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Debt vs Loan: Can You Be Arrested For It?

August 29, 2021 |
Personal Finance

The terms debt and loan are used interchangeably by Kenyans but they are not the same. There is a difference between a debt and a loan.

While a debt refers to anything such as property, money, provision of services, or any other form of consideration, a loan is a form of debt where one lends another money, with some repayment terms that may include interest and when the repayment should be done.

For corporate finance, debt  will refer to money that has been collected by the company by issuing bonds.

What is the legal definition of debt in Kenya? This answer is provided in Chapter 12 of the Constitution of Kenya. A “public debt means all financial obligations attendant to loans raised or guaranteed and securities issued or guaranteed by the national government..”

Can you be arrested for owing someone in Kenya?

Can you be jailed for a loan or debt? In Kenya, Civil debts such as HELB loans will not attract an arrest or sentencing to jail. When you fail to pay a personal loan or child support, it is still the same – no jail or arrests. However, you should be concerned since that will affect your credit rating and ability to receive emergency funds when you need them.

You may also be sued for a debt and given a court order to pay the outstanding amount. In such cases, you can be arrested through debt collectors’ efforts for contempt of court.

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