Debt Collection in Afghanistan

The debt collection process in Afghanistan begins with an assessment of the debtor’s solvency, their business area, the history of the business, the availability of documentary evidence of the debt, ongoing court cases and enforcement proceedings, and the possibility of disputing the debt. This assessment determines the strategy that will be used on behalf of the client in the collection process.

If the debtor has no ongoing court cases or outstanding judgments for debt collection and is actively engaged in commercial activities, then it is advisable to use the out-of-court debt collection stage.

This stage involves active negotiations with the debtor in order to reach an agreement on payment of the creditor’s claims or other possible settlement options (e.g. return of goods, transfer of the debt to a third party, exchange of services or goods).

Interaction with the debtor begins immediately after sending a notice by mail, email, phone or instant messengers. This process involves intensive communication with the debtor in order to exert constant pressure. The main objective is to establish contact with key decision makers to achieve prompt debt collection.

The average time for informal out-of-court collection is up to 60 days (except in cases where a payment plan is agreed upon). If this stage does not bring the expected results or after an initial analysis it becomes clear that it is not applicable, it is necessary to proceed to collection through the courts.

Before initiating judicial collection, it is worth paying attention to the statute of limitations. The statute of limitations for debt collection is either 5 or 15 years and depends on the type of debt. The statute of limitations is interrupted if the debtor directly or indirectly acknowledges the debt or provides the creditor with property as collateral. After the interruption, the statute of limitations begins to count anew.

The legislation of Afghanistan provides for judicial debt collection through the usual judicial procedure.

The usual judicial procedure is carried out by filing a claim with the court, after which the court checks the claim for compliance with the requirements of the law. If the claim is to be accepted, the court registers it and notifies the defendant of the acceptance of the claim and the need to provide a response to the claim.

After receiving the notice, the defendant has 15 days to respond to the claim. After the expiration of the specified period, the court sets a date for the trial. If the defendant refuses to appear in court at the specified time without good reason, the court issues a default judgment against him.

If the defendant appears, the court gives the opportunity first to the plaintiff or his legal representative, and then to the defendant or his representative to announce their statement of claim and objections. The court has the right to demand explanations from the plaintiff, defendant and other persons participating in the case if during the trial questions arise regarding the material circumstances of the case. In order to clarify the facts related to the claim and at the request of the parties, the court may require the opinion of experts who, by virtue of their profession and experience, have sufficient information and, in accordance with the norms of Islamic law, have a good reputation and qualities. In cases where the complexity of the case arises from accounting issues and document verification, or if the complexity of the case arose for other reasons, the court shall appoint one of the members of the court or an expert to supervise the matter and conduct a detailed investigation.

The period for considering the case is 4 months from the date of registration of the claim. The period may be extended taking into account the specifics of individual cases for documented and substantiated reasons.

After the investigation and study of the case, the court shall declare the end of the investigation of the case and proceed to judicial debate. Upon completion of the judicial debate and statements by the parties that they have nothing more to say, the court shall declare the end of the trial and make a decision. The court’s decision shall be announced to the parties to the case immediately after the end of the trial.

The decision of the court of first instance may be appealed to a higher court within one month from the date of the announcement of the decision. The decision of the higher court may be appealed to the Civil and Public Rights Tribunal of the Supreme Court of Afghanistan within two months from the date of the contested decision. The decision of the Supreme Court is final and cannot be further appealed.

After the court decision comes into legal force, the creditor should initiate the enforcement procedure. The court decision can be presented for execution within 5 years from the date of entry into legal force. Within the framework of the enforcement of the court decision, the creditor’s claims can be satisfied by arresting and writing off funds from the debtor’s accounts; arresting the movable and immovable property of the debtor with their subsequent sale; arresting and confiscating securities; arresting and confiscating company shares. 

If the debtor is in a state of insolvency, it is advisable to use the bankruptcy procedure of the debtor. The debtor is insolvent if he is in a financial state in which either his debts exceed his assets at the current valuation, or the debtor is generally unable to pay his debts as they fall due. The creditor has the right to initiate this procedure if the amount of the debt is not less than 700,000.00 Afghan francs and the debt is not paid within 30 days from the date of the creditor’s demand. At this stage, if the debtor’s assets are not sufficient to fully satisfy the creditors’ claims, it is possible to cancel the debtor’s transactions made with the intention of causing damage to the creditors. Any transfer of money or property made by the debtor or an obligation assumed by him within 2 years prior to the initiation of the bankruptcy procedure is subject to cancellation if the transfer or obligation was made under the following conditions: 1) the amount of remuneration of the debtor was less than the amount of remuneration of the opposite party and the debtor became insolvent at the time of the transfer or as a result of this transfer; or 2) the debtor made a transaction with the intention of evading the claims of creditors in general or giving preference to one creditor over others. In addition, the court may require the return of property, reduction of security or application of other measures that it deems necessary in relation to any transaction that is not part of ordinary business activities and was made by the Debtor within 1 year before the commencement of the procedure, if it created a preference in favor of one creditor to the detriment of the general circle of creditors. As a result of the cancellation of the above transactions, it is possible to return back to the debtor what he lost from such transactions and thereby increase the liquidation estate to satisfy the claims of creditors and cover the costs of implementing the bankruptcy procedure.

If you have any questions or you need support on international debt collection in Afghanistan, our company is ready to provide its expert assistance to effectively resolve your financial issue. Contact us to get additional information and professional support from specialists of the leading debt collection agency.

# DEBT COLLECTION AGENCY AFGHANISTAN

22.10.2024

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