Defending bank debtors against excessive debt claims by Nigerian financial institutions
Abdul Muhammed Law Practice outlines the strategies a commercial lawyer can employ to defend a bank debtor against excessive debt claims made by a Nigerian bank or other financial institution.
These strategies aim to ensure fair treatment, compliance with relevant laws, and protection of the debtor’s rights throughout the process.
Thoroughly review all debt documentation
The first step is to meticulously review all debt-related documents to confirm the accuracy and legitimacy of the claimed debt.
This includes loan agreements, promissory notes, and any amendments.
Any discrepancies or irregularities should be noted and addressed.
Verification of the debt amount
The lawyer must verify that the claimed debt amount is accurate and reflective of the debtor’s obligations.
This involves cross-referencing records, calculating interest, and confirming any fees or charges imposed by the financial institution.
Investigate compliance with CBN regulatory standards
Ensure that the financial institution has adhered to all applicable laws and regulations in its debt collection practices.
If there are violations or unfair practices, the lawyer can leverage these issues in defense of the debtor.
Make a debt validation request
Send a formal debt validation request to the financial institution, demanding verification of the debt’s legitimacy and the debtor’s obligation.
This request seeks detailed documentation and evidence of the debt’s origin and terms.
Be prepared to negotiate and settle
Engage in negotiations with the financial institution to explore settlement options that are fair and manageable for the debtor.
This could involve negotiating a reduced payoff amount, extended repayment terms, or the elimination of certain fees.
Review for predatory lending practices
Examine the circumstances surrounding the loan agreement to identify any predatory lending practices that might have contributed to the excessive debt burden.
Such practices could include undisclosed fees, high interest rates, or misleading terms.
Defend against unconscionable contract terms
If the loan agreement contains unconscionable or unfair terms, the lawyer can challenge the enforceability of these terms in court.
Such terms may include clauses that significantly disadvantage the debtor.
Statute of limitations analysis
Determine if the statute of limitations for debt collection has expired.
If the claim is time-barred, the lawyer can argue that the financial institution’s attempt to collect is unlawful.
Counterclaim and set-off rights
Explore the possibility of counterclaims against the financial institution, such as claims related to unfair practices, misrepresentation, or breach of contract.
Additionally, consider any set-off rights the debtor may have to offset the claimed debt.
Legal proceedings and defense
If negotiations fail, be prepared to defend the debtor in court.
Present evidence, legal arguments, and applicable defenses to challenge the excessive debt claim.
This could involve proving inaccurate recordkeeping, deceptive practices, or other legal grounds.
Conclusion
Defending bank debtors against excessive debt claims by financial institutions requires a comprehensive approach that involves thorough documentation review, compliance analysis, negotiation skills, and potential legal action.
A skilled commercial lawyer can ensure the debtor’s rights are protected and work towards a fair resolution that alleviates the burden of excessive debt.
Defending against excessive debt claims by the Asset Management Corporation of Nigeria
Defending against excessive debt claims by Nigerian banks
