How to Recover a Foreign Debt

How to Recover a Foreign Debt

By Ekele Chinda


Globalization and the resulting large number of cross-border transactions bring with it problems if the debtor, based abroad, refuses to pay.

For this reason, those who are in the habit of making purchases and sales with referrers allocated in foreign countries, take care to protect themselves already at the contracting stage by clearly indicating the court with jurisdiction in case of insolvency or dispute, the law applicable to the contractual relationship and any arbitration clauses.

Recovering a foreign debt can be a complex and challenging process, but it is crucial for individuals and businesses alike to ensure that they receive what is rightfully owed to them. Whether you are a creditor seeking payment from a foreign debtor or a debtor looking to settle an overseas debt, this article provides valuable insights on the steps involved in recovering foreign debts.

i. Verify the Debt
Before the initiation of a debt recovery process, it’s essential to confirm the legitimacy of the debt. This involves reviewing all relevant documents, such as
contracts, invoices, and communication records, to ensure that the debt is valid and legally enforceable, and if you have any doubts about the debt’s authenticity, consult with legal professionals who specialize in international debt recovery.

ii. Attempt Amicable Resolution
In many cases, it’s in both parties’ best interests to resolve the debt issue amicably without resorting to legal action. Open lines of communication with the debtor and explore negotiation options that may not lead to litigation. Offer flexible payment plans or alternative settlement arrangements that can help the debtor meet their obligations without causing financial hardship.

iii. Seek Mediation or Arbitration
If amicable negotiations fail, consider mediation or arbitration as a means of dispute resolution. Mediation involves a neutral third party facilitating discussions between both parties to reach a mutually acceptable agreement. Arbitration is a more formal process, where an arbitrator makes a binding decision after hearing both sides. Many international contracts include arbitration clauses, so it is imperative that an agreement of such nature carry such provision.

iv. Legal Action
When all else fails, pursuing legal action may be necessary. This process can vary significantly depending on the countries involved and the applicable laws.

Here are some key steps:
a. Properly review the contract agreement especially the clause that states payment of money.
b. Identify the jurisdiction: Determine the appropriate jurisdiction for legal action based on the debtor’s location and the terms of your contract.
c. Engage legal counsel: Hire experienced lawyers who specialize in international debt recovery and have a deep understanding of the legal systems involved.
d. File a lawsuit: Initiate legal proceedings by filing a lawsuit in the relevant court. This will require serving notice to the debtor, who may need to respond within a specified timeframe.
e. Enforcement of judgments: If the court rules in your favor, you may need to enforce the judgment to collect the debt. Enforcement methods can include
wage garnishment, asset seizure, or bank liens, depending on local laws.

v. Consider International Treaties and Agreements
Depending on your country, if there are bilateral or multilateral agreements in place to facilitate the enforcement of foreign judgments, endeavor to seek legal counsel.

Debt Collection Agencies

Debt collection agencies with international expertise can also be a valuable resource. They can navigate the complexities of foreign debt recovery, especially
when dealing with language barriers and cultural differences. Be sure to select a reputable agency with a proven track record.


Recovering a foreign debt can be a lengthy and challenging process, but with careful planning, patience, and professional guidance, it is possible to achieve a successful outcome. Start with amicable negotiations and explore alternative dispute resolution methods before resorting to legal action. If legal action becomes necessary, seek legal counsel with international debt recovery expertise to guide you through the process.

Ultimately, persistence and a thorough understanding of the applicable laws and regulations are key to successfully recovering foreign debts.

This article is for information purposes, it may or may not reflect the current position of the law and is therefore not intended to provide legal advice or guidance on litigation or provide commentary on any pending case or legislation.