In Hong Kong, simply failing to repay a loan (commonly referred to as “walking away”) does not constitute a criminal offense; such situations are considered civil disputes and are not handled by the police. However, creditors can pursue the recovery of debts through civil legal means. Our company can offer professional assistance and employs other legal methods to help you recover debts.

Legal Methods for Debt Collection

1. Professional Mediation and Debt Collection Assistance

    • Phone Call Collection: Regularly call the debtor to remind them to repay the amount due. Our professionals use a polite yet firm tone to ensure that debtors understand the importance of repayment and provide reasonable repayment plans to facilitate prompt repayment.
    • Written Notices: Send letters or written notices to the debtor, explicitly demanding repayment. These notices usually include details of the debt, deadlines for repayment, and the legal consequences of non-payment. These documents are legally binding and can serve as evidence in future litigation.
    • Personal Visits: Send personnel to visit the debtor personally to further negotiate repayment matters. Our professionals will communicate face-to-face with the debtor, explain the importance of repayment, and try to reach a repayment agreement, increasing the success rate of debt recovery.
    • Mediation Services: Our professional mediators can act as neutral parties to help both sides reach a settlement, avoiding further legal proceedings. Our mediation services aim to resolve disputes through negotiation, reducing the costs and time associated with litigation.

2. Civil Legal Avenues

  • Lawyer’s Letter Demanding Repayment: Initially, creditors can send a lawyer’s letter demanding repayment from the debtor. This letter typically specifies the amount of debt, the deadline for repayment, and the consequences of non-payment. If the debtor fails to repay after the deadline, the creditor can choose further legal action based on the amount:
        • Small Claims Tribunal: For debts of HK$75,000 or less, one can file a claim at the Small Claims Tribunal. In this situation, neither party needs to hire a lawyer, thus avoiding legal fees. The procedures at the Small Claims Tribunal are relatively simple and are designed to quickly resolve minor debt disputes.
        • High Court Litigation: As the amount of debt increases, the jurisdiction for litigation changes. For larger amounts, creditors need to initiate litigation in a higher court. In these cases, both parties must appear in court to present and defend their cases. The creditor needs to prepare sufficient evidence, such as promissory notes and contracts, to prove the existence of the debt.

Statute of Limitations for Debt Collection

The statute of limitations is a critical issue in debt collection. According to Hong Kong law, if there are documents such as promissory notes, failing to repay a loan is considered a breach of debt. Under the Limitation Ordinance, a “cause of action” arises on the day of the breach. Once more than 6 years have passed, the plaintiff is no longer entitled to sue. Therefore, if someone has been failing to repay a debt and it is nearing 6 years, it is advisable to take action immediately to avoid losing the opportunity to legally pursue the debt.

Illegal Debt Collection Methods and Their Dangers

When borrowers fail to repay on time, finance companies often transfer the borrower’s details to specialized debt collection agencies. These agencies use various methods to pursue debt, some of which may even be illegal. Here are some common improper debt collection methods in Hong Kong:

  1. Street Intimidation Advertising
    • Publicizing the debtor’s personal information near their residence or workplace using street banners to openly intimidate and exert psychological pressure on the debtor. This method violates the debtor’s right to privacy and can severely impact their life.
  2. On-Site Threats
    • Debt collectors may directly visit the debtor’s home or workplace to exert pressure, potentially causing panic to the debtor and their family. This method is not only frightening but can also lead to further disputes.
  3. Social Media Group Harassment
    • By adding the debtor’s relatives or colleagues to a WhatsApp group and continuously sending harassing messages, this method applies psychological pressure on the debtor and those around them. Utilizing the extensive influence of social media, it creates significant mental stress for the debtor.
  4. Workplace Harassment
    • Finance companies may repeatedly call the debtor’s office phone during work hours, causing workplace disturbances and informing colleagues and supervisors about the debt, further increasing pressure. This method can negatively affect the debtor’s career and performance.
  5. Public Information on Social Platforms
    • Leaving threatening comments on the debtor’s social media platforms like Facebook or Instagram, and exposing sensitive information such as their identity card number and contact details, to increase psychological burden and damage personal reputation. This method severely harms the debtor’s social life and reputation.
  6. Harassment of Relatives and Friends
    • Debt collection agencies may track down the debtor’s relatives and friends, even their counselors, and continuously harass and intimidate them, expanding the range of psychological pressure. This method impacts innocent acquaintances, extending its negative effects.
  7. Extreme Debt Collection Behaviors
    • In some cases, finance companies may resort to more aggressive methods, such as deliberately damaging public property around the debtor’s shop or residence or even instigating violent conflicts that threaten the lives of the debtor and their relatives. Such extreme behaviors are illegal and can cause serious danger and fear.
    • Physical Violence: Debt collectors may physically assault the debtor, such as beating or cutting the debtor or their close ones. This not only breaks the law but also poses a threat to the debtor’s physical safety.
    • Blocking Door Locks: Deliberately damaging the debtor’s lock, causing inconvenience and distress in their life, this action is illegal.
    • Pouring Red Paint: Pouring red paint on the debtor’s residence or vehicle as a form of intimidation and pressure, this not only damages property but could also constitute criminal vandalism.
    • Damaging Vehicles: Intentionally damaging the debtor’s vehicle, such as scratching the car body or smashing the windows, is a serious legal violation.
  8. Illegal Detention
    • In extreme cases, debt collectors may illegally detain the debtor, restricting their personal freedom to force repayment. This method severely violates the law and poses a great threat to the debtor’s personal safety.
  9. Forging Legal Documents
    • Debt collection agencies might forge court summons or other legal documents, threatening the debtor to repay immediately or face legal sanctions. This deceitful method can easily coerce the debtor to compromise out of panic.
  10. Harassing Neighbors
    • Debt collectors may harass the debtor’s neighbors by publicizing the debt issue, creating social pressure. This method can severely impact the debtor’s social relationships and living environment.