Debt сollection in Madagascar

The debt collection process in Madagascar 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, current 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 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 out-of-court collection is up to 60 days (except in cases where a debt repayment installment 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.

Before initiating judicial collection, it is worth paying attention to the statute of limitations. The statute of limitations for the collection of civil debts is 30 years. The statute of limitations for the collection of commercial debts is 5 years. The consequences of the expiration of the statute of limitations are applied in court only at the request of the debtor. The running of the statute of limitations is interrupted by any action by which the debtor acknowledges the debt to the creditor. After the interruption, the statute of limitations begins to count anew.

Judicial debt collection in Madagascar takes place in the ordinary course of business and through the issuance of a court order.

Ordinary court proceedings are initiated by submitting an application or summons to the court. If the initiating document complies with the procedural requirements, the court registers it and organises the summons of the defendant. 

The period between the service of the summons and the day specified for appearance is determined as follows: 1) eight days, if the party summoned is in the sub-prefecture where the court is sitting; 2) fifteen days, if the party to the case is in a neighboring sub-prefecture; 3) one month, if the party to the case is in another sub-prefecture; 4) two months, if the party to the case is outside Madagascar.

If the creditor is not a resident of Madagascar, the defendant has the right, before filing an exception, to require the creditor to provide security to cover possible legal costs. The amount of security and the procedure for its payment are determined by the court. If the creditor proves to the court that he has assets in Madagascar that exceed the amount of the security, the creditor may be released from posting such security.

On the appointed day, the parties must appear in person or through their lawyers. The court hears the factual or legal explanations of the parties necessary to resolve the dispute. It also considers the documents submitted by the parties in support of their positions. If this is sufficient for the court to resolve the dispute, the court may make a decision immediately. Otherwise, the court orders investigative measures and sets the time frame necessary for the investigation of the case, as well as the type of evidence that must be examined.

Once the investigative measures have been completed, the case is returned to the hearing for judgement. Before appearing at the hearing, the parties may submit oral observations in support of their written statements. After the end of the pleadings, the court shall issue a judgement immediately or within one month.

The procedure for issuing a court order is used to collect debts arising from written contracts or bills of exchange and cheques. The amount of the debt for this procedure may not exceed the amount established by regulation of the Minister of Justice. To use this procedure, the creditor must file a petition with the court, attaching documents proving the debt. If the court rejects the petition, the creditor must use the ordinary court procedure. If the documents provided support the claim in whole or in part, the judge issues a court order. A court order is not issued if the debtor has no known place of residence or domicile in Madagascar or if it is to be served abroad. The debtor has the right to object within one month of receiving the order. If the debtor does not object to the court order the order is given an execution formula. If the debtor files an objection, the court summons the parties to the case to consider the objection. The court that has considered the objection issues a decision that has the force of a judicial act. 

The decision of the court of first instance may be appealed to the court of appeal within one month of its issuance. The decision of the court of appeal may be appealed to the Supreme Court of Madagascar within two months of its service to the interested party. After considering the appeal, the Supreme Court issues a final decision, which immediately comes into force and is not subject to further appeal.

After the court decision has entered into legal force, the creditor must put a note on the certified copy of the decision regarding enforcement, notify the debtor accordingly and forward the decision to the bailiff to initiate the enforcement procedure. The court decision may be enforced within 30 years from the date of its issuance. Within the framework of the enforcement procedure, the creditor’s claims may be satisfied by seizing and writing off funds from the debtor’s accounts, seizing and selling his movable and immovable property, seizing and selling intangible assets, seizing and selling securities, as well as seizing the debtor’s property that is in the hands of third parties.

If the debtor stops making payments and is unable to repay the debt with its assets, the creditor should consider the possibility of judicial liquidation. Judicial liquidation of assets are applicable to any commercial individual or legal entity. The creditor may initiate this procedure regardless of the nature of its claim, provided that it is credible, liquid and enforceable. When opening the proceedings, the court must first set a date for the cessation of debt payments. The date of cessation of payments cannot be later than eighteen months before the decision to open the judicial procedure is made.

Within the framework of the liquidation procedure, if the debtor’s assets are insufficient to fully satisfy the creditors’ claims, it is possible to cancel the debtor’s transactions concluded during the period of cessation of payments. Such transactions should include, in particular: 1) all gratuitous transactions for the transfer of movable or immovable property; 2) any agreement in which the debtor’s obligations clearly exceed the obligations of the other party; 3) any early payment of a payment that has not yet fallen due; 4) any payment of an overdue debt by a method not provided for by the agreement of the parties; 5) provision of collateral for previously incurred debts. Cancellation of such transactions allows the return of property lost by the debtor and an increase in the liquidation estate, which contributes to a more complete satisfaction of creditors’ claims.

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

# DEBT COLLECTION AGENCY MADAGASCAR

17.01.2025

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