Debt collection in Zambia

Debt collection in Zambia begins with a practical assessment of the debtor, the debt documents and the assets that may be reached in Zambia. At this stage it is important to identify whether the debtor is an individual, a partnership or a company, whether the debtor is still trading, where its business is actually conducted, whether it has assets, receivables, bank accounts, vehicles, equipment or real estate in Zambia, and whether there are pending court proceedings, enforcement actions, business rescue proceedings or liquidation proceedings that may affect recovery.

For commercial debts, the assessment should also cover the debtor’s business sector and the origin of the claim. In Zambia, unpaid debts may arise from supply contracts, mining-related services, transport and logistics, cross-border trade, construction, agency arrangements, distribution agreements, loan agreements or unpaid invoices for professional services. The creditor should preserve the contract, invoices, delivery notes, correspondence, statements of account, payment confirmations, acknowledgements of debt and any settlement proposals, because these documents determine whether the claim can be pursued through negotiations, ordinary court proceedings, summary judgment, enforcement or insolvency-related measures.

If the debtor has no active proceedings that block recovery and continues to operate, the first stage may be out-of-court debt collection. This stage includes a written demand, direct communication with the debtor, verification of the person authorised to make payment decisions, negotiation of repayment terms and assessment of whether a payment plan, return of goods, security for the debt, set-off or another settlement structure is commercially acceptable.

The average time for informal out-of-court collection is up to 60 days, except where a payment plan or another settlement arrangement has been agreed. If the debtor disputes the debt without evidence, avoids communication, starts transferring assets, stops trading, enters business rescue or liquidation, or if the documents show that the claim is suitable for court action, the creditor should proceed to court debt collection without losing procedural time.

Before initiating judicial collection, the creditor should assess the limitation period for debt collection in Zambia. For ordinary contractual debt claims, the creditor should proceed on the basis of a 6-year limitation period, calculated from the date when the cause of action arose, unless the claim is based on a special instrument, a judgment or another category for which a different limitation period applies. A written acknowledgement of the debt or a partial payment may affect the running of time, so the creditor should keep all correspondence, payment confirmations and settlement records that show the debtor’s recognition of the outstanding obligation.

Judicial debt collection in Zambia may proceed through ordinary civil proceedings and, in suitable clear documentary cases, through applications that allow the court to decide the claim without a full trial, including summary judgment. The appropriate route depends on the value of the claim, the documents available, the debtor’s defence, the need for witness evidence and the court that has jurisdiction over the dispute.

The courts of first instance for debt recovery include the Subordinate Courts, commonly referred to as Magistrates’ Courts, and the High Court. The monetary jurisdiction of the Subordinate Courts depends on the level of the magistrate: a Chief Resident Magistrate may hear civil claims up to ZMW 1,000,000, a Principal Resident Magistrate up to ZMW 900,000, a Senior Resident Magistrate up to ZMW 500,000, a Resident Magistrate up to ZMW 300,000, a Magistrate Class I up to ZMW 150,000, a Magistrate Class II up to ZMW 100,000 and a Magistrate Class III up to ZMW 75,000. Claims exceeding the relevant monetary limit, or claims that require the original unlimited jurisdiction of the High Court, should be filed before the High Court.

An ordinary civil claim in Zambia is commenced by filing the appropriate originating process with the competent court. In the High Court and the Commercial Court Division, proceedings may be commenced by a Writ of Summons accompanied by a statement of claim, an Originating Summons supported by an affidavit, a Petition or an Originating Notice of Motion, depending on the nature of the claim and the relief sought. The statement of claim should set out the material facts, identify the cause of action and state the remedies requested from the court.

After the case is filed, the originating process must be served on the defendant, and the plaintiff should file proof of service with the court. In commercial debt cases, the documents filed with the claim may include the contract, invoices, account statement, correspondence, demand letter, list of documents, list of witnesses and other evidence showing that the debt is due and payable.

Once the summons or other originating process is served, the defendant generally has between 14 and 42 days to file a defence, depending on the distance between the court registry and the defendant’s physical address, including where the defendant is outside Zambia. If the defendant fails to file a defence within the required period, the creditor may apply for default judgment where the procedural conditions are met.

If the defendant files a defence, the court may issue directions on the further conduct of the case, including pleadings, discovery and inspection of documents, exchange of evidence, witness statements, expert evidence, written submissions and the timetable for trial. These directions are important in debt recovery cases because failure to comply with court timelines may affect the creditor’s ability to move the case forward efficiently.

If the case is heard in the Commercial Court Division, the court may schedule a scheduling conference. The parties should prepare and exchange their conference briefs at least seven days before the conference. These briefs may include a summary of the material facts, agreed facts, admissions, disputed issues of fact and law, witness statements, expert evidence and the documents that each party intends to rely on.

Based on the materials filed for the scheduling conference, the judge may identify the issues to be tried, narrow the dispute, give directions on evidence and set the procedural steps required before trial. A bare or general denial by the defendant may be treated as insufficient where it does not clearly answer the creditor’s claim.

After the hearing and final submissions, the court may pronounce judgment or reserve it for delivery at a later date. Where judgment is reserved, the judgment should be delivered within 180 days from the date set for filing final submissions. Where the court reserves a ruling after a hearing, the ruling should be delivered within 90 days after the conclusion of that hearing.

