Debt recovery process
The debt recovery process in Kenya.
Introduction.
In instances when a natural person or corporate entity defaults in paying its debts, the aggrieved party, creditor or the lender can recover the debt vide the following process:-
Pre-litigation step.
Before moving to court, creditors/lenders can try out of court debt recovery avenues like engaging in negotiations, mediations or even issuing statutory demand letters on intention to sue.
Negotiations, Conciliations and Mediations.
By dint of Article 159(2) of the Constitution of Kenya, disputing parties are always encouraged to first pursue alternative forms of dispute resolution before resolving to litigation. Creditors can directly negotiate settlement terms with the debtor to see if they can arrive to an amicable solution.
If by chance the creditor and the debtor cannot reach a consensus, they can as well engage a third party who serves as a mediator to aid them in negotiating a settlement. Further, the disputing parties can even engage a conciliator who comes in with some proposals for resolving the dispute at hand.
Statutory Demand letters.
In cases where both the creditor and the debtor fails to negotiate a settlement, the Creditor can procure services of an advocate who issues a statutory demand notice to the debtor demanding compliance towards honouring the debt. The demand letter contains inter alia a specific time frame limit for compliance for instance, 7-14 days, default to which a creditor can pursue litigation.
Litigation phase.
If the debtor still defaults in paying the debt despite frequent negotiations and upon issuance of demand notice of intention to sue, the creditor can resolve to file a formal substantive suit in court. The choice of court depends on the pecuniary value amount of the debt owed.
- Small Claims Court. Debts should not exceed KSh. 1,000,000/=
- Magistrates Court. Debt should not exceed KSh. 20,000,000/=
- High Court. Debt should be more than KSh. 20,000,000/=.
Hearing, determination and judgement.
Once a formal suit has been filled, the next step involves formal prove hearing of the case which is followed by court order judgment directing the debtor to pay the debt due. The creditor can proceed to obtain the decree or final court orders for the purposes of execution.
Execution
This the enforcement or implementation of the court orders. There exists various modes of execution including attachment and sale of the debtor’s properties, garnishee proceedings against third parties, arrest and committal to civil jail and appointment of receivers among others.
At Siyasa and Company Advocates, we offer expertise and professional legal services to our clients to who are in urgent need of recovering their debts. We have a seasoned, competent and esteemed team ready to serve you diligently. Contact us for personalized advice regarding this issue.
Disclaimer: “This article is for informational purposes only and does not constitute legal advice. For further inquiries, please contact Siyasa and Company Advocates.”
-Contributed by-
-Francis Kitheka-