Filing a Suit to Recover an Unpaid Loan in Kenya

Filing a suit to recover an unpaid loan in Kenya involves several procedural and substantive steps governed by the Civil Procedure Act (Cap 21), the Civil Procedure Rules, 2010, and relevant contractual laws. Below is a structured outline of the process.

1. Establishing the Legal Basis of the Claim

Before filing a suit, ensure that:

• There is a valid loan agreement (written or oral, though written is easier to prove).
• The amount owed is certain and ascertainable.
• There has been a default in repayment.
• You have made a formal demand for payment (usually via a demand letter).

Supporting documents may include:

• Loan agreement or acknowledgment of debt.
• Bank or mobile money statements.
• Correspondence showing reminders and default.
• Promissory notes or cheques, if any.

2. Sending a Demand Letter

Before instituting a suit, your advocate (or you, if self-represented) should issue a demand letter to the borrower.

• The letter formally demands repayment within a specified period (typically 7–14 days).
• It should warn that failure to comply will lead to legal proceedings.

Purpose:
To demonstrate good faith and give the debtor a fair chance to settle before litigation. It also serves as evidence of compliance with the pre-action protocol recognized by Kenyan courts.

3. Choosing the Appropriate Court

The choice of court depends on the monetary jurisdiction (pecuniary limits):

Court	Monetary Jurisdiction (Approx.)
Small Claims Court	Up to KSh 1,000,000
Magistrates’ Court	Up to KSh 20,000,000 (depending on rank of magistrate)
High Court	Above KSh 20,000,000

(Always confirm the latest limits through Gazette Notices or court updates.)

Also consider territorial jurisdiction — typically where the defendant resides, carries on business, or where the transaction occurred (see Section 15 of the Civil Procedure Act).

4. Drafting and Filing the Plaint

A plaint initiates the civil suit. It must include:

• The name of the court.
• Particulars of the parties (plaintiff and defendant).
• The cause of action — facts establishing the existence of the loan and default.
• The amount claimed and any applicable interest.
• The prayer or relief sought (e.g., payment of KSh X, interest, and costs).

Attach supporting documents, such as:

• Loan agreement or proof of the loan.
• Demand letter and evidence of delivery.
• Any other relevant documents.

Additional documents filed with the plaint:

• Verifying affidavit.
• List of documents.
• List of witnesses.
• Witness statements.
• Statement of the plaintiff.

Filing is conducted electronically via the Kenya Judiciary e-filing system: https://efiling.court.go.ke.

5. Service of Summons

Once filed, the court issues summons to enter appearance, which must be personally served on the defendant in accordance with Order 5 of the Civil Procedure Rules.

The defendant has 14 days from the date of service to:

• Enter appearance (indicating intention to defend), and
• File a defence (within 14 days after entering appearance).

6. Default Judgment (If No Defence Is Filed)

If the defendant fails to respond within the prescribed time:

• The plaintiff may apply for a default judgment under Order 10 of the Civil Procedure Rules.
• For a liquidated claim (a fixed sum), the court may enter judgment immediately.

7. Hearing and Determination (If Defended)

If the defendant files a defence:

• The matter proceeds to pre-trial directions and then to hearing.
• Both parties present evidence and call witnesses.
• The court then delivers its judgment based on the evidence presented.

8. Enforcement of Judgment

If judgment is entered in your favour but the debtor still fails to pay, you may enforce it through:

• Warrants of attachment and sale (executed by a licensed auctioneer).
• Garnishee proceedings (to recover funds from the debtor’s bank or employer).
• Committal to civil jail (only after due process and as a last resort).
• Charging orders or other execution against property.

9. Recovery of Costs and Interest

The court may award:

• Interest — as per the loan agreement or at the court’s discretion (typically 12% p.a.).
• Costs of the suit, including filing fees, legal fees, and disbursements.

10. Alternative Dispute Resolution (Optional)

Before or during proceedings, parties may opt for settlement through:

• Negotiation or mediation, as encouraged under Article 159 of the Constitution.
• The court may also refer the matter to court-annexed mediation prior to hearing.

 

Summary Table

Step	Action
1	Gather and verify loan evidence
2	Send a formal demand letter
3	Determine the appropriate court
4	File the plaint and supporting documents
5	Serve summons on the defendant
6	Seek default judgment (if undefended)
7	Proceed to hearing (if defended)
8	Enforce the court’s judgment
9	Recover interest and legal costs