Debt Collection in Chad

The debt collection in Chad procedure begins with a legal and financial review of the case: the origin of the debt, the debtor’s legal status, solvency, actual business activity, pending court cases, existing enforcement proceedings, possible objections to the debt, and assets that can be identified in Chad. It is also important to determine whether the debt arises from a commercial relationship, whether the debtor is a private company, a public entity, a foreign contracting party, or a business with assets in several states.

If the debtor continues to operate and there are no priority proceedings that immediately reduce the creditor’s chances of recovery, the creditor may first use the out-of-court debt collection stage. This stage is especially useful when the debtor acknowledges the debt, requests additional time, proposes instalment payments, offers to return goods, or maintains an active business relationship with the creditor.

At this stage, the parties may discuss payment, an instalment schedule, return of goods, assignment of the claim, set-off, exchange of services, or another solution acceptable to the creditor. A written acknowledgment of debt, a promise to pay, a specific payment proposal, or a statement by the debtor regarding the amount owed may have evidentiary value in later stages of recovery.

Communication with the debtor should follow a demand letter or formal payment notice whose content and delivery can be proven. The purpose is to clarify the debtor’s real willingness to pay, reach the persons who make decisions, fix the amount of the claim, and prepare the case for judicial debt collection if voluntary payment is not obtained.

If the out-of-court stage does not lead to payment, or if the initial review shows that the debtor denies the debt, conceals assets, delays the procedure, or is already pursued by other creditors, the creditor should choose the court procedure that corresponds to the nature of the debt and the available evidence.

The Republic of Chad is a member state of the Organization for the Harmonization of Business Law in Africa. The uniform legal rules of this organization apply directly and are binding in the member states. For commercial debt recovery, the most important rules concern general commercial law, simplified recovery procedures, enforcement measures, and collective insolvency procedures. Therefore, debt collection in Chad is based not only on national procedural rules, but also on uniform business law rules applicable in the member states.

Before starting court proceedings, the creditor should verify the applicable limitation period. For commercial obligations arising from business activities between merchants, or between merchants and non-merchants, the limitation period is generally five years, unless a special rule provides for a shorter period. This period begins on the day when the person entitled to claim knew, or should have known, the facts allowing the claim to be brought.

The effects of expiry of the limitation period are considered by the court when the debtor relies on this defence. The limitation period may be interrupted by acknowledgment of the debt by the debtor, by filing a court claim, or by an enforcement act. After interruption, a new limitation period begins to run.

The parties may modify the limitation period by agreement within the limits allowed by law. The period may not be reduced to less than one year and may not be extended to more than ten years. The parties may also agree on additional grounds for suspension or interruption of the limitation period.

Judicial debt collection in the Republic of Chad may be carried out, depending on the nature of the debt and the available evidence, through the ordinary court procedure or through a payment order.

The ordinary court procedure is used when the debt is disputed, when detailed examination of evidence is required, or when the case is not simple enough for a payment order. Before the competent court of first instance, ordinary proceedings are usually started by a summons served on the debtor by a court officer. Depending on the court and the type of procedure, proceedings may also be started by an application, electronic filing, a written or oral statement recorded at the court registry, or voluntary appearance of the parties before the judge.

The summons must identify the parties, indicate the competent court, describe the facts, state the legal basis of the claim, specify the amount claimed, include interest, penalties or costs claimed, and call the debtor to appear at the hearing. In a commercial debt case, the creditor should prepare documents proving the existence, amount and due nature of the debt: contract, order, invoice, delivery document, acceptance document, acknowledgment of debt, business correspondence, payment demand, account statement, interest calculation, and documents allowing the debtor and the location of assets to be identified.

In ordinary proceedings, the defendant must be given sufficient time to prepare a defence. In practice, there should be at least fifteen days between service of the summons and the hearing date. If the defendant is outside the court district or outside Chad, this period may be extended by distance rules. In international cases, proof of service, the address used, the identity of the recipient, and respect for the right of defence are especially important.

On the hearing date, the parties appear in person or through their representatives. If the defendant does not appear despite proper service, the court may examine the case on the basis of the documents submitted by the creditor. If the defendant appears and disputes the debt, the court hears the parties, reviews the documents, and may order preparation of the case for judgment.

During preparation of the case, the court may require additional documents, hear the parties, assess evidence, question witnesses, order an inspection, or appoint an expert. This stage is particularly important for debts arising from delivery of goods, service contracts, international business relationships, current accounts, guarantees, set-off arguments, or long-term commercial dealings.

After the preparation stage is completed, the case is referred for a hearing on the merits. The parties submit their final claims, defences, and evidence. The court examines the existence of the debt, its amount, its due nature, the interest claimed, the debtor’s defences, and any counterclaims, and then issues a decision that may serve as the basis for enforcement proceedings once it becomes enforceable.

The payment order procedure is governed by the rules on simplified recovery procedures and enforcement measures. It may be used when the claim is certain, quantified and due, and when it arises from a contract, a commercial payment instrument, or an unpaid cheque.

To start this procedure, the creditor submits an application to the competent court and attaches documents proving the existence, amount and due nature of the debt. If the court considers the application fully or partially justified, it issues a payment order for the accepted amount. If the application is rejected in whole or in part, the creditor may pursue the debt through the ordinary court procedure.

