In Nigerian debt recovery, no concept is more consequential or more frequently misunderstood than the statute of limitations. Creditors routinely discover that a recoverable ₦50 million debt has quietly become unenforceable because of a date on a loan agreement no one bothered to track.
This guide covers everything a Nigerian creditor needs to know about the limitation framework: the governing law, the six-year rule, the exceptions, how the clock can be reset, and what to do if your debt is approaching the deadline.
The Legal Framework
The limitation of debt actions in Nigeria is governed by:
- The Limitation Act, Cap L15, LFN 2004 (applicable to the Federal Capital Territory and matters within federal jurisdiction)
- The Limitation Law of Lagos State, Cap L67, Laws of Lagos State 2015 (applicable to Lagos State matters, see the Lagos State Judiciary)
- Corresponding Limitation Laws of other Nigerian states (each state has its own but all follow substantially the same framework)
These laws set out the time within which a creditor must commence legal proceedings to recover a debt. Fail to act within that window, and the law bars recovery through the courts, no matter how clear the underlying debt may be. This is very important to understand.
The Six-Year Rule
The headline rule, applicable to the overwhelming majority of debts in Nigeria:
Section 8(1)(d) of the Limitation Act provides that actions founded on a simple contract shall not be brought after the expiration of six years from the date on which the cause of action accrued. This is the date the debt became due and unpaid, and not the date the agreement was originally signed.
The "cause of action" for a debt accrues on the date the debt becomes due and payable, which in most cases, is the date of default under the loan agreement, invoice, or contractual payment terms.
Illustration: If a borrower was required to make a loan repayment on 15 January 2020 and failed to do so, the cause of action accrued on 15 January 2020. The lender has until 14 January 2026 to commence legal proceedings. On 15 January 2026, the debt becomes statute-barred.
What "Statute-Barred" Actually Means
This is where most creditors are misled. A statute-barred debt does not legally disappear. The underlying obligation remains. What is lost is the ability to enforce the debt through the courts.
In practical terms, when a debt is statute-barred:
- You cannot sue the debtor and expect to win if they plead limitation as a defence
- You cannot obtain a judgment, garnishee order, or writ of execution
- You cannot freeze the debtor's accounts or attach their property
- You can still demand payment voluntarily, but you have no legal lever
- In some circumstances, you can still report the debt to credit bureaus
A debtor must plead limitation as a defence in court. The court does not raise it automatically. But any competent counsel will plead it. So in practice, statute-barred debts are unenforceable.
How to Reset the Clock. Let Us Consider The Acknowledgment Rule
The limitation clock is not a one-way countdown. It can be reset.
Under Section 24 of the Limitation Act, if the debtor, within the limitation period, acknowledges the debt or makes any part-payment, the limitation period starts afresh from the date of acknowledgment or part-payment.
Written acknowledgment
To reset the clock, an acknowledgment must be:
- In writing, as verbal acknowledgments do not reset the clock
- Signed by the debtor (or someone authorised to sign for them)
- Specific to the debt, and not a vague acknowledgment of "money owed"; the acknowledgment should identify the debt
- Made within the limitation period, an acknowledgment made after the debt is already statute-barred does not revive the right of action
Common forms of valid acknowledgment include:
- Signed letters requesting more time to pay
- Signed payment plan agreements
- Signed emails (with appropriate authentication)
- Signed board resolutions acknowledging the debt (for corporate debtors)
Part-payment
Any part-payment of the debt, no matter how small, also resets the clock, provided it is clearly attributable to the specific debt. A ₦10,000 part-payment on a ₦10 million debt is sufficient. The clock resets from the date of the part-payment.
Tactical insight: If a debtor is cooperating but struggling to pay, a modest part-payment with an acknowledgment letter is far more valuable to the creditor than a verbal promise. It resets the full six-year window.
Different Debts, Different Rules
The six-year rule applies to simple contract debts. Other debt types have different limitation periods:
| Debt Type | Limitation Period | Legal Basis |
|---|---|---|
| Simple contract debt | 6 years | Section 8, Limitation Act |
| Debt under deed / specialty contract | 12 years | Section 9, Limitation Act |
| Mortgage principal (action for repayment) | 12 years | Section 18, Limitation Act |
| Mortgage interest arrears | 6 years | Section 18(5), Limitation Act |
| Judgment debt enforcement | 12 years | Section 16, Limitation Act |
| Debt owed by beneficiary to trustee | No limitation | Section 29, Limitation Act |
| Debts owed to AMCON (acquired loans) | Extended / overridden | AMCON Act |
Specialty contracts such as debts under seal or formal deed typically enjoy a 12-year limitation period. Many corporate loan agreements include specialty clauses specifically to extend the limitation window. Ensure the specialty clauses are included in the agreements.
Special Rules for AMCON-Acquired Debts
Debts acquired by the Asset Management Corporation of Nigeria enjoy extended protections. The AMCON Act contains provisions that effectively suspend or override standard limitation defences for AMCON-held debts.
