Debt collection in Lesotho

The debt collection process in Lesotho begins with an assessment of the debtor’s solvency, their line of business, 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 the client’s behalf in the collection process.

If the debtor has no ongoing court cases or outstanding judgments for debt collection and is actively engaged in business, 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 apply 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 out-of-court collection is up to 60 days (except in cases where a debt repayment plan has been 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 limitation period. The limitation period for debt collection is 8 years. The limitation period is interrupted if the debtor acknowledges the debt or makes a partial payment of the debt or interest on the debt. After the interruption, the limitation period begins to count again.

Judicial debt collection in Lesotho is carried out in the usual and simplified judicial procedure.

Ordinary legal proceeding is initiated by filing an initial application with the court, after which the registrar, if the application complies with the procedural requirements, registers it and issues a summons to summon the respondent to appear before the court. The application must be accompanied by a list of witnesses to be called at the hearing and all evidence relied upon by the applicant. 

After receiving the summons, the debtor has between 7 and 30 days to file with the court a notice of intent to defend. The time period depends on the distance of the defendant from the location of the court. If the defendant files a notice of intent to defend, the registrar transfers the case to the managing judge. Within fourteen days of receiving the debtor’s objection, the applicant may file a reply to the objection. If the applicant fails to reply within the specified time, he is deemed to have denied all allegations of fact contained in the objection. If the applicant does reply, the defendant has the right to file a rejoinder to the applicant’s answer. 

If the defendant has filed a notice of intention to defend, the plaintiff may apply to the court for summary judgment on each claim set out in the original application, including a claim for interest and costs, provided that the claim: is based on a liquid instrument and is for a specified amount of money. The plaintiff’s application must be sworn. The managing Judge must give directions for the hearing of the summary judgment application, which may be scheduled at the case planning conference. At the hearing of the summary judgment application, the defendant may: provide security to the plaintiff; or convince the court by affidavit or oral testimony that the defendant has a reasonable defense to the claim. If the defendant fails to provide security or convince the court, the court may grant summary judgment in favor of the plaintiff. Otherwise, the court will proceed with the case in accordance with the approved plan.

Once a case is assigned to the managing judge, the managing judge must notify the parties of the date and time of a planning conference, which must take place within 30 days of the assignment. Regardless of whether the parties submit a case management plan prior to the conference, the managing judge must determine the content of the plan at the conference and approve it as an order of the court.

After the case management conference is completed, the judge schedules a preliminary hearing. The plaintiff must initiate communication with the defendant to jointly prepare a draft order for the preliminary hearing. This draft must be prepared at least 4 days before the hearing date and include all issues of fact and law to be considered in the trial; facts that are not in dispute between the parties; a list of witnesses whose evidence is planned to be heard; a list of evidence that the parties intend to present; proposals for streamlining the trial and other procedural aspects.

The court then conducts the trial and, after all evidence and submissions have been considered, the court holds pleadings between the parties and makes a decision.

A decision of the local court may be appealed to the High Court within 21 days of the date of the decision. A decision of the High Court may be appealed to the Lesotho Court of Appeal within 15 days of the date of the decision.The decision of the Court of Appeal is final and not subject to further appeal.

Once a judgment has entered into legal force, the creditor must initiate enforcement proceedings. A judgment may be brought for enforcement within 8 years. Within the framework of enforcement of a judgment, the creditor’s claims may be satisfied by seizing and writing off funds from the debtor’s accounts; seizing the debtor’s movable and immovable property with their subsequent sale; seizing and confiscating intangible assets; seizing corporate rights of companies.

An additional option for collecting debt from a company is the liquidation procedure. This procedure can be implemented if the debtor is unable to pay its debts or if more than 75 percent of the company’s issued capital has been lost or has become useless for the debtor’s business. A company is considered unable to pay its debts – if the enforcement of a judgment to collect the debt has been completed as unsatisfied in whole or in part; or if it is proven to the court that the company is unable to pay its debts, taking into account the contingent and prospective obligations of the company.

In the bankruptcy procedure, 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 include transactions concluded within a year prior to the opening of the liquidation procedure, in particular: 1) a transaction in which the value of the remuneration or benefit received by the debtor was less than the value of the remuneration of the opposite party; 2) a transaction concluded with an associated person; 3) provision of collateral for previously incurred debts. Cancellation of such transactions allows you to return the property lost by the debtor and increase the liquidation estate, which contributes to a more complete satisfaction of creditors’ claims.

If you have any questions or need support on international debt collection in Lesotho, 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 LESOTHO

16.01.2025

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