Debt Collection in Rwanda

Debt collection in Rwanda begins with a legal, financial and evidentiary review of the debtor and the claim. At this stage, it is important to verify the debtor’s exact legal identity, business activity, operating address, available assets, bank relationships, pending court cases, existing enforcement proceedings, previous payment history, possible objections to the debt and the documents proving the creditor’s claim.

For a foreign creditor, debtor analysis in Rwanda should also cover the place where the contract was performed, the place where payment was due, the debtor’s local business presence, assets located in Rwanda, claims against third parties and the practical enforceability of a future judgment. This assessment helps determine whether the case should begin with negotiations, proceed directly to court or be prepared for enforcement against identifiable assets.

If the debtor continues commercial activity, the responsible persons can be identified and the documents support the debt, the creditor may use an out-of-court stage before starting judicial debt collection. This stage usually includes a written demand for payment, communication with authorized representatives of the debtor, clarification of the amount due and negotiation of settlement options such as full payment, instalment payment, return of goods, set-off, transfer of the debt to a third party or another commercially acceptable method of performance.

Communication with the debtor should be structured and documented. Notices, email correspondence, business messages, payment proposals, acknowledgments of debt, objections and partial payments may become important evidence at the court or enforcement stage. If the debtor does not pay, avoids communication, disputes the debt without sufficient grounds, breaches a payment arrangement or starts reducing available assets, the creditor may proceed to collection through the courts.

Before starting debt collection in Rwanda, the creditor should assess the applicable limitation period. The general rule preserved for limitation matters provides a thirty-year period for real and personal actions, unless a special shorter period applies to the specific claim. Certain claims are subject to shorter periods, including a five-year period for loan interest and other payments due annually or at shorter periodic intervals, and shorter six-month or one-year periods for specific categories of claims. A court claim, enforcement action, formal demand made in the legally relevant form or acknowledgment of the debt by the debtor may affect the running of limitation. Partial payment, a written promise to pay or a statement that limitation will not be raised as a defence should therefore be preserved as part of the creditor’s evidence.

Judicial debt collection in Rwanda begins with filing a claim before the competent court. The choice of court depends on the nature of the claim, the debtor’s status, the amount and subject matter of the dispute, the place connected with the obligation and the rules on jurisdiction. For commercial debt, the creditor should prepare the claim together with the contract, invoices, delivery or service evidence, correspondence, acknowledgment of debt, calculation of the principal amount, interest and other amounts claimed.

If the claim meets the established procedural requirements, the competent court registry registers the claim and issues a summons to appear in court. The summons period is eight working days from the date of service of the summons until the date of appearance in court. If the defendant is outside Rwanda, the period is two months.

On the appointed day for appearance, the Chief Registrar transmits the plaintiff’s case file to the defendant and requests a response within fifteen days. The Chief Registrar also requests any additional evidence from the parties that may be included in the case and verifies whether witnesses or members of the Bar should be called. Once these formalities have been completed, the Chief Registrar notifies the parties of the date on which the case is to be heard.

For commercial cases, the defendant must present arguments within fourteen days after receiving a copy of the statement of claim. This period is important when the creditor’s claim is based on commercial documents and the debtor’s objections must be assessed before the hearing.

On the appointed day, the parties must appear in person or through their representatives. If the defendant fails to appear at the first hearing without good cause, the plaintiff may apply for the case to be adjourned or for the case to be heard in the defendant’s absence. In the latter case, the plaintiff’s arguments are considered and the claim may be granted if it has sufficient grounds and has been filed in accordance with the procedure provided by law.

If after the first hearing the defendant fails to appear at subsequent hearings or appears but refrains from giving explanations, the plaintiff must file a request for a hearing within fifteen days after the defendant has been notified and warned. After fifteen days from the date of notification of the defendant to appear, the plaintiff must apply for a decision on the case.

The case must be heard within six months from the date of receipt of the claim by the court. If this period is not met, the chairperson of the relevant court must explain the reasons in writing to the chairperson of the Supreme Court and notify the parties to the case.

After reviewing the evidence and arguments of the parties, the court makes a decision immediately or within one month after the end of the hearing.

The decision of the court of first instance may be appealed within thirty days from the date of the contested decision. Depending on the court that issued the decision and the type of case, the appeal route may involve the High Court, the Commercial High Court or the Court of Appeal. The Court of Appeal is the last court of appeal on the merits, while further involvement of the Supreme Court is limited to matters provided by law, including special jurisdiction and review mechanisms.

