Debt Collection in Uganda

The debt collection process in Uganda 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 ability to dispute 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 business activities, then it is advisable to use the out-of-court debt collection stage.

This stage involves active negotiations with the debtor 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 the fastest possible debt recovery.

The average time for informal out-of-court collection is up to 60 days (except in cases where a payment plan is 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 6 years. The consequences of the expiration of the limitation period are applied in court only at the request of the debtor. The limitation period is interrupted if the debtor acknowledges the debt in writing or makes a partial payment of the debt. After the interruption, the limitation period begins to count anew.

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

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 notice to the defendant to appear in court and respond to the claim.

On the appointed day, the parties are required to appear in court in person or through their representatives. If the defendant fails to appear, the court may rule in favor of the plaintiff or order the defendant to be summoned again. In addition, the court may compel the debtor to appear, and for this purpose may: 1) issue a warrant for his arrest; 2) seize and sell his property; 3) impose a fine on the debtor in the amount of up to five hundred currency units; 4) order the debtor to provide security for his appearance in court and, in case of failure to do so, imprison him.

If the parties appear, the court conducts an adversarial hearing, during which the participants exchange opinions, documents and arguments in support of their positions. If after the first hearing all the circumstances of the case are clear to the court, it may render a decision immediately. Otherwise, the court continues to prepare the case by conducting an investigation. During the investigation, the court examines witnesses, engages experts, visits sites, verifies the authenticity of documents, requires the parties to appear in person, and performs other procedural actions. At the end of the investigation, the parties hold a final discussion of the case, after which the court makes a final decision.

The simplified judicial procedure applies to the collection of civil debts and is regulated by the Debt Act 1937. The procedure is carried out by the magistrates’ courts and is commenced by filing a complaint with the court containing the particulars of the claim.

A magistrate of a magistrate’s court, on receiving a complaint, may issue a summons setting out the nature of the complaint and requiring the defendant to appear before him at a specified time and place to answer the complaint. On the appointed day, whether or not the defendant appears, the magistrate shall hear the complaint in the same manner as if such defendant had appeared before the judge in accordance with the summons. As a result of examining the complaint, the judge makes a decision obliging the defendant to pay the requested amount, or rejects the complaint.

A decision of the Magistrates’ Court may be appealed to the High Court. A decision of the High Court may be appealed to the Court of Appeal. The decision of the Court of Appeal is subject to appeal to the Supreme Court of Uganda. The time limit for filing an appeal is thirty days from the date of the impugned decision.

Once the judgment has entered into force, the creditor should initiate enforcement proceedings. The judgment may be brought for enforcement within 12 years. 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 and then selling them; seizing and confiscating securities; seizing the debtor and keeping him in custody until the debt is repaid.

If the debtor is unable to pay the debts, the option of bankruptcy of the debtor should be considered. A debtor is considered unable to pay his debts in the following cases: 1) the debtor has failed to comply with the statutory requirement to pay the debt; 2) enforcement proceedings against the debtor in respect of a debt under a court decision have been returned unsatisfied in whole or in part; or 3) all or substantially all of the debtor’s property is in the possession or under the control of a recipient or other person exercising the forced collection of this property. Within the framework of the bankruptcy procedure, if the debtor’s assets are insufficient to fully satisfy the claims of creditors, it is possible to cancel the debtor’s transactions concluded with the intent to cause damage to creditors. Such transactions should include, in particular: 1) a transaction with the purpose of giving preference to one creditor over others, concluded during the year preceding the commencement of bankruptcy; 2) a transaction at a reduced price, concluded during the year preceding the commencement of bankruptcy; 3) the provision of collateral for debts that existed one year before the commencement of bankruptcy; 4) an insider transaction concluded during the twelve months preceding insolvency; 5) payments for transactions that are not related to ordinary business activities, made during the six months preceding the commencement of bankruptcy proceedings. As a result of the cancellation of the above actions and 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 need support for international debt collection in Uganda, 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 UGANDA

25.12.2024

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