It is no news how difficult it is to run a business these days and it also not in doubt that the purpose of starting a business or company is to make profit. What then happens when services have been rendered or goods sold to a customer or consumer and they refuse to pay up?
1. Try amicable settlement by contacting the debtor and giving them time to pay, maybe by instalments especially where it’s a huge amount.
2. Where amicable settlement fails, then it’s time to contact a good debt recovery lawyer. Your lawyer will require evidence of such of such debt, such s invoices, emails, contract,photographs, memos, etc.
What Your Lawyer Will Do after reviewing your claims will be to issue a Letter of Demand to the debtor, warning about dire consequences if payment is not received on or before a stipulated date (usually 7 days after the delivery of the letter). If the debtor is a Company, a Statutory Letter of Demand for winding up of the Company may be served on the Company and upon expiration of the statutory period, a winding up proceedings will be commenced against the Company for the Court to appoint a receiver to liquidate and sell off the insolvent Company’s assets.
A Letter of Demand will show the debtor your level of seriousness to recover the debt and serves as a pre-action notice for a debt recovery proceeding. The debtor may pay up or negotiate an installment payment once he hears from a lawyer.
What You Must Not Do to Recover Debt:
Failure to pay debt is not a criminal offence, you must therefore not resort to self-help as the court frowns at extra-judicial measures at debt recovery. Self-help may include the use of menacing threats, violence, malicious destruction of goods or property, and/or the arrest and detention of debtor by the Police at your behest. Self-help may expose you to liabilities for assault, battery, unlawful detention, false imprisonment, constitutional rights abuse, wherein, debtor may successfully prosecute an action for his fundamental rights enforcement and for the award of punitive compensatory and monetary damages against you, which may by far exceed the outstanding sum of debt you are claiming.
Debt Recovery Action in Court:
Where the overdue debts arose from a service contract or loan agreement, the requirements for the enforcement of the right of the vendor or lender are usually specified and provided for under the commercial contract or loan agreement. It is the Court that has the power to hear and determine an action for debt recovery and enforce payment against a stubborn debtor. Your lawyer acting on your behalf through a fast-track court procedure known as “Undefended List” or “Summary Summons” will commence a debt recovery action and for damages for breach of contract and state your case. Your lawyer may also bring an application for the preservation of the moveable and immoveable property of the debtor pending the final determination of the Court process. Where the debtor is a company, a winding up proceedings may be commenced along with the action for Summary Judgment against the debtor.
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