By Our Law Team on May 6, 2025
A creditor recovering money in Kenya moves through a predictable sequence: a formal demand, negotiation, and - if the debtor still refuses to pay - a court claim followed by execution against the debtor's assets. Most debts are recovered without a full hearing, but the outcome is usually decided long before trial: by the quality of the documentation, the speed of the demand and the choice of enforcement route. This guide sets out each stage, the deadlines that matter, and what to do when the debtor is genuinely insolvent.
The demand letter does three things: it fixes the date of default, it warns the debtor that proceedings will follow, and it starts the running of interest and costs. A proper demand identifies the parties precisely, states the amount owed and how it is computed - principal, contractual interest and agreed charges - encloses a reconciled statement of account, gives a payment deadline of 7 to 14 days, and states clearly what will happen if the debt is not paid.
Send the demand in a way you can prove: registered post, a courier with tracking, or email where the contract permits electronic notices. Keep every delivery receipt, and copy any guarantor, because a guarantor who is not put on notice early may later argue that their position was prejudiced.
Speed matters. Under the Limitation of Actions Act a creditor has six years to sue on a simple contract, so a debt can become unenforceable even where the debtor openly admits owing it. If the limitation period is close to expiring, issue proceedings rather than continuing to negotiate.
A debt claim is won on documents. Put the file together first so that the demand and any later court process are consistent:
One point is easy to miss: a written acknowledgment of the debt signed by the debtor, or a part-payment made towards it, can restart the limitation clock. That is why every repayment plan, however informal, should be recorded in writing and signed.
Suing the wrong entity is an expensive mistake. For a company, obtain an official search to confirm the registered name, registration number and directors. For a business name, identify the registered proprietor. For an individual, confirm the full legal name. Where a director or a third party guaranteed the debt, consider joining them as a co-defendant so that recovery is not limited to the company's own assets.
Enforcement is only as good as the assets behind it, so run a practical asset check before spending money on a claim: land and buildings (through a land registry search), registered vehicles, bank accounts, shareholdings in other companies, stock, machinery and known receivables. Where there is a real risk that the debtor will move assets while the case is pending, ask the court for preservation orders or an injunction early.
Negotiation is not weakness; it is often the fastest route to money. A written instalment agreement with interest, a default clause and, ideally, security or a guarantor is frequently better than a judgment against a debtor with no traceable assets. Where the debtor offers property, shares or a third-party guarantee, document the arrangement properly before you release the pressure.
Where a suit has already been filed, a settlement recorded and adopted by the court as a consent order is enforceable by execution without a fresh trial - and it removes any later argument about whether the debt was owed.
A statutory demand is a serious step, not a bluff: use it only where the debt is undisputed and exceeds the insolvency threshold, otherwise the debtor may apply to set it aside and recover the costs of doing so.
If the debtor will neither pay nor negotiate, the next step is a claim. The court depends on the value and the nature of the debt:
Filing fees are generally assessed on the value of the claim, so settle the figure you claim carefully at the outset. Interest and costs are usually claimed in addition to the principal.
A claim starts with a plaint supported by a verifying affidavit, a list of documents and witness statements. Once served, the debtor must enter an appearance and file a defence within the time allowed by the Civil Procedure Rules. If the debtor does nothing, the creditor applies for judgment in default.
If a defence is filed but discloses no real answer to the claim - for example where the debt is admitted in writing or is plainly due - the creditor can apply for summary judgment, which avoids a full trial and saves months. Where a genuine dispute exists, the case goes through case management and then to hearing.
Kenyan courts now actively refer civil and commercial disputes to court-annexed mediation before trial. A settlement reached there is recorded and adopted as an order of the court and is enforceable as such, which can resolve a debt claim in weeks rather than years. Our mediation and arbitration lawyers represent creditors and debtors in those sessions.
A judgment is only a piece of paper until it is enforced. Execution under the Civil Procedure Act and the Civil Procedure Rules includes:
Execution has to be kept alive. Warrants of attachment lapse if they are not executed and must be renewed, objections to attachment are common, and the auctioneer needs to be pressed. A decree that is not actively enforced loses value quickly.
Where the debtor is genuinely insolvent and has many creditors, a race to attach assets can be futile. Bankruptcy of an individual, or liquidation of a company under the Insolvency Act brings the assets under a trustee or liquidator, stops individual execution and distributes the estate in the statutory order - expenses first, then preferential debts such as certain employee claims and taxes, then unsecured creditors.
Insolvency also creates real pressure: many settlements happen in the weeks after a statutory demand or a petition is filed, because the debtor's directors and partners can see the business being taken out of their hands. If you hold security, remember that a secured creditor generally stands outside the unsecured pool and can enforce the security instead of proving in the estate. Our insolvency lawyers in Nairobi advise creditors on both sides of that line, including whether to petition or to negotiate.
Interest is a substantial part of most debt claims, so claim it correctly from the start: contractual interest at the rate in the agreement, interest on the judgment sum once a decree is issued, and interest on costs. Kenyan banks and financial institutions are subject to the in duplum rule under the Banking Act, which stops interest accruing on a non-performing loan once the interest equals the outstanding principal - one reason older institutional debts are often smaller than the statements suggest. Kenya removed the statutory cap on lending rates in 2019, so rates are now largely contractual, although courts can intervene against unconscionable or penal terms.
Our debt recovery lawyers in Nairobi handle the full process - demand letter, statutory demand, court claim, garnishee orders and insolvency proceedings - and keep enforcement moving until the money is recovered. Book a consultation and recover what you are owed.