For a clear debt supported by documents, the creditor may apply for summary judgment where the defendant has filed a defence but the defence does not show a real prospect of successfully defending the claim. This route is especially relevant where the claim is based on a written contract, invoices, delivery documents, statements of account, correspondence or a written acknowledgement of debt, and the defendant’s response does not raise a genuine triable issue. If the court is satisfied that the claim is properly supported and the defence is insufficient, it may enter judgment in favour of the creditor without a full trial.

A Magistrate’s Court decision may be appealed to the High Court within 30 days of the decision being made. A High Court decision may be appealed to the Court of Appeal within 30 days. A decision of the Court of Appeal may be appealed to the Supreme Court of Zambia only with leave, and an application for leave to appeal should be made within 14 days. The decision of the Supreme Court of Zambia is final and is not subject to further appeal.

If the creditor already has a foreign court decision against a debtor connected with Zambia, a separate assessment is required for recognition and enforcement of foreign judgments in Zambia. Under the Foreign Judgments (Reciprocal Enforcement) Act, a judgment creditor may apply to the High Court for registration of a final and conclusive foreign money judgment from a jurisdiction covered by the reciprocal enforcement regime. The application for registration must be made within six years from the date of the judgment or, if there was an appeal, from the date of the last judgment in those proceedings.

A registered foreign judgment has the same force and effect as a judgment of the High Court and may be enforced in Zambia after registration, subject to the rules on notice, setting aside and execution. Registration may be refused or set aside where, for example, the foreign court lacked jurisdiction, the debtor did not receive proper notice of the foreign proceedings, the judgment was obtained by fraud, the judgment has already been satisfied, enforcement would be contrary to public policy, or the judgment is not enforceable in the country of origin.

Once a Zambian judgment or a registered foreign judgment becomes enforceable, the creditor may initiate enforcement proceedings. A judgment may be brought for enforcement within 12 years from the date on which it became enforceable. Execution may normally begin after at least three days from the date of judgment, unless the court directs otherwise or enforcement is affected by an appeal, stay or other court order.

The main enforcement measures may include a Writ of Fieri Facias for seizure and sale of movable property, a Garnishee Order against money owed to the debtor by a third party, a Charging Order over suitable property, Attachment of Earnings, a Writ of Possession, a Writ of Elegit and a Judgment Summons. The choice of enforcement method depends on the debtor’s assets, employment status, bank relationships, receivables, real estate, movable property and the evidence available to identify recoverable value.

An alternative route for debt recovery is bankruptcy or corporate insolvency, depending on the legal status of the debtor. Bankruptcy proceedings are mainly relevant where the debtor is an individual, a partnership or a person falling within the scope of the Bankruptcy Act. If the debtor is a company, the creditor should assess remedies under the Corporate Insolvency Act, including winding-up and the effect of any business rescue proceedings.

A creditor may initiate bankruptcy proceedings where the following conditions are met: 1) the amount of the debt is not less than 100 Zambian kwacha, payable immediately or at a specified future date; 2) the debtor has committed an act of bankruptcy within three months preceding the commencement of the bankruptcy procedure; 3) the debtor is domiciled in Zambia or, within one year before the date of filing the application, has habitually resided or carried on business in Zambia or has been a member of a firm or partnership carrying on business in Zambia.

According to the Bankruptcy Act, acts of bankruptcy include, among other things: 1) transferring property to a trustee for the benefit of creditors; 2) fraudulently transferring property or part of it to another person; 3) leaving Zambia or otherwise keeping out of the way with intent to defeat or delay creditors; 4) failure to comply with a bankruptcy notice based on a court order for payment of a judgment debt; 5) notifying creditors that payments have been suspended or will be suspended; 6) filing a debtor’s own bankruptcy petition.

In bankruptcy, the trustee may challenge voidable transactions and recover value for the estate where the debtor’s assets are insufficient to satisfy creditor claims. Such transactions may include disposals of property without valuable consideration, fraudulent transfers, transactions entered into when the counterparty knew of the debtor’s insolvency, assignments of book debts that are ineffective against the trustee, and preferences given to one creditor over others within the relevant period before the bankruptcy. If such transactions are set aside, the value may be returned to the estate and used to satisfy creditor claims and cover the costs of the bankruptcy process.

Where the debtor is a company, winding-up may be available if the company is unable to pay its debts. A company may be treated as unable to pay its debts if a creditor serves a written demand for payment and the company fails for more than 30 days to pay, secure or compound the debt, if execution or another process issued on a judgment is returned unsatisfied, or if the company is unable to pay debts as they fall due, taking into account contingent and prospective liabilities.

If the company enters business rescue, legal proceedings against the company or its property may be restricted during the business rescue period. The business rescue administrator may investigate the company’s affairs, assess whether there is a reasonable prospect of rescuing the business, review voidable transactions, examine failures by directors, identify reckless trading or fraud and take steps to recover misappropriated assets. This makes insolvency analysis especially important where the debtor appears to be trading under financial distress, transferring assets or continuing business while unable to meet payment obligations.

Grandliga provides legal support for debt collection in Zambia at every stage of the case: preliminary assessment of the debtor and documents, preparation of a demand strategy, out-of-court settlement, court proceedings, summary judgment applications, registration of foreign judgments, enforcement measures, bankruptcy analysis and corporate insolvency scenarios. The strategy is built around the debtor’s legal status, available assets, quality of evidence, limitation period, court jurisdiction and the practical prospects of enforcement in Zambia.

# DEBT COLLECTION AGENCY ZAMBIA

08.01.2025

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