Since it’s not legally right to arrest debtors, then we must know the effective debt recovery strategies to use. Debt recovery is a legal matter in Nigeria. If it’s not treated properly, it can lead to a worse situation.
It is therefore vital to note that resorting to self-help is against law terms. What then are the debt recovery strategies that help to recover debt from debtors?
3 Areas Of Debt Recovery Strategies You Can Adopt
- Parties may determine the dispute resolution scheme to be adopted in the event of a dispute. Here, important contract details like debt recovery may be subject to arbitration, negotiation, and litigation.
- Litigation appears to be the most employed mode of debt recovery. This is possibly due to the adversarial nature of debt matters.
- Recovery of debt, as we have earlier stated is a matter of law and the law has defined procedures to follow to legally reclaim a debt.
Let’s proceed to examine the procedures involved in debt recovery in Nigeria.
Step-by-Step Procedures For Debt Recovery In Nigeria
Step 1: Engage a lawyer. This is the first step.
Step 2: The lawyer would usually write a letter of demand requesting payment of the debt due. It’s instructive to note that this is a condition precedent that must be satisfied before going to court to institute an action.
Step 3: The letter of demand would usually contain the time frame of debt repayment and would indicate that failure to pay would result in consequent legal action.
Step 4: Where the debtor fails to reply or pay the debt sum, the lawyer upon instruction of the client would commence an action in court for debt recovery.
Key Things To Note About Debt Recovery Strategies
Having followed all of these processes, there are yet certain things note about debt recovery strategies. Let’s examine each of them below.
Note 1
The Nigerian Police has no jurisdiction in debt recovery matters. Thus, engaging the police or private security personnel in recovering a debt is not legal. In Okafor & Anor v AIG Police Zone II Onikan & Ors, the Court held that the police had no right in civil matters like debt recovery and loan agreements.
Note 2
As a creditor, never resort to self-help in recovering your money or property from a debtor. It leaves you vulnerable to lawsuits for breach of fundamental human rights.
Note 3
It’s important and necessary for all creditors to recover their debts through legally approved means. Importantly, creditors are also encouraged to employ ADR in debt recovery before going to litigation.
Do You Want To Recover A Debt? Don’t be tempted to resort to self-help. Consult A Lawyer Today.
References
1 Okafor & Anor v AIG Police Zone, 2019 LPELR- CA/L/332/2018
2 Jamiu Yusuf, “Debt Recovery Under Nigerian Law” available at, https://www.google.com/url?sa=t&source=web&rct=j&url=https://papers.ssrn.com/sol3/papers.cfm%3Fabstract_id%3D4142402&ved=2ahUKEwivrpa_5Jn9AhXpcfEDHfGMCsw4ChAWegQIGBAB&usg=AOvVaw1IUuWKHvnyr8LHJsNRosVl accessed on Feb 16, 2023
Do you seek redress or consultation on legal matters?
Our Law Firm – Scotts Legal – offers legal services in areas including but not limited to the following:
- Real Estate Services (Property Acquisition, Investigation, Registration, Property Management)
- Company Registration and Post-Incorporation Services
- Corporate and Commercial Law solutions
- Domestic Violence and Child Custody
- Cross Border Transactions
- Debt Recovery Services
- Commercial Litigation
- Intellectual Property
- International Trade
- Criminal Litigation
- Employment Law
- Client Advisory
- Civil Litigation
- Mining Law
- Tax Law
Follow us on our social media handles:
Constantly get our news updates and informative articles.