Information about legally collecting unpaid money in Japan.
First of all, make sure you keep contracts, invoices, or any other documents (evidences) which can prove you have the right to demand payment. Lack of evidences can make it difficult for you to collect unpaid money.
Usually, we first negotiate with the other party for payment.
Send a content-certified letter. (“Naiyo-Shomei”)
Content-certified letter is a service provided by the Japanese postal office which is designed to prove where you have sent the mail to and what is written in it. By claiming the payment through a content-certified letter, you can clearly express the details of your claim and also that you are strongly willing to collect your money. Sending a content-certified letter can also be a powerful approach to produce pressure on the other party. Additionally, you can also hire a lawyer to send a content-certified letter by the lawyer’s name.
2, Court Procedures
If the other party still does not pay, you will have to take court procedures, in order to perform court enforcement.
Court procedures include;
(1) Conciliation of civil affairs
(2) Notice of overdue payment
A Simple and quick procedure designed to receive the court decision made by reviewing documents. The potential disadvantage of this procedure is that the case will be required to move forward with a lawsuit if the other party has an argument.
(3) Lawsuit for small claims
A Simple and quick procedure designed for the payment of 600,000 yen or less.
3, Court Enforcement
After you get a court order, but if the other party refuses to pay, you will have to file for a court enforcement procedure.
Court enforcement is designed to forcibly collect the amount of your claim from the other party by seizing their properties. In order to take this procedure, you will need to specify their properties. You need to confirm what properties they own or where they have their bank accounts in advance.
Keep in mind that taking a court enforcement procedure cannot be an option if the other party has no properties or if you can’t specify their actual properties.
4, Cost etc.
As discussed above, there are several ways you can take to collect money in Japan. However, when the amount is small, it may not be practical to file for legal procedures.
The attorney generally handles these cases as follows.
1. Review the evidences and see if the client should move forward.
2. Send a content certified mail to the debtor in Japan.
3. If the debtor doesn’t pay or doesn’t reply, then the attorney will file a lawsuit.
4. If the debtor doesn’t pay even after getting the court’s order, the attorney will collect the money from the company through the court enforcement procedure (See this page)
The attorney fee will be charged for each step.
For research (step 1), attorney fee is 60,000 yen or more depending on the quantity of work. For sending a mail (step 2), the attorney fee is 50,000 yen – 80,000 yen plus tax. The attorney fee for filing a lawsuit (step 3) will depend on the amount to claim. However, the legal fee is usually more than 600,000 yen if you are overseas and cannot come to our office. It may also cost 300,000 yen or more plus tax for doing the above written step 4 (even the procedure may end up in vain). In Japan, generally you cannot make the other party to pay your legal expenses (even if you win at the lawsuit), and you will have to pay the expenses in advance.
Even if you file a lawsuit and get the court’s order for payment, it doesn’t directly mean you can collect the money. If the company has no asset, or if they run away, it may not be possible to get the payment anyway. So, usually if the amount to claim is under 3,000,000 yen, it may not be cost effective to use the attorney’s service for collecting money from overseas.