Debts incurred if not managed effectively go on accumulating and this can lead to the debtor ultimately turning bankrupt. Nonpayment of the debts can also be severely frustrating and stressful to the lender. These problems are more significant in the corporate and business sector. Thus businessmen and lenders arm themselves with the following strategies to recover debts:



Firstly, the lender may call the debtor, negotiate and set up a deadline by which the debt should be paid off. The debtor usually tries to portray an intimidating attitude. If the calls are left unanswered or the debtor fails to meet the deadline the lender can go to the court.

The court employs three methods to recover debts. They are Small Claim Process (SCP), Warrant of Execution (WoE) and Section 65 proceedings. The court determines the method to be used depending on the money owed.

Small Claim Process (SCP):

The SCP being straight forward and cheap is the most widely accepted method. The disputes can be settled using the fast-track process or the multi-track process. Generally amounts above 5,000 pounds are dealt with the fast-track process while those in excess of 15,000 pounds are dealt with using the multi-track process. In the instances where the creditor may be given a default judgment with respect to the debtor the creditor has two options. He may appeal to the court to issue a WoE to the debtor or his property. The other remedy is to refer to Section 65 of the Magistrate's Court Act.

Warrant of Execution (WoE):

Here, the court places the responsibility of auctioning off the assests of the debtor and property with the sheriff. The debtor is supposed to surrender his real estate documents as collateral. First the movable assets like vehicles or furniture are auctioned followed by the immovable assets like real estate. The public is invited to such auctions and the assets are sold to the highest bidder. The money raised is then given to the creditor. If that money does not successfully recover the loan the debtor is asked to make some other arrangements to get the additional money.

Section 65 Proceedings:

If the debtor and the creditor have reached a conclusion to settle the debt in smaller installments, the court is sanctioned to make this a court order. Now, in accordance with section 65 (A), if the debtor fails to pay the amount, the creditor can summon him to court. A particular day is decided for the court hearing where both the debtor and creditor should be present to defend themselves. If the debtor stays absent on the predetermined day, he can be charged with contempt and even imprisoned.

These are the ways in which a lender can effectively recover his money.