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Practical Steps to Recover Debt in Ghana.

By November 13, 2023No Comments

Indebtedness within the Ghanaian market poses a severe challenge to lenders and businesses trying to grow their investment portfolios. Many business organisations are indebted, and thus growth is restricted.

As a result of this, institutions dedicated to the recovery of debts have sprung up in Ghana. Their primary focus is to recover long overdue debts and restore their monies. Against this background, this article provides some practical tips to ensure you maximise recovery of your debts and avoid write-offs by focusing on “no-nonsense” techniques that can be deployed to prevent the likelihood of non-payment.

Debt Collection Rates

Legalstone Solicitors follows international standard rates for debt collection cases and the fees stipulated by the Ghana Bar Association for the collection of the debt owed in commercial, corporate, and business contracts.

Debt Recovery Processes

At Legalstone, we offer simple, effective, and swift solutions to recover debts in Ghana. Our team of lawyers and experts has an in-depth understanding of the laws and legal nuances for recovering a debt owed to clients, whether individual or corporate entities.

Our debt recovery solutions can issue an initial letter before the commencement of a court process to recover the amount due and owed. A letter before action is a formal letter written by our expert lawyers demanding payment of the debt owed to your business. It warns of impending and unstoppable court action on failure to adhere to the moratorium granted for payment.

Our letter before action usually sets out the following:

  1. Circumstances leading to the debt owed.
  2. The amount involved.
  3. The particulars of the Debtor.
  4. The particulars of the client.
  5. Set the time for payment, which is usually seven (7) days of moratorium.

In some cases, issuing the letter before action may lead to the settlement of the debt due and owed to our client without necessitating further steps. We are a law firm and not a debt collection agency. We litigate based on explicit instructions from our clients if our letter of demand doesn’t result in payment.

Our debt recovery services include:

  1. Commercial litigation and dispute resolution;
  2. A letter before action (LBA), that is, letters of demand;
  3. Settling matters by way of Alternative Dispute Resolution (ADR) processes;
  4. Obtaining and enforcing judgments by way of writs, instalment orders, and garnishees, among others;
  5. Assisting you and your business by drafting the agreement to mitigate the need for debt recovering actions and
  6. Telephone collections and follow-ups.

Practical ways of recovering debt

Here are some of the practical approaches to debt recovery in Ghana.

  1. Recovery through the issuance of a Writ of Summons.
  2. Recovery through application for Summary Judgment.
  3. Recovering through application for Mareva Injunction.
  4. Recovery through Writ of Execution.

Recovery through the issuance of a Writ of Summons

A creditor to a credit transaction in which the Debtor has defaulted in repaying on the terms agreed shall have the right to cause a writ of summons to be issued seeking relief, among which is to recover the amount due and owing.

A writ of summons is, therefore, a formal document by which the Chief Justice informs a defendant (Debtor) that an action has been commenced against him by a named plaintiff (the creditor). It commands Defendant to cause an appearance to be entered within a specified time, usually eight days on the service of the document if Defendant wishes to dispute Plaintiff’s claim to recover the debt; otherwise, judgment will be given without further notice.

Recovery through the application of summary judgment

The application of summary judgment is another valid mechanism that a creditor can employ to recover a debt due and owing. As the name suggests, summary judgment is obtained without going through the rigorous processes of a full trial.

Summary judgment is available where a party can depose that to his belief. There is no defence to the relevant part of his claim. The rule retained its root in the English 1962 rule revisions and was introduced in the 19th Century to meet convenient demand for efficient debt recovery or collecting. Its ambit has significantly developed and has become a procedure for swiftly determining a point of law. It enables a plaintiff (the creditor) to obtain a quick judgment where there is no defence to the claim by a defendant (Debtor).

Recovery through the application of Mareva Injunction

Mareva Injunction is a discretionary remedy that permits the Court to balance the parties’ respective interests. Mareva Injunction is, therefore, an extraordinary, equitable remedy intended to prevent a genuine risk that a Defendant would most likely dissipate assets before the conclusion of a trial or the determination of the action between the Parties.

It is always advised for Creditors/Banks to approach the Court for Mareva order when there is the likelihood or suspicion that the Debtor may dissipate or dispose of his assets before the case initiated against him in a Court of Competent Jurisdiction is conclusively determined.

Recovery through the issuance of a Writ of Execution

We shall consider two mechanisms for recovery of debt through the issuance of a Writ of Execution:

  1. Writ of Fieri Facias

This is the mode of enforcement of a money judgment by the seizure and sale of the Debtor’s goods, chattels, lands or property sufficient to satisfy the judgment debtor cost and execution. It is a writ directed to the sheriff of the Court to seize the property of the judgment debtor as may be sufficient to satisfy the amount of the judgment debt together with interest and cost, and the purpose is to enable the property to be sold to pay the judgment debt, interest if any and cost.

The Writ of fieri facias is the most common of all the writs of execution and is usually referred to in a shortened form as the Writ of fi fa. Its essence is that the seizure realises the amount ordered to be paid and then the sale of the judgment debtors’ properties and chattels.

  1. Garnishee Proceedings

Garnishee Proceeding is the process by which a judgment-creditor may attach debts due in satisfaction of the judgment debt. On being attached, the debt owed by the third party to the judgment debtor shall ultimately be paid by him to the judgment creditor of the Court.

In other words, if the judgment debtor is himself the creditor of another, known as the garnishee, it is possible to obtain an order that the garnishee should pay the judgment creditor. This is known as the Garnishee order and is accomplished in two stages.

In the first stage, the judgment creditor will obtain, by way of ex parte, an “order to show cause,” also called a “garnishee order nisi,” which attaches the debt due to the judgment debtor and commands the garnishee to attend Court at the time and place specified in the order and show cause why he should not pay the debt directly to the judgment creditor.

Legal Representative

Growing a healthy business requires a solid legal team that employs practical strategies to recover debt, defeating the idea of losing funds to defaulting clients.

It is advisable to engage the services of a lawyer before initiating processes for the recovery of a debt in Ghana.

Legal Disclaimer

The legal notice emphasises that the publication’s contents are for reference purposes only, and specific legal advice should be sought based on individual circumstances. Please consult legal professionals for the most accurate and up-to-date advice tailored to your situation.

About the Contributor

Mr. David Yaw Danquah, Esq., is the founder and Managing Partner of Legalstone Solicitors, a leading law firm in Ghana specialising in Corporate and Commercial, Mining and Infrastructure, Family Law, Debt Recovery and Restructuring, Real Estate, Construction Law, and Commercial Arbitration.

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