Are you owed money by a Bahamian-based person or business? If the answer is yes, then you may need to start thinking about how to collect the debt owed to you. First, do some research to determine whether any bankruptcy or insolvency proceedings have been commenced in respect of the debtor. This information could affect your approach to debt collection. For example, if the debtor is solvent enough to pay your debt and there is a dispute over whether payment is due, you could consider mediating the dispute to avoid going to court.

If bankruptcy or insolvency proceedings have been commenced, you will need to follow the laws relating to the collection of debts and the rights of creditors in a bankruptcy/insolvency. Consult an attorney to determine your rights. Further, make only legitimate, good faith claims against the debtor's estate.

Further, you should determine if the debt is secured or unsecured. Having security for a debt generally means that the debtor has transferred title to something of value to the creditor, which is to be returned to the debtor upon full payment of the debt (such as a mortgage). Other types of security, such as an equitable mortgage and a fixed charge, are permitted under Bahamian law

When the debtor is insolvent, all unsecured creditors must share proportionately in the assets of the insolvent debtor. If there is concern that the debtor will use up his assets or hide them or take them outside The Bahamas before a judgment is obtained, unsecured creditors can seek an injunction to limit the debtor's use of the assets.

If an unsecured creditor obtains a Bahamian judgment against the debtor, many more enforcement techniques are available by law. For example, the creditor can apply for garnishee orders, charging orders, a receivership, writs for seizure and sale of the debtor's assets, or orders for committal. However, creditors who commence proceedings against a debtor in The Bahamas but who do not themselves reside in The Bahamas, may be ordered by the Court to pay security for the debtor's legal costs in the event that the creditor is unsuccessful in its claim.

There is a six-year limitation period for bringing an action to recover debts or to enforce a judgment.  This means that no action to enforce a judgment or collect a debt may be undertaken after six years have passed from the date the judgment became final or the debt first fell due.  If the judgment you are seeking to enforce against the debtor is from another jurisdiction outside The Bahamas, different rules apply which will be outlined in a later article.

To find out more about your rights as a creditor, visit Gonsalves-Sabola Chambers online or call the office at +1 242 326 6400.