A certified copy of the application and the payment order must be served on the debtor at the creditor’s initiative within three months from the date of the order. If service is not completed within this period, the order becomes ineffective. After service, the debtor has ten days to pay or file an objection. Applicable distance periods may be added to this time limit.

If the debtor does not file an objection within the time limit, the creditor may request the court registry to add the enforcement formula to the payment order. This request must be filed within two months after the expiry of the objection period. If the debtor withdraws the objection, the two-month period runs from that withdrawal. After the enforcement formula is added, the payment order has the effect of a decision issued in adversarial proceedings and allows enforcement measures to begin.

If the debtor files an objection, the debtor must notify the creditor, the court registry and the person responsible for service. The parties are summoned before the competent court, and the judge first attempts to achieve settlement. If settlement is reached, a record signed by the parties is prepared and may become enforceable. If no settlement is reached, the court examines the dispute and issues a decision replacing the payment order.

A decision of the court of first instance issued in ordinary proceedings may be appealed before the competent court of appeal. In civil and commercial matters, the appeal period is one month. The appeal must identify the challenged decision, the parties, the parts of the decision being challenged, the appellant’s requests, and the documents relied upon.

A special period applies to the decision issued after an objection to a payment order. This decision may be appealed within fifteen days. If the decision was issued in the presence of the parties, the period runs from its pronouncement. If it was issued in the absence of a party, the period runs from service. The appeal and the appeal period generally suspend enforcement, unless the court has ordered provisional enforcement.

In this special procedure, the appeal is filed through a formal out-of-court act. The appeal act is served on the other party and on the court registry of the court that issued the decision on the objection. The court registry sends the case file and all annexes to the competent court of appeal within ten days after service of the appeal act on the registry. The first hearing before the court of appeal may not be scheduled later than one month after receipt of the file, and the court of appeal must decide within two months from that first hearing.

When the dispute concerns interpretation or application of uniform business law rules, common judicial review must also be considered. National courts hear the case at first instance and on appeal; questions concerning the application of uniform business law rules may later be brought before the common court of justice and arbitration.

If the creditor already has a foreign court judgment or an arbitral award, recognition and enforcement of foreign judgments should be assessed before any enforcement measures are started in Chad. Foreign court judgments and arbitral awards may serve as a basis for action against the debtor’s assets in Chad after they have been declared enforceable in the state where enforcement is requested.

After obtaining an enforceable title, the creditor may initiate enforcement proceedings under the rules applicable to enforcement measures. Recovery may target bank accounts, movable property, real estate, securities, the debtor’s claims against third parties, or the debtor’s property held by third parties. The choice of measure depends on the amount of the debt, the assets identified, the available enforceable title, and the real prospects of recovery.

Enforcement proceedings require a claim that is certain, quantified and due. Banks, persons holding the debtor’s property, and third parties with information needed for enforcement must assist when lawfully required. An unjustified refusal to assist may result in liability for the relevant third party.

If the debtor is a public legal entity, a territorial entity, or a public institution, special rules apply. Direct enforcement measures against such debtors may be limited; at the same time, set-off, budget registration of the debt, or other payment mechanisms for public entities may be relevant for claims that are certain, quantified and due. This distinction is important when the debt arises from a public contract, public procurement, services provided to a public entity, or a business relationship with a state-controlled structure.

Enforcement acts must comply with the forms, time limits and legal restrictions established by the applicable rules. Enforcement costs are generally borne by the debtor, but costs of measures taken without an enforceable title or outside the legal conditions may remain with the creditor.

If the debtor is in financial difficulty, recovery may also be connected with collective insolvency procedures. In Chad, these procedures are governed by uniform rules on collective settlement of liabilities. Depending on the condition of the business, preventive measures, business recovery, or asset liquidation may apply.

The creditor may be affected by these procedures when the debtor can no longer pay due debts with available assets. In this situation, the creditor’s objective is not only to obtain an individual court decision, but also to file the claim correctly, preserve rights within the collective procedure, and prevent assets from leaving the debtor’s estate to the detriment of creditors.

If the debtor’s assets are insufficient to satisfy the claims in full, certain acts carried out during the suspicious period may be declared unenforceable against the creditors’ estate. This period generally runs from the date of cessation of payments to the decision opening the procedure; the date of cessation of payments may be moved back within the limits allowed by law.

Acts that may be challenged include gratuitous transfers of movable or immovable property, contracts in which the debtor’s obligations significantly exceed those of the other party, early payment of debts, granting security for earlier debts, and certain transactions for value concluded with a person who knew that the debtor had ceased payments.

Declaring such acts unenforceable or cancelling them may allow assets to return to the estate and increase creditors’ chances of payment according to the applicable order of priority. In the most serious situations, the liability of legal or actual managers may also be examined, especially if their management contributed to the insufficiency of assets and there are grounds to seek coverage of the shortfall or application of legal sanctions.

If you need assistance with debt collection in Chad, Grandliga can support your case at every stage: evidence review, out-of-court strategy, choice between ordinary court procedure and payment order, preparation of court documents, appeal support, recognition and enforcement of foreign judgments, enforcement proceedings, and assessment of risks arising from collective insolvency procedures. Our work focuses on protecting the creditor’s rights, structuring the case legally, and adapting the recovery path to the debtor’s assets and legal status.

# DEBT COLLECTION AGENCY CHAD

20.11.2024

339