Debt Recovery in Kenya: What to Do When Someone Owes You Money

For a business or individual, money that is owed but not paid can create serious financial pressure.

A business may have supplied goods and services but not received payment. A landlord may be owed rent. A person may have advanced money to another individual who has failed to repay it. A company may be waiting months for an invoice to be settled.

The natural reaction is often to demand payment immediately or threaten legal action.

While pursuing a debt promptly is important, effective debt recovery requires more than simply sending angry messages or repeatedly calling the person who owes the money.

The first step is understanding the nature of the debt, the evidence available and the appropriate legal strategy for recovering it.

What Is Debt Recovery?

Debt recovery is the process of seeking payment of money that is legally owed to an individual or business.

The debt may arise from many different circumstances.

It could result from an unpaid invoice, a loan, a contractual obligation, unpaid rent, goods supplied on credit or another legally enforceable arrangement.

The method of recovery depends on how the debt arose.

A straightforward unpaid invoice may require a different approach from a disputed loan or a debt secured against property.

This is why it is important to establish the legal basis of the claim before deciding what action to take.

Do You Need a Written Agreement?

A written agreement can make debt recovery significantly easier because it provides evidence of the parties' obligations.

For example, a supply agreement may clearly establish the goods supplied, the agreed price and when payment was due.

A loan agreement may specify the amount advanced, the repayment schedule and other relevant terms.

Without written documentation, recovering a debt may become more difficult because the parties may disagree about whether money was actually owed or what the repayment terms were.

This does not necessarily mean that every debt without a formal written contract is impossible to recover. However, the available evidence becomes particularly important.

What Evidence Should You Keep?

If someone owes you money, preserve all documents and communications relating to the transaction.

Depending on the circumstances, this may include:

• Contracts and agreements.

• Invoices.

• Receipts.

• Delivery notes.

• Bank statements.

• Payment records.

• Emails.

• WhatsApp or other written communications.

• Acknowledgements of the debt.

• Statements of account.

• Records of previous demands for payment.

Evidence becomes particularly important where the debtor later disputes the amount owed.

A business should therefore avoid treating record-keeping as an administrative issue only. Proper records can become critical evidence if legal action becomes necessary.

Should You Send a Demand Letter?

In many situations, a formal demand for payment can be an important first step.

A demand letter communicates that the creditor expects payment and gives the debtor an opportunity to resolve the matter before formal proceedings are commenced.

A well-drafted demand should identify the debt clearly and explain what payment is being requested.

It should not simply consist of threats or accusations.

The objective is to create a clear record of the claim and, where possible, encourage payment without the need for prolonged litigation.

Sometimes a debtor genuinely intends to pay but has delayed due to a misunderstanding or temporary financial difficulty.

A formal demand can bring the matter to their attention and create an opportunity for resolution.

What If the Debtor Disputes the Debt?

This is where debt recovery can become more complicated.

A debtor may respond by saying that they do not owe the money, that the amount is incorrect or that they have already paid.

They may also allege that the goods were defective, the services were not provided or the agreement was breached.

At this stage, the creditor should not simply assume that the debtor is acting in bad faith.

The underlying documents and evidence should be reviewed.

The question becomes:

Is there a legally enforceable debt, and can it be proved?

If the creditor has strong documentation, the dispute may be capable of being resolved through negotiation or formal proceedings.

What If the Debtor Acknowledges the Debt but Cannot Pay?

Not every debtor who fails to pay is refusing to pay.

Sometimes the debtor accepts that the money is owed but genuinely lacks the ability to pay the full amount immediately.

In such circumstances, the parties may consider negotiating a payment arrangement.

For example, the creditor may agree to receive the debt in instalments over an agreed period.

Whether this is appropriate depends on the circumstances and the creditor's objectives.

A payment plan should be properly documented rather than relying on a verbal promise.

The agreement should clearly establish the amount to be paid, payment dates and what happens if the debtor defaults again.

When Should You Consider Court Proceedings?

Where attempts to recover the debt fail, legal proceedings may become necessary.

However, commencing a lawsuit should not be an automatic reaction to every unpaid invoice.

Before filing a claim, it is useful to consider the amount involved, the evidence available, the debtor's position and the likely costs and risks of litigation.

It is also important to determine whether the particular claim falls within the jurisdiction of the appropriate court and whether a specific legal procedure applies.

A legal assessment at this stage can help prevent a creditor from spending money pursuing a claim that is difficult to prove or recover.

Winning a Case Does Not Always Mean Getting Paid Immediately

This is an important distinction.

