How to Recover Money From a China Company

1. Who can help you to collect your debts legally in China

In China, only licensed law firms and licensed lawyers can help you collect your debts from China. In 1995, National Public Security Bureau and State Administration for Industry and Commerce issued together one regulation prohibiting organizations and individuals to set up Debt Collection Companies. The theory base of this regulation is, debt collection and recovery is a sort of law service, and only licensed Chinese lawyers are allowed to offer clients with Chinese law services. And in 2000, State Economic and Trade Commission (under National People’s Congress), National Public Security Bureau and State Administration for Industry and Commerce issued together another notice named “fighting against illegal debt collection companies severely”. In fact, if according to the 1995 regulation, all debt collection companies in China are illegal.

Before this regulation of 1995 was issued, individuals and organizations may set up debt collection companies in China, and help clients with their debt recovery. However, some of their debt collection methods were not professional, and even illegal. One typical method is, to send several persons or to hire and send around 10 unemployed persons to the house or office-site of debtor, and sitting there to have a party, and they will not leave unless the debtor agrees to manage to pay the debt. And some of their debt recovery methods are more violent, like threat, deceiving, extortion and even kidnapping.

2. How to recover your debt legally?

The standard operation procedure of debt collection via legal actions shall be:

1. To study the materials from creditor, and when in need the lawyer will do pre-investigations on the situation of the debtor, like whether and where it’s registered, whether one off-shore company, and so on.

1. To decide the nature of the case, if the case is a civil case (dispute) over nature, then come to step c. If the case is a criminal case, then help creditor to file one criminal case in a related police bureau in China.

1. Lawyer’s letters (demand letter, claim before legal actions and/or final claim before legal action) to the debtor, and if the debtor opens to it, carry on further negotiations with him so as to reach one out-of-court agreement, requesting him to pay the debt.

1. In case the letter does not work, or negotiations do not lead to one out-of-court agreement, the lawyer will file one litigation or arbitration case on behalf of the creditor.

3.Types of debt

1. Debt caused by Contracts.
2. Debt caused by Unjust Enrichment.
3. Debt caused by Management of Affairs without Mandate.
4. Debt caused by Infringement of legal rights.