Debt Collection in Chad

The debt collection procedure in Chad begins with an assessment of the debtor’s solvency, its field of activity, its business history, the existence of documentary evidence of the debt, current court cases and enforcement proceedings, and the possibility of disputing the debt. This assessment determines the strategy to be used on behalf of the client in the collection process.

If the debtor has no current 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 the 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 the fastest possible debt recovery.

The average time for informal extra-judicial collection is up to 60 days (except in cases where a payment plan has been agreed upon). If this stage does not produce 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.

The Republic of Chad is a member of OHADA (Organization for the Harmonization of Business Law in Africa), which includes nine approved Uniform Legal Acts applicable to all member countries of the above-mentioned organization. Therefore, the procedures for judicial debt collection, enforcement and bankruptcy are mainly regulated by the provisions of the relevant Uniform Acts.

Before initiating judicial collection, it is worth paying attention to the limitation period. The general limitation period under the national legislation of Chad is 30 years. According to the provisions of the general commercial law OHADA, obligations arising from commercial transactions between merchants or between merchants and non-merchants expire after five years. The effects of the expiration of the limitation period are applied in the court of first instance and on appeal only at the request of the debtor. The limitation period is interrupted by the recognition of the creditor’s claims by the debtor. After the interruption, the limitation period begins to run anew. The limitation period may be shortened or extended by agreement of the parties. However, it cannot be shortened to less than one year or extended to more than ten years. The parties may also, by mutual agreement, supplement the list of reasons for the suspension and interruption of the limitation period.

Judicial debt collection in the Republic of Chad is carried out in the ordinary judicial procedure and by order of payment.

The ordinary judicial procedure begins with the filing of a claim in court, after which the court, if the claim meets the procedural requirements, issues a summons to summon the defendant. The summons must be served on the defendant within two months, otherwise it will become invalid. The defendant has 15 days to appear in court after receiving the summons if the defendant is within the court’s seat. If the defendant is outside the court’s seat or outside Chad, the appearance period is extended from 15 to 60 days.

On the appointed day of the hearing, the parties must appear in person or through their lawyers. If the defendant fails to appear, the court will hear the case ex parte, if there is evidence that the defendant was duly notified. If the defendant appears, the court hears the parties’ positions and, if it considers that preliminary measures are necessary, it decides to transfer the case to a pre-trial judge.

During the preliminary measures, the court interrogates witnesses, requests the necessary evidence and evaluates it, and orders an expert examination. After completion of the preliminary actions, the pre-trial judge decides to terminate the preliminary investigation and returns the case for consideration on the merits.

At the hearing to consider the case on the merits, the parties must submit their final conclusions and arguments to the court. After reviewing the final conclusions and assessing the results of the preliminary actions, the court holds debates between the parties and makes a final decision.

The procedure for issuing a payment order is regulated by the OHADA Debt Settlement Act and is used to collect a debt arising from a contract or a negotiable bill and a check. To implement this procedure, the creditor must file an application for a payment order with the court along with documents confirming the debt. If, after reviewing the documents submitted, the application is found to be fully or partially justified, the court issues an order for payment of the amount requested. If the court rejects the application in whole or in part, its decision is not subject to appeal by the creditor. The only remedy for the creditor in this case is to file a claim under the ordinary procedure.

A certified copy of the application and the order for payment must be served on the debtor within three months. Otherwise, the order will be invalid. Upon receipt of the said documents, the debtor must either pay the debt within 15 days or file an objection within the same period. If the debtor does not file an objection, the order for payment acquires the force of an enforcement document. If the debtor files an objection with the court, the judge attempts to reconcile the parties. If reconciliation is achieved, the judge draws up a reconciliation act, which is signed by the parties. One copy of this act contains the enforcement formula. If reconciliation is unsuccessful, the court immediately considers the case and issues a decision on the claim for collection, even in the absence of the debtor who filed the objection. The court’s decision in this case has the force of a decision made following the results of adversarial proceedings. The court’s decision made following the objection replaces the order for payment.

The decision of the court of first instance may be appealed to the court of appeal within one month from the date of the contested decision. The appeal period is extended by 15 days if the interested party is outside the location of the court of first instance and by two months if outside the territory of Chad. The decision of the court of appeal may be appealed to the Supreme Court of Chad within one month from the date of the contested decision. The appeal period is extended by the application of the distance rules specified above. During the appeal period, the contested decision may be suspended at the request of the interested party if the execution of the decision would cause irreparable harm. The decision of the Supreme Court is final and cannot be further appealed.

Once the judgment has entered into legal force, the creditor must initiate enforcement proceedings. Within the framework of the enforcement of the judgment, the creditor’s claims may be satisfied by the seizure and write-off of funds from the debtor’s accounts; seizure of the movable and immovable property of the debtor with their subsequent sale; seizure and confiscation of securities, seizure and confiscation of the debtor’s property held by third parties.

An alternative option for debt collection is the bankruptcy procedure of the debtor. The bankruptcy procedure in Chad is regulated by the provisions of the Uniform Insolvency Law OHADA. The creditor has the right to initiate this procedure if his claim is undisputed, liquid and subject to payment. At this stage, if the debtor’s assets are insufficient to fully satisfy the creditors’ claims, it is possible to cancel the debtor’s transactions made with the intention of causing damage to creditors. Such transactions or actions performed by the debtor during the suspicious period from the date of suspension of payments to the date of the decision to open proceedings shall include, in particular: all gratuitous transfers of movable or immovable property; all contracts in which the debtor’s obligations significantly exceed the obligations of the other party; early repayment of unfulfilled debts; provision of security for previously incurred debts; transactions performed for a fee, if the party that entered into the transaction with the debtor knew of his insolvency at the time of the transaction. 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 Chad, our company is ready to provide its expert assistance to effectively resolve your financial issue. Contact us for more information and professional support from specialists of the leading debt collection agency.

# DEBT COLLECTION AGENCY CHAD

20.11.2024

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