Debt Collection in Rwanda

The debt collection process in Rwanda 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 behalf of the client in the collection process.

If the debtor has no ongoing 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 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 early recovery of the debt.

The average time for informal out-of-court 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, then the next step is to proceed to collection through the courts.

There is no statute of limitations for debt collection by law. Therefore, the creditor has the opportunity to initiate legal collection at any time.

Judicial debt collection in Rwanda is carried out in the usual manner.

The usual legal process begins with the filing of a claim in court. If the claim meets the established procedural requirements, the Registrar General registers the claim in the court registry 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 or whether other 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 his arguments within 14 days of receiving a copy of the statement of claim.

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 will be considered and the claim will 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. Otherwise, the chairman of the relevant court must explain the reasons in writing to the chairman of the Supreme Court and notify the parties to the case.

After reviewing all 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 to the High Court. The decision of the High Court may be appealed to the Court of Appeal. The decision of the Court of Appeal may be appealed to the Supreme Court of Rwanda. The time limit for filing an appeal is thirty days from the date of the contested decision.

Once the judgment has entered into legal force, the creditor should initiate enforcement proceedings. As part of the enforcement of the judgment, the creditor’s claims may be satisfied by seizing and writing off funds from the debtor’s accounts; seizing the movable and immovable property of the debtor with their subsequent sale; seizing and confiscating the harvest.

An alternative option for collecting a debt from a company or businessman is bankruptcy proceedings. The creditor may initiate this procedure if one of the following conditions is met: 1) the debtor is unable to repay his debts when they fall due in the ordinary course of business; 2) the debtor’s assets are less than his liabilities. In the course of bankruptcy proceedings, if the debtor’s assets are insufficient to fully satisfy the creditors’ claims, it is possible to cancel the debtor’s transactions concluded with the intent to cause damage to creditors. Such transactions shall 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 the debts owed to him, d) as a result of the transaction, the debtor was unable to pay his 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 his debts owed; b) this security replaces a security presented more than a year before the start of liquidation or bankruptcy.

In addition, the Insolvency Law provides for the possibility of the court, under certain circumstances, to force any company that is or was a company related to the liquidated debtor company to pay to the liquidation estate all or part of the amount of the claim presented during liquidation. By applying the above provisions, it is possible to increase the chances of creditors to collect debts in full.

If you have any questions or need support on international debt collection in Rwanda, 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 RWANDA

27.12.2024

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