In China, hiring a debt collection agency (討債公司) is generally not legally recognized as a legitimate practice, though the legality depends on the methods employed by the agency. Here’s a breakdown of the key points in English:

1. Legal Status of Debt Collection Companies

No Official Recognition: The Chinese government prohibits the establishment of registered “debt collection companies” since 2000, as they often operate in legal gray areas or violate laws through aggressive tactics like harassment, threats, or violence.

Alternative Forms: Some agencies operate under names like “business consulting” or “credit management” firms to circumvent restrictions, but their activities remain scrutinized.

2. Permissible Methods

Legal Channels: Only methods compliant with the Civil Procedure Law and Contract Law are allowed, such as:

Negotiation or mediation.

Issuing lawyer’s letters (律師函) or filing lawsuits (起訴).

Prohibited Tactics: Threats, physical violence, defamation, or illegal detention are criminal offenses.

3. Why It’s Risky to Use Unregulated Agencies

Criminal Liability: Employers may face charges for “abetting illegal acts” if the agency uses unlawful means (e.g., violence or fraud).

No Legal Protection: Contracts with such agencies are often unenforceable, and creditors risk losing both the debt and additional fees.

4. Recommended Alternatives

Legal Proceedings: File a lawsuit or apply for a “payment order” (支付命令) through courts.

Professional Services: Engage licensed law firms or commercial collectors (e.g., “商賬追收師”) who adhere to ethical guidelines.

Key Takeaway

While debt collection itself is legal, the means must comply with Chinese law. Unregulated agencies risk violating the Fair Debt Collection Practices Act (where applicable) and local regulations, leading to penalties. For safety, opt for court-sanctioned methods or professional legal assistance.

For specific cases, consulting a lawyer is advised to navigate the complexities of debt recovery in China.