When it comes to business dealings, it is almost impossible not to encounter situations where goods and services will be given out with hopes of it being paid on a given date or loans being advanced to a person to be paid on a stipulated date. Where such dealings take place, the persons who receives the goods or services or the loan, to pay at a specified date, is called the debtor while the person advancing the loan or giving out such goods and services on credit, is the Creditor. Debts are meant to be paid back at the actual date but some debtors refuse to pay up such debt as at when due. This could be as a result of different reasons such as the debtor not having the funds at that particular time, the debtors being bankrupt or the debtor(s) blatant refusal to pay up the debts.

Debt recovery is the process of recovering a debt from a debtor(s). This arises when the due date for payment of the debt has elapse but the debtor has refused to make such payment even when demands for such payment of the loan has reached the debtor.

Resorting to self-help to achieve the purpose of getting the debt paid is disastrous and in fact not acceptable in the Nigerian legal system. Thus, legitimate ways should be used in actualizing the purpose of getting back the debt owed.


  1. Issue a reminder: This is the first step a creditor should adhere to. Thus, the creditor is to send a reminder through written letters, mails or SMS reminding the debtor of his inability to pay the debt as at when due and the importance of doing so as refusal may make the creditor to institute the matter in court. Where the debtor does not make payment after the reminder, a further mail to the debtor, referring to the reminder earlier sent should be made. The letter of reminder can be drafted by the creditor or through his lawyer.
  • Negotiate on new terms of payment: It is important for the creditor to give room for discussion and negotiate with the debtor on new terms of payment of the debt where it is glaring that the debtor is desirous of paying the debt but for circumstances beyond his/her control, was unable to do so at the actual date fixed for paying the debt. Thus, payment in installments, a new date for the payment of the debt or selling of valuable goods or property of the debtor to settle the debt could be used as a form of paying up the debt owed.
  • Fall back to the agreement earlier made: Where the parties have made an agreement before the loan, goods or services were given out, it is important for the creditor to fall back on the said agreement to know if an alternative method of resolving the problem before going to court should default be made in paying the debt, was stated therein. Where such is the case, the creditor should first follow such method before going to court.
  • Letter of demand: A letter of demand can be issued to the debtor(s) stating the debt owed, the date which such loan, goods or services were given out, the agreed date it ought to have been paid and the deadline stating that the creditor will commence an action in court where the debt remains unpaid. This letter is an evidence that the creditor has in fact notified the debtor of the debt owed and such payment has not been made. The letter can be drafted by the Creditor’s lawyer. Hence the need for the creditor(s) to employ the services of a lawyer.
  • Apply Alternative Dispute Resolution Mechanism: It is important for the creditor to explore other methods of dispute resolution before resorting to litigation. Hence the need for the creditor to use the Alternative Dispute Resolution mechanism to tackle the issue at hand. Parties often times include the Alternative Dispute Resolution clause in their agreement as a means to solving any problem in case of default but where that is not the case, the creditor can still use this means to solving the issue at hand. The Alternative Dispute Resolution methods include Mediation, Conciliation, Negotiation and Arbitration etc.
  • Institute a matter in court: Where the creditor has exhausted all avenues to settle the matter, the creditor can institute a matter in court this being the creditor’s last resort to getting the debt owed. The court has the power to entertain matters regarding debt recovery and as such, enforce payment on the debtor. The court with competent jurisdiction to entertain a debt recovery matter, depends on the total amount of money owed and which is sought to be recovered. Thus, the matter could be instituted in the Magistrate Court, State High Court or Federal High Court. It is important for the creditor to seek the services of a lawyer in order to represent him in court. It is important for matters brought to court concerning debt recovery, be brought timeously as the limitation period within which to bring the debt recovery matter which resulted from a simple contract, is six (6) years excluding the year the contract was entered into and executed.  section 21(1)(a) of the limitation of action law.


The creditor before instituting a matter in court for debt recovery should look out for other amicable avenues as enumerated above to settle the issue at hand. Where the debtor, is adamant and refuses to pay up the debt, then the court should be the creditor’s last resort. In a situation where the creditor did not recover the full debt owed within six (6) years, the creditor can still be heard by a court of competent jurisdiction as there was a break in causation.

For further enquires you may reach out to us HERE and we’ll be happy to help.

Cynthia Tishion
Cynthia is a lawyer and currently serves as Head of Corporate / Commercial Services at LEX – PRAXIS. With her passion for business and entrepreneurship, she is actively engaged in creating awareness on the legal aspect of businesses through various platforms such as writing, public speaking engagements.

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