Debt collection and the ‘new normal’

As a country, we are starting to acclimatise to the “new normal.”

Unfortunately, for many businesses this means grappling with how to keep their doors open, manage cash flows and keep staff employed.

In this time of financial uncertainty, some businesses may find it hard to pay their debts while on the flipside others may need to collect the debts owed to them in order to stay afloat. In this environment, there are some debt collection strategies that businesses facing these issues may want to consider.

Examine the debt

As a start, it would be prudent to review your contract clearly and the debt that is due. Are there any amounts that are in dispute? When was the deadline date for payment? Are there any contractual remedies that you may be entitled to as a result of late or non-payment such as contractual interest or penalty? Are there, conversely, any contractual remedies that the debtor may be able to rely on, such as force majeure? Understanding the context of the debt is essential to determining the appropriate avenue to manage it.

Know the limitation period

One issue you need to be aware of, especially in relation to older debts, is the limitation period.

When a person has a right to sue someone or some entity, the law places time limits within which they can file a lawsuit. These time limits are called “limitation periods.”

Generally, if legal proceedings are not started within this period then the right to sue is lost.

In T&T, the Limitation of Certain Actions Act sets out the limitation periods for different types of claims. Legal action must be commenced within four years of the accrual of the cause of the action.

In certain circumstances, that time period can be extended.

Generally speaking, in a debt collection matter, the period is four years from the date that the debt was due to be paid. If you initiate legal action on an invoice which became due four years or more before the date the action is filed, without legal acknowledgement of that debt or part-payment on the debt, then the Defendant can argue that your claim is statute barred and this would be a valid defence. You will not be able to recover on this debt in these circumstances. In this regard, you need therefore to examine whether you have outstanding invoices to be paid which are approaching this time. If you do, you may want to consult your attorney to discuss how to best mange this issue.

Consider renegotiation

If there is difficulty in meeting contractual obligations, it may be worthwhile to have the parties sit back down at the bargaining table and re-negotiate their contractual arrangement.

For example, if a debtor is unable to pay a sum of money that is currently due, the parties can agree to defer payments to a later time.

During the deferral period, the monthly instalments, including the principal and interest payments, can be postponed but with interest continuing to accrue, perhaps compounded, during the deferral period. You may also want to consider the debtor’s real capacity to pay and the value of the long-term relationship. If in fact there is a potential for a long-term relationship, you can lock in a longer-term agreement for a fixed or graduated price. If you are the debtor and you are unable to meet the current payment agreement, it is worth investigating whether you are able to provide additional securities.

It is advisable to ensure that that no false security is provided, and that the security construction is properly recorded. These are just a few strategies that might be appropriate depending on your own commercial reality.


Recourse to the courts remains a viable option and, in some cases, it is the only option to recover debts that are validly due and owing to you. If the debt is essentially admitted by the entity owing the debt, then the progress of the matter through the Courts may be truncated.

Of course, once you get judgment in your favour, the issue of enforcement of that judgment may arise. This is something your attorney would be able to advise on.

We are facing trying times and the issue of collecting on unpaid debts may not be straightforward.

Alternatively, if you are the party that has failed to liquidate a debt owing, you will be no doubt nervous of the notion that you have potentially breached your obligations under your contract and may face potential court action.

However, there is no time like the present to confront our “new normal” and the challenges it brings head on.

Cherie Gopie is a Partner at M Hamel-Smith & Co. She can be reached at

Disclaimer: This column contains general information on legal topics and does not constitute legal advice