If microcredit loan was not secured against your land, then the lender cannot legally seize or auction it without a valid court order.
In 2023, I took a loan of Sh150,000 with a micro credit company to start an executive barbershop business targeting the working class. The business failed after eight months. By the end of 2024, I had paid about Sh250,000 after going into various defaults and accumulating arrears.
Three months ago, the auctioneers came to my home and carted away furniture and electronics worth over Sh200,000. Last month, they came back again and said I still owed an additional Sh300,000 in interest and penalties. So far, I have paid Sh250,000, lost goods worth Sh200,000 and still owe Sh300,000.
I have a title deed for a parcel of land worth Sh650,000. It is my only possession, and the possibility of losing it is killing me. I earn Sh61,500 per month. I spend Sh14,000 on rent (inclusive of power & water), Sh5,600 on school fees per month (Sh16,800 per term), Sh15,000 on food, groceries and household shopping, Sh3,500 matatu fare to work, Sh17,500 on mobile digital loans (paying and reborrowing), Sh3,000 wife salon money, tithe Sh6,000, Sunday church offering Sh500 (Sh2,000 per month). At the end of the month, I have nothing but loans, auctioneers and stress. Please help me. — Nehemiah
Muthoni Njakwe is an accountant and the author of Her Shilling, Her Power: A Woman’s Guide to Financial Freedom
With a clear strategy, discipline, and commitment, you can climb out of the financial hole you are currently in and regain control of your life and finances. Here are the steps you need to take:
Step 1: Audit your financial situation
You need to understand exactly where your money is going. Right now:
Income: Sh61,500 per month
Expenses:
Rent: Sh14,000
School fees: Sh5,600
Food & household: Sh15,000
Transport: Sh3,500
Digital loans: Sh17,500
Wife’s salon: Sh3,000
Tithe & offering: Sh8,000
Total expenses: Sh66,600
Monthly shortfall: Sh5,100
This shows that you are living beyond your means, primarily because of high digital loan repayments.
Step 2: Stop the cycle of borrowing
Digital loans are currently the biggest drain on your cash flow. You have to free yourself from reborrowing if you truly want to take back control.
Do not borrow to pay off old loans. This is the cycle that is making your debt spiral out of control. Instead , adjust your spending for example wife’s salon (from Sh3,000 to sh1500), squeeze the food and household budget , you can buy groceries from the market and items in wholesale, church tithes and offerings (consider temporarily stopping or reducing).
Step 3: Protect your assets
You mentioned owning a 40×80 parcel of land worth about Sh650,000, which is your most valuable asset and must be protected at all costs. Begin by confirming whether the microcredit loan was secured against your land; if it was not, the lender cannot legally seize or auction it without a valid court order. There are organisations such as Legal Aid Kenya and pro bono Kenya that offer free or low-cost legal support.
Step 4: Negotiate with the lender
Do not ignore your lender. Doing so will only make the situation worse. However, before rushing to make further payments, it’s important to fully understand the loan terms, interest structure, and legal boundaries. Demand a detailed loan statement showing the principal amount borrowed, the interest charged to date, all penalties and arrears applied, the payments you have already made, and the actual balance outstanding. The Microfinance Act and the Consumer Protection Act that govern how micro-lenders should operate, you have the right to seek clarification or legal redress through the relevant regulatory bodies.
Once you have fully understood what you owe, the next step is to negotiate a repayment plan. Clearly state your monthly income and propose a realistic amount you can pay, for example, between Sh5,000 and Sh10,000 per month.
Step 5: Create a sustainable budget
Start by prioritising essential expenses: rent, food, school fees, and transport, then allocate a fixed amount for debt repayment based on your negotiated plan. If possible, set aside a small amount for emergencies, even if it’s just a few hundred shillings. Over time, this cushion will help you avoid relying on quick loans whenever unexpected expenses arise.
Step 6: Increase your income
Consider using your existing skills or learning new ones through free online courses on platforms like YouTube and Coursera. You could also start some small side hustles that require little to no capital, such as selling products online or providing home services. Even an extra Sh5,000–Sh10,000 per month can make a big difference in your debt repayment journey.
Nehemia, your situation is challenging, but it is not hopeless. By stopping new debt, protecting your assets, negotiating with the lender, and living within your means, you can gradually regain control and rebuild.
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