You may be owed money. The debtor may even admit that the money is due. However, if you wait too long to take legal action, you may lose the right to recover the debt through the courts.
This is where the debt recovery limitation period in Malaysia becomes important.
What Is a Limitation Period?
Under section 6(1) of the Limitation Act 1953, an action must generally be commenced within six (6) years from the date on which the cause of action accrues.
In the context of an ordinary debt recovery claim, this generally means that legal proceedings must be commenced within six years from the date the creditor first becomes entitled to sue for the unpaid debt.
When Does the Six-Year Period Start?
The six-year limitation period generally begins when the creditor first becomes entitled to commence legal proceedings to recover the debt.
For a straightforward unpaid debt, this will commonly be when the debt becomes due and payable. Depending on the circumstances, this may be: –
- the payment due date stated in an invoice;
- the expiry of an agreed credit period;
- the repayment date specified in an agreement;
- the date of a valid demand for payment, where payment is contractually due upon demand; or
- another date on which the debtor became legally obliged to make payment.
The precise date on which the cause of action accrues will depend on the contractual terms and the circumstances of the particular debt.
Can the Limitation Period Start Afresh?
In certain circumstances, yes.
The Limitation Act 1953 contains provisions under which an acknowledgment of a debt or part payment made in respect of it may affect the computation of the limitation period.
Whether those provisions apply will depend on the nature and contents of the acknowledgment or part payment and the particular circumstances of the case.
Accordingly, where there have been subsequent communications, acknowledgments or payments after a debt first became due, these should be considered in determining the applicable debt recovery limitation period.
Why Does the Limitation Period Matter?
The question of limitation can have a significant impact on whether and how a debt recovery claim may be pursued.
Where a debt has remained outstanding for several years, it is important to consider: –
- when the cause of action first accrued;
- the relevant contractual terms governing payment;
- whether there were any subsequent acknowledgments of the debt;
- whether any part payments were made; and
- any other circumstances which may affect the computation of the limitation period.
The applicable limitation period cannot always be determined simply by counting six years from the date of an invoice or the date on which money was first advanced.
The position may differ depending on the facts of each case. Creditors should therefore seek legal advice at an early stage rather than assume that an outstanding debt is either recoverable or time-barred merely by reference to the passage of time.
结论
Where the limitation position is uncertain, a debt recovery law firm can assess the contractual terms, payment history and subsequent communications to determine the available recovery options.
If you require advice on debt recovery in Malaysia, including the applicable limitation period for an outstanding debt, our dispute resolution lawyers can advise on the available legal options and appropriate recovery process.
Engaging a debt recovery law firm at an early stage may assist in determining the applicable debt recovery limitation period and the appropriate steps to be taken before legal proceedings are commenced.
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