Debt collection in Kenya often brings anxiety, confusion, and financial strain to those caught in its grip. If you’re overwhelmed by relentless calls, unclear legal processes, or unfair practices, this article is for you. Guided by our expert debt collection lawyers at F.M Muteti & Company Advocates, we delve into the common issues plaguing debt collection cases. Our extensive debt collection in Kenya FAQ guide addresses your pain points with clear, actionable solutions designed to empower you and reclaim control over your financial future.
What Are the Common FAQs about debt collection in Kenya
- How do I begin debt collection proceedings in Kenya?
In tandem with Order 3 Rule 2(d) of the Civil Procedure Rules, in debt collection matters, the first step is issuing of a time-bound demand letter as a formal notice to the debtor demanding performance or payment of the sum of money owed in honour of a contractual commitment within a definite period. Normally, the demand letter grants the addressee an opportunity to have the matter settled out of Court.
- What is the significance of formal demand letter?
A formal demand serves as a preventive measure against incurring additional costs of suit should the claim be admitted. Issuing a Demand Letter further mitigates against filing vexatious or rather suits brought out of malice. As well, a formal demand offers a party an opportunity not to miss the boat as regards righting a wrong against a legal right.
- What happens when my formal demand is not honoured?
Where a formal demand is ignored, then the next available option is institution of debt recovery proceedings against the debtor. This should be strictly done in accordance with the law hence it is advisable to seek legal guidance on the same.
- Where do I file my suit when my formal demand is not met?
The forum for this depends on the amount claimed. Accordingly, Section 12(3) of the Small Claims Court Act limits jurisdiction of the Court to one million Kenyan Shillings. Further, as per Section 7 of the Magistrates’ Court Act, Magistrate Courts have and exercise jurisdiction and powers over cases in which the value of the subject matter does not exceed Twenty Million Kenyan Shillings. By virtue of Article 165(3) of the Constitution, the High Court is the appropriate forum for matters exceeding Twenty Million Kenyan Shillings.
- What is the difference between a Judgement Debtor and a Decree Holder?
A judgement debtor is person whom a judgement has been entered against. On the other hand, a Decree Holder is the person whom a judgement has been rendered in favor of.
- When can I file debt recovery Proceedings?
Since most debt recovery proceedings emanate from either Oral or Written Agreements, they should be filed reasonably within six years as the Limitation of Actions Act dictates at Section 4. However, the limitation may be extended by virtue of Section 22, 26 & 27 of the Limitation of Actions Act.
- What is the remedy where a debtor is unwilling or is reluctant to pay me after judgement in my favor?
- Garnishee Proceedings– As per Order 23 of the Civil Procedure Rules, this is where a decree holder is enabled to reach money due to the judgment debtor, which is in the hands of a third party through attachment of debts. For example, the Money might be held by a Bank on behalf of the Judgement debtor.
- Further, as per Section 38 of the Civil Procedure Act, the Court has power to enforce execution on application of a decree holder. As such, the Court may order execution of a decree-
- by delivery of any property specifically decreed;
- by attachment and sale, or by sale without attachment, of any property;
- by attachment of debts;
- by arrest and detention in prison of any person;
- by appointing a receiver; or
- in such other manner as the nature of the relief granted may require.
- What should I do where a debtor wants to delay or obstruct the Court process before judgement?
The most appropriate way is to make an interlocutory application seeking arrest and attachment. This is provided under Order 39 of the Civil Procedure Rules. The Court reserves its discretion to issue a warrant to arrest and bring the defendant before Court so as to show to show cause why he should not furnish security for his appearance. However, the Defendant cannot be arrested if settles any sum specified in the warrant as sufficient to satisfy the plaintiff’s claim. The amount paid is normally held in deposit by the Court until the suit is disposed of or until further Court order is issued.
- Can I pay in installments where judgement has been entered against me?
Order 21 Rule 12 of the Civil Procedure Rules allows for direct payment in Installments where Decree has been issued for Payment of money.
Conclusion
While debt recovery proceedings might be complex sometimes, find the best debt recovery lawyers in Kenya at F.M Muteti & Company Advocates for seamless experience. We pride as the best performing Law Firm in Kenya, with immense success in matters debt recovery and settlement.
