Ten Points That Decide Whether a Debt Is Recovered in Japan

The money does not arrive, several reminders produce nothing, and the natural impulse is to sue. What matters more at that moment is knowing what to establish, and in what order. In Japan the outcome of a recovery is usually settled by the judgments made at the outset rather than in the courtroom. What follows sets out, under Japanese law, ten points that decide whether a debt is in fact recovered.

Contents

Why the debtor is not paying
Establishing the claim and the time that remains
The debtor’s assets, and preventing their dispersal
Choosing the procedure by cost and benefit
Looking past the judgment to the money
Where the debtor’s credit becomes doubtful
In closing
How to contact us

Why the debtor is not paying

The first point is to distinguish between three quite different situations: the debtor has no means to pay, the debtor genuinely disputes the claim, or the debtor is simply playing for time. Where there are no means, the priority is to secure and identify the assets available to satisfy the claim before they go. Where there is a real dispute, the case turns on the documents. Where it is mere delay, a single specific and unambiguous demand will often be enough. The three call for entirely different responses, and suing without first making the distinction is usually wasted effort.

Establishing the claim and the time that remains

The second point is to assemble, early, the material that proves that the claim exists and in what amount: the contract, any master trading agreement, purchase orders, delivery notes, acceptance certificates, invoices, statements of account and the email correspondence, arranged in date order, with what the debtor admits separated from what is genuinely contested.

The third point is to establish how much of the period of extinctive prescription remains. Under the Civil Code of Japan as amended with effect from 1 April 2020, a claim is extinguished five years from the time the creditor became aware that the right could be exercised, or ten years from the time it could be exercised, whichever comes first. Claims arising before that date remain governed by the earlier rules, so the date each claim arose must be fixed. A demand made by content-certified mail (naiyo-shomei yubin, a Japanese postal certification system) postpones the completion of prescription for six months; that is time bought and nothing more, and an action must be filed or a demand for payment applied for within it if prescription is to be renewed.

The debtor’s assets, and preventing their dispersal

The fourth point is to investigate the debtor’s assets and the property that answers for the debt: the certificate of registered matters, the register of any real property, the banks used, the business premises and the principal customers. A Japanese lawyer may also make a bar association inquiry under article 23-2 of the Attorney Act of Japan, through which public and private bodies may be asked to confirm the debtor’s whereabouts and certain asset information.

The fifth point is that where assets may be dissipated, provisional attachment (kari-sashiosae) should be considered before the action is filed. The right to be preserved and the necessity of preservation must be shown, and a security bond deposited with the Legal Affairs Bureau, in practice commonly ten to thirty per cent of the sum claimed. Litigation takes months and often more than a year; if deposits are moved and property sold in the meantime, even a judgment in the creditor’s favour recovers nothing.

Choosing the procedure by cost and benefit

The sixth point is to choose the procedure on a cost-and-benefit basis. Where the sum is clear and no dispute is expected, a demand for payment (shiharai-tokusoku) is applied for to the clerk of the Summary Court and issues without any oral hearing, at half the court fee of an ordinary action; if no objection is filed within two weeks, a declaration of provisional execution may be added and an enforceable title obtained. For monetary claims of not more than 600,000 yen there is also the small claims action (shogaku-sosho), in which the hearing is in principle concluded and judgment given on a single day. An objection by the debtor, however, converts a demand for payment into an ordinary action.

The seventh point is to try to obtain a part payment or an acknowledgement of debt. Even a small payment, or an acknowledgement in writing, renews prescription and starts the period running afresh. Where negotiations do not settle the matter, that much at least is worth taking away from them.

Looking past the judgment to the money

The eighth point is to check for a joint and several guarantee, for security, and for the possibility of set-off. Where the principal debtor lacks the means, a guarantor is decisive; where a mortgage or a revolving mortgage exists, the creditor takes priority over the property charged; and where the debtor also holds a claim against the creditor — a deposit, a rebate, a payable from another transaction — a declaration of set-off recovers the money at once, without waiting for a judgment. It is the fastest and most certain remedy of all.

The ninth point is that obtaining a judgment and actually being paid are two different things. The target of execution — a bank account, receivables owed to the debtor, real property or movables — is best identified before the action is begun. Where the assets cannot be traced, the property disclosure procedure allows the court to order the debtor to attend and state what it owns, and the procedure for obtaining information from third parties allows deposit information to be obtained from banks and property information from the registry.

Where the debtor’s credit becomes doubtful

The tenth point concerns the debtor who has begun to restructure its debts, has called a meeting of creditors, or has petitioned for corporate bankruptcy or civil rehabilitation. Pressing for individual payment then carries its own risk: the Bankruptcy Act and the Civil Rehabilitation Act of Japan confer a power of avoidance, and a preferential payment made to one creditor during the critical period may be avoided by the bankruptcy trustee and ordered to be repaid. The realistic options at that stage are set-off, the right of separate satisfaction (betsujoken) over property held as security, and the recovery of goods supplied under retention of title. The time available for that decision is short, and advice should be taken early.

In closing

These ten points are not independent of one another. The assessment of the debtor’s means governs the choice of procedure; the time left before prescription governs how quickly matters must move; and the presence or absence of anything to execute against governs whether an action is worth bringing at all. Move early and the options are many; hesitate and they narrow. Instructions, asset investigation and an application for a provisional remedy can all be handled from outside Japan by email and video conference, and we are equally glad to work through the creditor’s own counsel.

How to contact us

Telephone 03-6435-8418 within Japan, or +81-3-6435-8418 from overseas. Lines are open from 08:00 to 24:00 Japan time, including Saturdays, Sundays and public holidays. Enquiries are also received at any hour through the form on this site.

M&A Partners Law Office LPC　Katsuhiro Tsuchiya, Representative Attorney-at-Law (Tokyo Bar Association, Registration No. 26775)　17F Mori Trust Shiroyama Trust Tower, 4-3-1 Toranomon, Minato-ku, Tokyo, Japan

This article is a general explanation based on the laws and practice of Japan as at August 2026 (Reiwa 8). The outcome of any particular matter depends on its own facts, and no specific result is guaranteed.

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