Reviving Time-Barred Debts in Kenya: What Creditors Need to Know

Reviving Time-Barred Debts in Kenya: What Creditors Need to Know

By Cyrus Maina - CM Advocates LLP

In the world of credit and commercial transactions, timing is everything. When debts remain unpaid for extended periods, creditors may find themselves constrained not by financial risk—but by the law itself. In Kenya, once a debt crosses a certain age, it may become unenforceable in court, even if genuinely owed.

But there’s a silver lining. With proper legal strategy, even so-called time-barred debts can be revived and recovered.

At CM Advocates LLP, we provide proactive, globally informed legal solutions that help creditors reclaim dormant debts while staying fully compliant with Kenyan law. This article outlines how the law treats old debts, how they can be lawfully revived, and the tactical steps creditors can take to recover what is rightfully theirs.

Understanding the Limitation Period

Under Section 4(1)(a) of the Limitation of Actions Act (Cap. 22, Laws of Kenya), a creditor must bring an action founded on contract—such as a loan, supply agreement, or service fee—within six years from the date the cause of action arose.

If no legal action is initiated within this period, the claim becomes statute-barred, meaning a court will likely dismiss any attempt to enforce the debt—regardless of its merit or size. This provision is intended to ensure legal certainty and prevent indefinite exposure to litigation.

Can a Time-Barred Debt Be Revived? Absolutely.

Fortunately, Kenyan law offers creditors a critical second chance. Section 23(3) of the Limitation of Actions Act provides that where a debtor:

• Acknowledges the debt in writing, or
• Makes a part payment towards the debt—

whether before or even after the expiration of the six-year limitation period, a new limitation period commences from the date of such acknowledgment or payment.

This legal provision means that a time-barred debt is not automatically extinguished—but merely dormant until action is taken. With the right strategy, it can be legally reactivated and pursued afresh.

Strategic Use of Demand Letters

A well-structured demand letter is not just a formality—it is a powerful recovery tool.

At CM Advocates LLP, our demand letters are crafted with a blend of legal precision and strategic persuasion, and tailored to accomplish three objectives:

1. Invite the debtor to settle the matter amicably, without escalation or litigation;
2. Prompt a written acknowledgment or part payment, thereby reviving the enforceability of the debt;
3. Apply calibrated commercial pressure, signaling that the creditor is represented by seasoned counsel and prepared to escalate the matter, if necessary.

These letters form a core part of our Rapid Recovery Program, which is designed to accelerate recoveries and preserve commercial relationships wherever possible. We also work with reputable private investigation firms to locate debtors and trace assets, ensuring even evasive debtors can be reached and held accountable.

Insolvency Pressure: A Tactical Option When Necessary

Where appropriate, and particularly for corporate debtors, creditors may lawfully consider the option of winding-up proceedings under the Insolvency Act, 2015.

Similarly, for individual debtors, bankruptcy proceedings may be considered as a pressure point. While these are serious and last-resort measures, their mere mention in a demand can often serve as a catalyst for settlement, particularly for debtors seeking to avoid reputational damage, asset exposure, or regulatory consequences.

This tactic aligns with our Corporate Restructure Suite and litigation strategy aimed at converting crises into opportunities for resolution and recovery. As part of our cross-border insolvency strategy, we also support enforcement of international arbitral awards and foreign court judgments under both reciprocal treaties and common law doctrines.

How CM Advocates LLP Can Help

At CM Advocates LLP, we are trusted by banks, non-bank financial institutions, PE firms, global law firms, and high-net-worth individuals for our exceptional capability in debt recovery, restructuring, and cross-border enforcement. Our services include:

• Legal assessment of the debt’s enforceability and limitation status;
• Drafting and issuing formal demand letters, structured to prompt acknowledgment or settlement;
• Negotiating debt settlement agreements and moratoriums;
• Asset tracing, enforcement litigation, and post-judgment execution strategies;
• Initiating insolvency or restructuring proceedings, where appropriate;
• Recognition and enforcement of foreign judgments and arbitral awards, including UNCITRAL, New York Convention and common law mechanisms.

Our approach blends deep knowledge of Kenyan enforcement frameworks with global enforcement strategy and local precision—ensuring we deliver strategic recovery and sustainable outcomes.

Next Steps: Engage Us to Recover Dormant Debts

If you are holding a debt that may be statute-barred—or approaching limitation—do not assume that recovery is off the table. With strategic legal advice, you may have more options than you think.

To initiate a recovery process or receive tailored advice, please reach out to our Debt Recovery & Restructuring team for a confidential consultation. Let us help you turn time-lapsed claims into actionable recovery.

📧 Debt Recovery Email: drri@cmadvocates.com or cmaina@cmadvocates.com
📧 General Firm Contact: law@cmadvocates.com
📞 Phone: +254716209673
🌐 Contact Page: https://cmadvocates.com/en/contact-us

CM Advocates LLP – Your Strategic Legal Partner in Debt Recovery and Cross-Border Enforcement