A separate route is required when the creditor already has a foreign court judgment and wants to use it in Rwanda. Foreign judgments and foreign deeds issued by foreign officials are not directly enforceable in Rwanda unless they are rendered enforceable by a competent Rwandan court. For civil cases, the application is filed at first instance with the High Court; for commercial, financial and fiscal cases, it is filed with the Commercial High Court. The court verifies whether the foreign judgment is compatible with public order, Rwandan law and general principles of law, whether the proceedings respected due process and natural justice, whether the judgment has acquired final force in the country of origin and whether an authentic copy is provided. After recognition and enforceability are granted, the creditor may proceed to enforcement of the foreign court judgment in Rwanda.

Once the judgment has entered into legal force, the creditor should initiate enforcement proceedings. Enforcement in Rwanda is carried out through the legally designated enforcement mechanism and may involve a professional or non-professional bailiff, depending on the type of enforcement action. The creditor’s claim may be satisfied by seizure of funds in the debtor’s accounts, seizure of movable or immovable property followed by sale, seizure of claims or other attachable assets, and seizure of harvest where the law allows such a measure.

Enforcement is connected with an electronic system for execution of enforcement orders and with standardized enforcement forms. The bailiff may request information about the debtor’s property and may carry out seizure based on the relevant enforcement order. If immovable property is seized, valuation is carried out with the involvement of an expert from the Institute of Real Property Valuers in Rwanda. The creditor, debtor and owner of the property to be auctioned have the right to contest the valuation within fifteen days from notification of the valuation report, supported by a counter-valuation. If the auction concerns immovable property, the public auction notice is posted in the cell office where the property is located, and the seized property cannot be auctioned before seven days have passed from publication of the public auction notice.

An alternative or parallel route for collecting a debt from a company, trader or business debtor may be insolvency proceedings. A creditor may initiate this procedure if the debtor is unable to pay debts as they fall due in the ordinary course of business or if the debtor’s assets are less than its liabilities. This route is especially relevant when ordinary recovery against a single asset is unlikely to satisfy the debt, when several creditors are pursuing the debtor, or when the debtor’s transactions before insolvency require legal review.

After the opening of insolvency proceedings, individual claims and enforcement steps against the debtor’s assets are affected by the insolvency framework. The creditor’s position then depends on the nature of the claim, available security, ranking of creditors, the debtor’s estate and the decisions taken within the proceedings. In distribution, the law distinguishes between the costs and expenses of the proceedings, secured creditors, certain employee, social security and tax claims, unsecured claims and other categories provided by law.

In the course of bankruptcy or liquidation, if the debtor’s assets are insufficient to fully satisfy creditors’ claims, transactions made before the opening of the proceedings may be challenged where the legal conditions are met. These rules are important where the debtor has transferred property, created security, paid selected creditors or entered into transactions that reduced the estate available to creditors.

Such transactions include, in particular: 1) a transaction involving the transfer of property, provided that it: a) was concluded to pay off a previous debt; b) was concluded at a time when the debtor was unable to pay its debts; c) was concluded during the year preceding the commencement of liquidation or bankruptcy; d) allowed the counterparty to receive more towards repayment of the debt than it otherwise would have received or could have received upon liquidation or bankruptcy of the debtor; 2) a transaction concluded at an undervalued price, provided that it: a) was concluded during the year preceding the commencement of insolvency proceedings; b) the value of the remuneration received by the debtor was significantly less than the value of the remuneration provided by the counterparty; c) at the time of the transaction, the debtor was unable to pay debts owed by it; d) as a result of the transaction, the debtor was unable to pay its debts; 3) a transaction that provides for or creates an encumbrance on any property of the debtor, provided that it: a) immediately after its conclusion led to the debtor being unable to pay debts owed by it; b) this security replaces a security presented more than a year before the start of liquidation or bankruptcy.

The insolvency practitioner may use the statutory procedure to challenge a transaction. If the affected person does not apply to court within the legally provided period after receiving notice, the transaction may be set aside. If the transaction is set aside, the court or the insolvency framework may require restoration of value to the debtor’s estate, which can improve the position of creditors participating in the proceedings.

In addition, the Insolvency Law allows the court, under certain circumstances, to require a company that is or was related to the liquidated debtor company to pay to the liquidation estate all or part of the amount of the claim presented during liquidation. These rules may be important where the debtor’s assets were shifted within a group or where a related company benefited from transactions that reduced the funds available to creditors.

If you need assistance with debt collection in Rwanda, Grandliga provides legal support at every stage of the recovery process: reviewing the debtor and evidence, preparing a payment demand, negotiating settlement terms, filing a court claim, obtaining recognition and enforcement of a foreign court judgment, coordinating enforcement against assets and assessing insolvency options. Our work focuses on the documents available, the debtor’s conduct, the applicable limitation period, the competent court and the practical prospects of recovering the debt in Rwanda.

# DEBT COLLECTION AGENCY RWANDA

27.12.2024

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