This is why many Nigerian banks and creditors with ageing non-performing loans transfer them to AMCON before the limitation period expires, thus preservation of the right to recover is maintained through AMCON even where the original creditor would be time-barred. For a complete walkthrough of AMCON's statutory toolkit, see our AMCON debt recovery process guide.
Mortgage Debts Do Not Follow the 6-Year Rule in Nigeria
Because mortgages are executed as formal deeds (instruments under seal) and involve interests in landed property, they fall under a separate legal category with a much longer timeline.
The 12-Year Rule for Mortgages
Under the federal Limitation Act and state laws (such as the Limitation Law of Lagos State), the limitation period for a mortgage action is 12 years. The 12-year period applies to both the right to recover the principal mortgage sum and the right to enforce the security over the mortgaged property. Interest arrears on a mortgage remain limited to the 6-year window under Section 18(5) of the Limitation Act, which is a frequent trap for creditors who assume the entire mortgage claim shares the same 12-year window.
Suspension of the Limitation Clock
In limited circumstances, the limitation clock can be suspended (not merely reset). These include:
- Debtor's disability, if the cause of action accrued while the debtor was under a legal disability (minor, mental incapacity), the clock pauses until the disability ends
- Fraud or concealment, if the creditor's cause of action was concealed by the debtor's fraud, the clock starts only when the fraud is discovered or could reasonably have been discovered
- Acknowledgment under duress, if the acknowledgment that reset the clock was obtained by duress, it may be set aside
What to Do If Your Debt Is Approaching the Deadline
If your Nigerian debt is approaching the six-year limitation, take these steps immediately, ideally with at least 90 days of runway remaining.
Step 1: Audit the exact deadline
Identify the precise date the cause of action accrued. For a term loan, this is the date of first default. For an invoice, the date payment was due. For a facility with multiple payment dates, each default has its own six-year countdown.
Step 2: Seek acknowledgment or part-payment
Contact the debtor and secure a written acknowledgment of the debt or a part-payment, however small. This resets the clock. A good recovery firm can structure acknowledgment letters that preserve the creditor's position while giving the debtor comfort.
Step 3: Issue a formal demand letter
A properly drafted demand letter does not reset the clock, but it creates evidentiary value and often prompts a debtor response (acknowledgment or part-payment) that does.
Step 4: If no cooperation, file proceedings before the deadline
If acknowledgment is impossible and the deadline is close, file court proceedings before the limitation expires. Once a writ is issued and served within the limitation period, the limitation defence is spent. The case can then proceed normally even if it takes years to resolve.
Common mistake: Creditors often rely on verbal assurances or informal exchanges of email in the final months before limitation expires. These may not qualify as a valid acknowledgment. If the deadline is close and you have anything less than a signed written acknowledgment or confirmed part-payment, file proceedings as a protective measure.
Why This Matters for Your Portfolio
Every creditor with an aged receivables book should run a limitation audit. In our experience, Nigerian creditors routinely discover that 5–15% of their non-performing book is already statute-barred. They are recoverable in theory, unenforceable in practice.
The economic impact of this is substantial. A ₦1 billion non-performing book with 10% already statute-barred represents ₦100 million of effectively written-off debt that could have been preserved with a basic acknowledgment programme or a timely assignment to AMCON.
Tenaza runs limitation audits as part of our portfolio engagement for banks and institutional creditors. The audit identifies: which debts are already time-barred, which are within 12 months of time-bar (urgent action required), and which have acknowledgment opportunities that can preserve the limitation window. See our buyer's guide to choosing a Nigerian recovery firm for the due diligence framework we recommend creditors apply.
Tenaza's Proprietary AI: Built to Find Anyone, Anywhere
At the core of Tenaza's recovery operation sits a proprietary in-house AI model built specifically for Nigerian and cross-border debt work. It is one of the most robust tracing platforms available to any Nigerian recovery firm, and it powers three capabilities that make the difference between a written-off debt and a recovered one.
- Skip tracing. The AI locates evasive debtors irrespective of where they are hiding. Local address changes, offshore relocations, name variations, and shell structures do not stop it.
- Asset tracing. The model maps debtor assets across companies, nominees, offshore vehicles, and property registries, surfacing hidden ownership chains that manual research routinely misses.
- Real-time debtor location. The platform pinpoints current whereabouts of individuals and entities in Nigeria and across our 40+ country correspondent network.
The result for creditors is faster recovery, lower tracing cost per matter, and higher close rates on debts that would otherwise be impossible to pursue.
We do the digging while you watch.
Frequently Asked Questions
What is the statute of limitations for debt in Nigeria?
Can the Nigerian statute of limitations be reset?
What happens if a debt becomes time-barred in Nigeria?
Does the Nigerian limitation period apply to secured debts?
What is the limitation period for AMCON-acquired debts in Nigeria?
Can you sue on a time-barred debt in Nigeria?
What should I do if my debt is approaching the Nigerian statute of limitations?
Debt Approaching the Deadline?
If you have debts within 12 months of the six-year limitation, time matters. Tenaza runs limitation audits and acceleration strategies for creditors with ageing books. Initial consultations are complimentary.
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