Running a business is hard enough without having to chase clients who refuse to pay. Whether it is a friend who borrowed money or a company that hasn't paid an invoice, unpaid debts can cripple your cash flow.
However, frustration can lead to mistakes. In Kenya, you cannot harass a debtor, confiscate their property by force, or threaten them with police arrest (debt is a civil matter, not criminal). Doing so can get you sued.
Here is the proper legal procedure to recover your money effectively.
Step 1: The Demand Letter
This is the most effective tool in our arsenal. A Demand Letter is a formal notice sent by a law firm. It warns the debtor that if they do not pay within a specific period (usually 7 to 14 days), legal action will commence.
Why it works: A letter on a law firm's letterhead shows you are serious. It signals that you have moved from "asking nicely" to "legal enforcement." In our experience, 70% of debtors pay after receiving this letter to avoid the embarrassment of court.
Step 2: Alternative Dispute Resolution (ADR)
If they respond to the letter but cannot pay the full amount at once, we can draft a Debt Settlement Agreement. This is a binding contract where they agree to a payment plan. If they default on this plan, we can go straight to court for a Summary Judgment.
Step 3: Filing a Civil Suit
If they ignore the letter, we file a suit in the appropriate court (Small Claims Court for debts under Sh1 Million, or Magistrate's Court for higher amounts).
Since the debt is usually documented (invoices, contracts, or M-Pesa messages), these cases are often straightforward. We ask the court to order them to pay the principal amount, the interest accrued, and your legal costs.
Step 4: Execution (The Auctioneers)
Once we win the case and get a court decree, if they still refuse to pay, we proceed to Execution. We instruct licensed Auctioneers to locate the debtor's assets (vehicles, office equipment, land). These items are seized and sold to recover your money.
Stop Chasing, Start Recovering.
Your time is better spent growing your business than chasing bad debts. Let Wanyoike & Partners handle the legal pressure while you focus on your work.