In 2022, most newspapers were filled with auction notices of multi-million mansions in various parts of the country.
Modern houses in Nairobi estates such as Runda, Kileleshwa, Kilimani, Syokimau, Kitisuru and even Donholm featured prominently in the auction notices raising concerns among Kenyans - especially those from affluent neighbourhoods.
In December 2022, a record of over 100 houses were listed for auction by different firms.
However, there are legal ways and channels debtors can use to avoid facing the auctioneer's hammer. Here are five ways to circumvent the process;
Negotiating to Extend Repayment Period
In financial distress, debtors can enter into a deal with financial institutions to extend their repayment periods.
According to financial experts, written agreements allow individuals clear credit and avoid losing their property to auctioneers.
However, during this process, most creditors tend to adjust the interest rate to keep their businesses afloat during the extended repayment period.
Moratorium on Principal
A moratorium is where an individual is allowed to pause on debt payments for a certain period of time. This is usually caused by medical emergencies and other unavoidable financial distresses.
To reach a moratorium, both a creditor and a debtor agree on a model that will be adopted to settle the debt later.
Applying for Waivers
Companies in financial distress can apply for waivers from the government in order to remain afloat and even honour debts. For instance, the government allows some companies in Kenya to enjoy preferential corporate tax benefits for a certain period of time.
Firms allowed to apply for waivers in the country include real estate firms, shipping businesses, motor vehicle assembling plants and even businesses in carbon market exchange.
Besides waivers granted by the government, individuals can also enter into binding agreements with financial institutions to reduce the interest rates imposed on credit.
Selling Assets
Others lose their properties to avoid getting in contact with their lenders.
However, financial experts advise Kenyans to discuss with their banks to explore the possibilities of selling the assets as the way out of the auctioneer's hammer.
Fundraising Through Saccos and Chama
Another strategy some individuals adopt is raising money through chamas to clear the debt.
After paying the debt, individuals then enter another agreement with the chamas to repay the money at low interest rate. With chamas and saccos, the repayment tenors can be adjusted.
To protect Kenyans from rogue auctioneers, the government formulated rules to be used during the process.
According to the Auctioneer's Act, an auctioneer should not exercise dishonesty, immorality, violence and malicious damage while pursuing a directive to attach property.
Similarly, the auctioneer must have the property valued to protect the owner's interest.
