Debt collection in Zambia

The debt collection process in Zambia 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 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 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 messaging. 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 payment 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, then 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 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 again.

Judicial debt collection in Zambia is carried out in the ordinary and simplified judicial procedure.

The courts of first instance are the Magistrate’s Court and the High Court. The Magistrates Court has jurisdiction to hear cases where the value in dispute is up to Zambian Kwacha 1,000,000.00. The High Court has unlimited jurisdiction.

An ordinary court procedure, depending on the jurisdiction, begins with the filing of one of the following documents: a writ, a notice of demand, a notice of complaint, a default order, an initial application or a summons. These documents contain a brief statement of the claim and an indication of the relief sought. However, a writ must be accompanied by a statement of claim, a list of documents, a list of witnesses that the plaintiff plans to call, and a demand letter with proof of service on the defendant. If the said document complies with the established procedural requirements, the court registers the case and arranges for the defendant to be summoned.

Once the summons is received, the defendant has between 14 and 42 days to provide a defence. The time period depends on the distance between the court registry and the defendant’s physical address. If the defendant fails to file a defence within the specified period, the creditor may ask the court to enter judgment against the defendant in absentia. If the defendant files the said document, the court will issue directions setting out the procedure for settling the lawsuits, the procedure for discovery and inspection, and the time and manner of the trial.

If the case is heard in commercial court, the judge, upon receipt of the claim, will schedule a planning conference at which the parties will agree on the filing dates of their applications. The parties must prepare a planning conference summary at least seven days before the conference and exchange their summaries, which must include: a summary of the facts, including agreed facts and admissions; a summary of questions of law; witness statements and expert opinions. Based on these summaries, the judge will determine the list of disputed questions of law and fact and the procedure for their resolution.

After the disputed questions have been resolved, the court will issue a decision within 90 days of the conclusion of the hearing.

The plaintiff has the right to apply to the court for a summary judgment if the defendant has filed a defence but the plaintiff believes that the defendant has no real prospect of defending the claim or if the defendant’s defence fails to refute the charges, as this is considered an admission of the charges by default. If the court finds that the plaintiff’s application is justified, it will rule in favour of the plaintiff.

A Magistrate’s Court decision may be appealed to the High Court within 30 days of the decision being made. A High Court decision may be appealed to the Court of Appeal within 30 days of the decision being made. A Court of Appeal decision may be appealed to the Supreme Court of Zambia within 14 days of the decision being made. The decision of the Supreme Court is not subject to further appeal. 

Once the judgment has entered into legal force, the creditor must initiate enforcement proceedings. The judgment may be brought for enforcement within 12 years. Enforcement of the judgment may involve the seizure and debiting of funds from the debtor’s accounts; seizure of the debtor’s movable and immovable property and their subsequent sale; arrest of the debtor and detention.

An alternative option for debt collection is bankruptcy proceedings against the debtor. The creditor has the right to initiate this procedure if the following conditions are met: 1) the amount of the debt is not less than 100 Zambian kwacha, payable either immediately or at a specified future date; 2) the debtor has committed an act of bankruptcy within three months preceding the commencement of the bankruptcy procedure; 3) the debtor is domiciled in Zambia or has, for one year prior to the date of filing the application, habitually resided or carried on business in Zambia or is or has been during that period a member of a firm or partnership of persons carrying on business in Zambia.

According to the provisions of the Bankruptcy Act, the following acts are considered to be acts of bankruptcy: 1) the debtor transfers his property or any part thereof to a trustee; 2) the debtor fraudulently transfers his property or any part thereof to a third party; 3) the debtor, with the intent to cause damage or delay payment of debts to his creditors, leaves Zambia or absconds from his creditors; 4) if the debtor, within seven days after receiving a notice of bankruptcy, fails to comply with a demand of a creditor based on a court order for the recovery of the debt; 5) the debtor notifies any of his creditors that he has suspended or intends to suspend payments on his debts; 6) the debtor files a bankruptcy petition against himself.

As part of the bankruptcy procedure, if the debtor’s assets are insufficient to fully satisfy the claims of creditors, it is possible to set aside transactions of the debtor made with the intent to cause damage to creditors. Such transactions include, in particular: 1) any disposal of property without valuable consideration; 2) any transaction in which the counterparty of the debtor knew that the debtor was in a state of bankruptcy; 3) giving preference to one creditor over others. 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 Zambia, 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 ZAMBIA

08.01.2025

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