We have all had to deal with debtors, whether on a personal or business level. Debtors can be categorized based on the peculiarities of their situations when it comes to repaying their debt.
(a) There are those who are unable to pay.
(b) There are those who are unwilling to pay.
This article will cover these 2 types of debtors in Nigeria and how to approach them.
According to Premium Times, The Asset Management Corporation of Nigeria (AMCON) has about ₦3.6 trillion of unrecovered debt. The amazing part is that only 350 debtors contribute to this huge debt. So if you do the math, one person is owing about 10 billion Naira.
Types Of Debtors In Nigeria
It is clear from the AMCON story that a lot of people who take loans end up owing. The debtors who owe lesser amounts are even more in number. Have you ever lent money to someone who did not payback at the time you both agreed? It can be really frustrating. You may have made plans around that money and because someone doesn’t keep to their word, your plans suffer.
For lending companies, it negatively affects their cash flow.
For instance, some of these companies generate funds from investors whom they have to pay a monthly ROI. When debtors don’t remit their loans, the company will still have to pay their investors, making them run at a loss.
Working in a micro business development company, I’ve seen how different people act when they are asked to pay back their loans. They either give a fight or flight response. From this experience, I will show you how to approach debtors who are unable to pay back their loan and those are unwilling.
1. Debtors Who Are Unable To Pay Back
These type of debtors actually want to pay back their loan. Unfortunately, an unforeseen circumstance causes them to lack funds. It could be a disaster that causes their income to fail, or the business just doesn’t turn a profit as they expected. More often than not, these kind of debtor would reach out to you to inform you that they may not be able to pay back on time.
Because of their willingness, you might want to go easy on them. You can make a payment plan for them that cuts down the total debt into smaller chunks and spread it across a few weeks or a couple of months. Paying back bit by bit is a lot more feasible than when they try to get the whole money to pay at once.
2. Debtors Who Are Unwilling To Payback
Some people who collect loans have an irrational belief that they have no obligation to pay back what they owe. They do not care about the consequence or what it would cost the lender. These are the kind of lenders who can get snarky and hostile once you request or demand they pay back their debt. They are basically a pain to lenders.
When you owe people money, remember that you must repay, not just because the person wants the money back; but also because they need it at a particular time.— Double OG (@DoubleOGAdoga) August 19, 2021
Consider the time value of money. People have plans, just like you.
The first thing you want to do with this kind of lender is to be very stern with them and let them know you mean business. Remind them that legal action can and will be taken against them. If possible, bring in law enforcement and let them know you will charge them to court. You could legally confiscate a property of theirs that is equivalent in value, if not twice the value, to the money you loan them. If you have a contract, then you have every right to move any in this direction.
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My name is Emmanuel Ejiga. Content lead of OG Capital
I am a writer. Technical writer, song writer, and sometimes fictional writer.