Debt has existed since the beginning of time and there will always be debtors and creditors as long as man and his endeavors exist. It is typical for both debtors and creditors to use any option available to them in order to escape the burden of debt. Before we proceed further, it is pertinent to understand the definition of a debt.

What is debt?

To start with, it is appropriate to note that some claims that may be regarded as debts are not actually debts as properly called. The Black’s Law Dictionary defines “Debt” as a specific sum of money due by agreement or otherwise. See also Per /kongbeh, J.C.A. in NIPOST V INSIGHT ENGINEERING COMPANY LIMITED.

It follows that for a money claim to be regarded as debt, the money must be a specific sum- a certain, fixed or liquidated amount of money; there must be a due date and such due date must have passed; it must arise from some agreement by parties to it called the “Debtor” (the person who owes the debt) and “Creditor” (the person who claims or is entitled to recovery).

Procedures for Debt Recovery in Nigeria

What is Debt Recovery?

Debt recovery involves the process of making individuals or companies pay the sum that they owe to others when they have not paid back the debt at the agreed time. Debt recovery is crucial because it has a direct impact on your credit score.

Procedure for Debt Recovery in Nigeria

In Nigeria, there are several legal alternatives for recovering debt from a firm or an individual. It is critical to note that in Nigeria, there is a time limit on when a debt can be recovered. The statute of limitations for debt recovery arising from a simple contract is six (6) years from the date the contract was entered into and executed, omitting the year the contract was entered into and executed. As a result, it is desirable to file a debt recovery action as soon as possible, before the 6-year statute of limitations expires, as stipulated by Section 21(1)(a) of the Limitation of Action Law. 

Below, we’ll go through some of the stages and techniques for recovering debt from an individual or a corporation in Nigeria:

Stage 1: Try to settle the disagreement amicably with your debtor and collect payment.

Stage 2: Consult a lawyer or a debt collector, and bring documentation such as delivery notes, invoices, written agreements, letters, emails, memos, and so on to the interview.

Stage 3: The lawyer or debt collector will examine and evaluate your claims regarding debt events.

Stage 4: Sending a Demand Letter to the debtor, introducing the person on whose behalf the debt is to be collected, the amount owed or current amount owed where interest has accrued, and specifying the amount owed or current amount owed where interest has accrued.

Stage 5: A creditor’s lawyer can file a lawsuit against an obstinate debtor using a fast-track court method known as “Undefended List Procedure” or “Summary Judgment Procedure,” or other procedures provided for under various statutes allowing debt recovery. The appropriate court to institute a legal action depends on debt sum. It may be instituted in Nigeria through the Magistrate Court, the State High Court or the Federal High Court.


In Nigeria, debt recovery entails making legal demands before considering the possibility of taking legal action. If an agreement between parties has a mediation or arbitration clause, the other party must first attempt to recover debt from the debtor-party through mediation and/or arbitration before resorting to filing a lawsuit in court. It’s also worth remembering that the Limitations Act and the Limitation Laws of various Nigerian states impose a 6-year limitation on debt collection in Nigeria. If a creditor fails to collect a debt owed within six years, the court may dismiss the case unless there is a break in the chain of causation, such as the corporation admitting or paying some of the obligation during the six-year limitation period.

 iBlack’s Law Dictionary. 8th ed. St. Paul, MN: Thomson/West, 2004.

 ii(2006) 8 NWLR (Pt. 9830) p. 435

iiiBill Fay, what is Debt Recovery? Accessed on 11th April, 2022

 ivOkonta & Anor v. Egbuna (2013) LPELR-21253(CA)

 vThe Limitation of Actions Act 2004 (as amended)

Written by Khadija Bayero for The Trusted Advisors

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