FAQ on debt collection in Zimbabwe

1. What is a debt collector?

A debt collector is a third party, also known as an agent of a Creditor (the Client) who in terms of the law is permitted to collect debts due and owing to the Client on their behalf.

The practice of debt collection is strictly reserved for lawyers in Zimbabwe who are at law allowed to charge a fee or a percentage of the total collected.

It is significant to note that in terms of section 9(2) of the Legal Practitioners Act [Chapter 27:07] the following persons are at law allowed to collect a debt:

• (a) A director or an officer of a company;
• (b) A member of a partnership acting on behalf of that corporation of partners;
• (c) A legal practitioner

2. When should one refer a case for debt collection?

Outstanding debts have a significant impact on the cash flow of any business and recovery of debts can be challenging for any business. It is therefore important that credit control departments that are responsible for trade collections and receivables know when to refer a case for debt recovery. The best time to refer a case for debt collection is: when a debt becomes due and payable.

3. Is there a minimum amount a debt collector can collect?

There is no recognized tariff of the minimum and maximum amounts. However, at Kanokanga & Partners our minimum collection are pegged is USD$500. It is also significant to note that debt collection is volume based where there are a significant number of small debts due and owing, it would be prudent to contract an attorney to discuss whether the collection is worth pursuing.

4. What information should I include when handing over a debt for collection?

In order to hand over a debt for collection the following information is useful:

• (a) The amount owing;
• (b) The nature of the debt;
• (c) The duration of the debt;
• (d) The debtor’s contact details (preferably email and physical address);
• (e) The document(s) if any, giving rise to the debt;
• (f) Whether the debtor is an individual or any entity;
• (g) Whether the debt is local, regional or international in nature.

5. Can interest be charged outstanding debts?

It is not uncommon for agreements between a Creditor and a Debtor to contain a provision relating to interest, and how such interest will be charged or calculated.

If a debt bears interest and the rate at which the interest is to be calculated is not governed by any other law or by an agreement or trade custom or in any other manner, such interest is calculated at the prescribed rate as at the date on which such interest begins to run, unless a court of law, on the ground of special circumstances relating to the debt, orders otherwise.

6. Does the in duplum rule apply in Zimbabwe?

Yes, the in duplum rule applies in Zimbabwe. The in duplum rule is a rule of the common law, that prohibits the payment of outstanding interest in excess of the amount representing the capital or principal sum of a debt.

7. How long does an average debt collection take in Zimbabwe

Each matter is unique as it is based on its own facts and considerations. The time for collection largely depends on whether the debt collection is contested or not.

Some collections can be resolved amicably within a short space of time with no need to resort to legal action. In some cases, legal action may be required. This prolongs the debt collection process especially if the claim is contested.

8. How old can the debt be?

Under the Prescription Act [Chapter 8:11] (the Act), an ordinary debt prescribes after three (3) years. It is important to highlight that the meaning of ‘debt’ as it is applied in section 2 of the Act includes anything which may be sued for or claimed by reason of an obligation from statute, contract, delict or otherwise.

Furthermore, prescription is ‘interrupted’ by either an express or tacit acknowledgement of liability of the debt by a Creditor. An express acknowledgement may be in the form of an email, a fax, telegram, text message or a WhatsApp.

Another form of an express acknowledgement is the payment of interest, or the giving of security for the payment of the debt and also partial payment by a Debtor constitutes an acknowledgement and interrupts prescription in respect of the whole debt.

Tacit acknowledgement on the other hand can be established from a Debtor’s conduct or words. It can include part payment of the capital sum or arrears of a debt, or may be inferred from a request for an indulgence or extension of time to pay the debt by a Debtor, this constitutes an acknowledgement and interrupts prescription.

9. Can a debtor sign an acknowledgement of debt?

Sometimes a debtor can agree to repay a debt by way of instalments. Although it may not appear ideal to receive an outstanding debt by way of instalments, this generally is the best way of getting a Debtor to pay.

It is equally important that an Acknowledgement of Debt (AoD) be reduced to writing. This is something that should ordinarily be done by a lawyer as the law provides for certain requirements to be included in an acknowledgement of debt.

It is equally important for a Debtor signing an AoD to honour and fulfil his or her obligation in terms of the payment arrangement.

10. Who can sign an acknowledgment of debt?

A party who is not privy to a debt is not legally responsible to pay another person’s debt, even if that person is your spouse or partner. It does often happen that a co- borrower, co-guarantor or surety to a debt will also be liable to pay an outstanding debt.

In many cases in which loved ones undergo treatment or operations in hospitals and clinics they may be liable to pay the debts of their loved ones, and in such cases can sign an acknowledgement of debt. This is more common with regards to education, in terms of which parents are responsible for their children’s school tuition from day care, primary school, high school, college and universities.

In conclusion, the following can and often do have authority to sign an Acknowledgement of Debt (AoD):

• (a) An AoD may be made by the Debtor and / or his agent or attorney;
• (b) An AoD may be made by the Creditor and / or his agent or attorney;
• (c) An AoD must be made expressly or tacitly acknowledging the existence of liability

11. Can I reject a Debtor’s payment proposal?

You can reject a Debtor’s payment proposal. One would generally need to have good reasons for refusing the proposal, for instance, the amount(s) to be repaid are so small that it will take a significant amount of time to collect the debt, or where one thinks the Debtor can afford to pay more than they are offering.

Before a Creditor rejects a Debtor’s offer to repay a debt by instalments whether they be weekly, fortnightly or monthly instalments it would be useful for a Debtor to furnish the Creditor with his / her financial position to demonstrate what the Debtor can afford.