Nigeria | How Debt Collection/Recovery Mechanisms Work in Nigeria?(2)
Contributed by CJP Ogugbara, CJP Ogugbara & Co (Sui Generis Avocats), Nigeria.
More options of debt collection can be found under the Nigerian Secured Transaction in Movable Assets Act 2017 and Credit Reporting Act 2017.
The second is the pattern of debt collection provided for under the Nigerian Secured Transaction in Movable Assets Act 2017. The Act in section 40, provides that upon giving adequate notice as required in the law, the creditor has the power to take over and or take possession of the chattel of his debtor. There are three options open to a creditor to exploit in the taking possession of the chattel. First is the use of the judicial process and getting a court order to that effect. Second is where the debtor consented to relinquish possession of the chattel freely, in which case the creditor may require the debtor to deliver it at a designated place. The third being the last alternative is by self-help using the instrumentality of the Men and Services of the Nigerian Police Force. It must be commented here that the use of the Police in debt recovery spells danger for commercial transactions in Nigeria. It is really an abuse of the police as an institution constitutionally set up to fight crime. It is also a deliberate attempt to smuggle what the court has severally frowned at in several judiciary. In the cases of MCLAREN vs. JENNINGS (2003) FWLR (Pt.154) 528 and AFRIBANK (NIG) PLC vs. ONYIMA (2004) 2 NWLR (Pt.858) 654, the Courts have held: “The Police force, a respectable institution entrusted with the security of our nation and people is no “debt collector” and should never be involved in such services.”
The creditor can also explore the reporting chances available in the Credit Reporting Act, 2017. Under the Credit Report Act, information regarding the credit standing of individuals, companies and all manner of debtors are received and shared for due diligence and risk management. The Act under section 27(h-i) of the Act, identifies suppliers of goods and providers of services as well as other entities to whom a debtor is indebted to, as Credit Information Providers. The provision of the Act is not end in itself, but it is purely a means to an end; payment of the debt. Thus, where a debtor is reported and listed by a Credit Bureau, even-though the implication is possibly remote, it can however impair the credit worthiness of a Data Subject in the event where demand arises. This would normally translate to quick payment by the debtor to effect immediate removal or deletion of such information from the Bureau. Apparently credit worthiness is very important to business prospecting.
Contributor: CJP Ogugbara
Agency/Firm: CJP Ogugbara & Co (Sui Generis Avocats)(English)
Position/Title: Founding Partner
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This post is a contribution from CJP Ogugbara & Co (Sui Generis Avocats). Established in 2014 as a Partnership Firm in Nigeria, CJP Ogugbara & Co has been working along and engaging in dispute management, litigation and arbitration, commercial practice: real estate and investment advisory, tax practice and energy consultancy. Apart from the core practice areas, they also facilitate and extend practice to the development of clients’ businesses and corporate interests, especially as they apply to the Nigerian economy and investment circle.