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5 Ways to Recover Debt Lawfully from an Individual or Organization

Read the 5 Ways to Recover Debt Lawfully from an Individual or Organization. In this guide, I will show you how to collect depth from debtor in Nigeria lawfuly.

Debt may arise from so many scenarios. It may arise from a loan taken from an individual or financial institution or it may arise from lack of payment for services rendered or items purchased. In any case, indebtedness should not become a hobby to us. We must always pay our debts when due.


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This article will elaborate on ways to recover your debt lawfully and the best one to use in the circumstances.

Procedure for debt recovery in nigeria

There are many debt recovery strategies in Nigeria you can use. See the few tips on how to recover debt in Nigeria bwlow.

1. Recover Debt Lawfully – Contract a Lawyer

The first line of action to recover your debt is to contract a lawyer. Often times, lawyers acts as debt recovery agents in Nigeria. The reason for this is no other reason than the fact that only the court has the power to adjudicate on debt recovery, the police or any other similar organization lacks the power to handle such matters. Lawyers have extensive knowledge of debt recovery laws in Nigeria.

Read: Know Your Rights: The Use of Police for Debt Recovery is Unlawful in Nigeria

The lawyer will the begin the process by issuing a formal letter of demand to the debtor, giving him an Ultimatum of a certain number of days and a threat of further legal action.

This letter of demand must contain how much is owed, the how the debt was incurred, the date before which it must be paid and the warning of a legal action if the money is not paid within the Given period.

Debtors should note that a letter of demand from a creditor is usually the beginning of a potential legal dispute and must be cautious when replying this letter so as not to have such reply ruin his chances in court.

Debtors should ensure that the reply us marked “without prejudice”, if not, the reply may be admitted in evidence against the debtor and as an admission of liability for the debt.

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If after sending the letter of demand and the debtor does not agree to pay, there is more than one option to recover the debt.

2. Recover Debt Lawfully – Use Alternative dispute resolution

Alternative dispute resolution is a means of settling issues or disputes that may arise without having to sue the party to court. There are different kinds of alternative dispute resolution but for the purpose of this topic, we would discuss just two types.

3. Recover Debt Lawfully – Mediation

Mediation is a structured negotiation between the parties with a mediator who does makes the final decision on the Rights of their parties but encourages them to settle amicably without going to court.

Mediation is voluntary and not forced on any party. And can also be engaged in when the matter is already in court, the decision of the parties is then submitted to the court as consent judgment.

Mediation is a much better method because it is faster than a cull fledged litigation or even arbitration. The parties to a mediation are entitled to have their lawyers present although, this is not compulsory but advisable. The venue of the mediation proceedings in also private and not open like a courtroom, the setting is also informal and not strict like a courtroom.

Mediation may be disadvantageous because the mediator lacks the power to enforce the agreement reached unlike a judge, but like I stated earlier, the mediation agreement can be enforced in court as a consent judgement.

4. Recover Debt Lawfully – Arbitration

Arbitration is a procedure in which a dispute is submitted voluntarily , by agreement of the parties, to one or more arbitrators who make a binding decision on the dispute. In choosing arbitration, the parties opt for a private dispute resolution procedure instead of going to court.

Arbitration is more suitable when the parties to the dispute are corporate organizations. It is advantageous because, the proceedings are done In private. It is also flexible in rules as the parties my decide the time frame for the proceedings.

The proceedings are also informal and evidence is not applicable to the proceedings unlike as is done in a courtroom.

The disadvantage of arbitration in settlement of disputes is the cost of the proceedings which is borne by the parties. The venue and payments of the Arbitrators are usually very expensive and so it is discouraging to use this method.
Another disadvantage is the similar one we discussed under mediation.

The absence of coercive powers to enforce the outcome of the Arbitration or arbitral award. The court is still needed to enforce the award. And the losing party may appeal as well if the judgment is not in his favor.

5. Recover Debt Lawfully – Litigation

Where alternative dispute resolution has failed to resolve the dispute at hand, litigation will be the last option to take.

Litigation begins by a writ of summons being taken out in the high court along with an application for summary judgment.

This saves time of having to go through a full trial where you will call witnesses and tender evidence. Summary judgment application is supported only by affidavit and documentary evidence and is allowed by the court when it has been proven that the defendant is actually in debt and has no Defence whatsoever to his suit.

The advantages of this system over alternative dispute resolution is that it is cheaper to embark on as the judges are paid by the state unlike the arbitrators who are paid by the parties.

Also, the court has the absolute power to enforce any judgement it makes unlike the alternative dispute resolution methods that lack the power to do so.

It’s disadvantages on the other hand, are time, the parties cannot control the time of the trial and the trial may be delayed due to unforseen circumstances.

The conduct of the proceedings are usually formal and very complex, that is why a lawyer is required unlike in mediation.

Parties to the dispute have to observe courtroom decorum just like lawyers do, such as bowing to the judge before entering and when leaving the court or addressing him as my lord.

The proceedings are also open to the public unlike in arbitration and mediation which are private.

Read: 6 Things You Should Consider Before Going to Court

I always advocate for alternative dispute resolution, but as we all know, some persons are not emotionally available for a mediation or any amicable settlement of any sort. If force is not used, they may never pay their debts. Caution should be exercised and where alternative dispute resolution fails, litigation may be the only way out.

If you need any personal assistance on this topic, kindly contact us. We have legal practitioners at your service anytime.We have already handled several Nigerian cases on recovery of debt.

Have questions? Ask them in the comments section below.

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Bar. Princess Ogono

Bar. Princess Ogono is a Legal Practitioner and Content Developer at InfoGuideNigeria.com. InfoGuide Nigeria is a team of Resource Persons and Consultants led by Ifiokobong Roberts. Page maintained by Ifiokobong Roberts. If you need a personal assistance on this topic, kindly contact us.

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4 Comments

  1. Great write-up. Please how do I recover debt from a state government in Nigeria? Is there any vital information I should know about this and is the procedure different from recovering debt from an individual or an organisation?

  2. Pls I need your advice,my parent(aged now have a number of flats being used as an hostel in delta state & presently the agent that collects the rents & should remit our part to us haven’t paid us but has collected rents for the year due from January to September/November when schools vacate.He keeps asking for more time that he used the money for something & hasn’t still gotten the returns till date.This excuses have been coming since early this year.However the property is in delta state & we live in Lagos while the property is in delta state so its a challenge to manage myself due to distance & not having a relative there that can.I was advised to get him arrested,pls what do I do? I need your urgent response as the debt money is huge & the family us in great need of it.Awaiting your speedy reply,thanks a lot.

    1. The first thing to do is to withdraw the property from him and give to another manager who will deliver. The next thing is to look for means to collect the debt. Follow the instructions in the post. Success!

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