A court judgment establishing that a debt is owed is a significant step, but the creditor may still need to take appropriate steps to enforce the judgment.

The practical question becomes whether the debtor has assets or income against which the judgment can be enforced and what enforcement mechanisms are legally available.

This is why assessing the debtor's circumstances can be important before and during recovery proceedings.

A judgment against someone who has no identifiable assets may present different practical challenges from a judgment against a debtor with substantial assets.

What If the Debtor Is Trying to Hide Assets?

A creditor may sometimes become concerned that a debtor is transferring or disposing of assets to avoid paying the debt.

Such circumstances can require urgent legal advice.

The appropriate response depends on the evidence and the nature of the threat.

The law provides mechanisms through which a creditor may, in appropriate circumstances, seek protection while proceedings are ongoing.

However, these are serious legal steps and should not be pursued merely on the basis of suspicion.

There should be a proper factual and legal basis for any application.

Can You Recover a Debt Without Going to Court?

Sometimes.

Negotiation can be particularly effective where both parties want to avoid the cost and disruption of litigation.

A creditor may negotiate directly with the debtor or through advocates.

In some circumstances, mediation or another appropriate form of alternative dispute resolution may also help.

The advantage of reaching an agreement is that the parties can potentially resolve the matter more quickly and with greater flexibility than a fully contested court case.

However, the creditor should ensure that any settlement is properly documented and that the agreed terms adequately protect their interests.

Why Businesses Should Have Credit Control Procedures

Debt recovery should ideally begin before a debt becomes a problem.

Businesses that regularly sell goods or services on credit should have clear credit-control procedures.

Customers should understand their payment terms from the beginning.

Invoices should be issued promptly and accurately. Outstanding accounts should be monitored, and overdue payments should be followed up consistently.

A business that waits six months before addressing an unpaid invoice may find that the situation has become much more difficult.

Good credit management can therefore reduce the need for legal recovery.

Contracts Can Make Debt Recovery Easier

A well-drafted commercial agreement can significantly improve a creditor's position.

The agreement can establish payment dates, interest where legally appropriate, consequences of default, dispute-resolution mechanisms and other relevant terms.

This gives the parties clarity from the beginning.

For example, a supplier who clearly states that invoices are payable within 30 days has a much clearer contractual framework than one who simply tells customers, "Pay when you can."

The contract should reflect the actual commercial relationship and comply with applicable law.

What If the Debtor Is a Company?

Recovering money from a company can require additional considerations.

The creditor should establish that the company is the party that actually owes the debt and should not automatically assume that the company's directors are personally liable.

A company is generally a separate legal entity from its directors and shareholders.

Whether a director or another person can be held personally responsible depends on the circumstances and the legal basis for the claim.

This distinction is important when deciding who should be pursued.

How Long Should You Wait Before Taking Action?

Waiting indefinitely is rarely a good debt-recovery strategy.

The longer a debt remains unpaid, the greater the possibility that records will become difficult to locate, witnesses may become unavailable or the debtor's financial circumstances may change.

There are also legal limitation periods that can affect the ability to bring certain claims.

A creditor should therefore avoid assuming that because a debt has existed for years, it can always be recovered whenever they decide to act.

If you are owed a significant amount of money, obtaining legal advice early can help you understand the applicable timelines and options.

What Should You Do If Someone Owes Your Business Money?

The first step is to gather the evidence.

Establish exactly how much is owed, when it became due and what contractual or other legal obligation gives rise to the debt.

Next, consider whether the debtor disputes the debt or simply has not paid.

If appropriate, a formal demand can then be issued.

Where payment still does not occur, the available legal options can be assessed.

This approach is generally more effective than immediately commencing proceedings without first understanding the claim.

Conclusion

An unpaid debt can place significant pressure on an individual or business, particularly where the money is needed to meet operating expenses, pay employees or maintain cash flow.

The good news is that creditors do not necessarily have to accept non-payment indefinitely.

A combination of proper documentation, timely demands, negotiation and, where necessary, legal proceedings can provide a structured approach to debt recovery.

The key is to act before the problem becomes more difficult.

At G.K. Kimani & Associates Advocates, we assist individuals and businesses with debt recovery, commercial disputes, contract enforcement and related litigation.

If someone owes you money and has failed to pay, obtaining legal advice can help you assess the strength of your claim, understand the available recovery options and determine the most appropriate next step.

This article is intended for general informational purposes and does not constitute legal advice. Debt recovery is highly dependent on the nature of the debt, the available evidence and the circumstances of the debtor. Applicable limitation periods and procedures may also vary. Professional legal advice should be obtained before commencing recovery proceedings.