Debt Collection in Laos

The debt collection process in Laos begins with an assessment of the debtor’s solvency, their business sector, business history, availability of documentary evidence of the debt, ongoing court cases and enforcement proceedings, and the possibility of disputing the debt. This assessment determines the strategy that will be used on behalf of the client in the collection process.

If the debtor has no ongoing court cases or outstanding judgments for debt collection and is actively engaged in commercial activities, then it is advisable to use the out-of-court debt collection stage.

This stage involves active negotiations with the debtor in order to reach an agreement on payment of the creditor’s claims or other possible settlement options (e.g. return of goods, transfer of the debt to a third party, exchange of services or goods).

Interaction with the debtor begins immediately after sending a notice by mail, email, phone or instant messengers. This process involves intensive communication with the debtor in order to exert constant pressure. The main objective is to establish contact with key decision makers to achieve the fastest possible debt recovery.

The average time for informal extra-judicial collection is up to 60 days (except in cases where a debt repayment installment plan is agreed upon). If this stage does not bring the expected results or after an initial analysis it becomes clear that it is not applicable, it is necessary to proceed to collection through the courts.

Before initiating judicial collection, it is worth paying attention to the limitation period. The limitation period for debt collection is 3 years. This limitation period cannot be changed by agreement of the parties. The court applies the provisions on the limitation period only at the request of the defendant. The limitation period is interrupted if the debtor acknowledges the debt or other obligations to the creditor. After the interruption, the limitation period begins to count anew.

Lao legislation provides for judicial debt collection in the usual judicial procedure.

The usual judicial procedure is carried out by filing a statement of claim with the court, after which the court checks the compliance of the claim with the requirements of the law, its competence to consider the dispute, and whether the pre-trial dispute resolution and mediation procedure has been implemented, if such a procedure is mandatory. The pre-trial settlement and mediation procedure is mandatory for commercial disputes.

If the court finds that the creditor has met all the requirements for accepting the claim for proceedings, the court notifies the defendant of the acceptance of the statement of claim, hands over a copy of the claim and gives the defendant 15 days to provide a response to the claim.

After receiving the response or expiration of the period for its submission, the court appoints a trial. The total duration of the trial should not exceed 9 months. The hearing of the case begins with hearing the plaintiff’s position, after which the court clarifies with the defendant whether he or she admits the claim or not. If the claim is admitted, the court makes a decision without holding further hearings. If the defendant does not admit the claim, the court hears the defendant’s position, and then accepts and examines the evidence in the case, namely, depending on the circumstances of the case: questioning witnesses, hearing expert opinions, studying material and written evidence.

At the end of the hearing, the court summarizes the issues on which there are still doubts and contradictions, and obliges the parties to the case to provide additional evidence that confirms or clarifies the disputed issue. If, after the hearings, all the circumstances of the case are clear to the court, the court appoints a debate during which the parties present their final arguments. After hearing the final arguments, the court makes a decision that comes into force after the expiration of the period for appeal.

The decision of the court of first instance may be appealed to the appellate court within 20 days from the date of the decision, and in the absence of a party at the hearing, from the date of receipt of a copy of the contested decision. The appeal must be considered within 4 months from the date of opening of the proceedings. The decision of the appellate court shall enter into legal force from the moment of its adoption, but may be appealed to the Supreme People’s Court of Laos within thirty days from the moment of the adoption of the decision. The appeal must be considered within 3 months from the moment of opening of the proceedings. The decision of the Supreme Court is final and is not subject to further appeal.

After the court decision comes into legal force, the creditor should obtain a court order and initiate the enforcement procedure. The court decision can be presented for execution within 3 years from the date of entry into legal force of the decision. As part of the enforcement of the court decision, the creditor’s claims can be satisfied by seizing and writing off funds from the debtor’s accounts; seizing the movable and immovable property of the debtor with their subsequent sale; seizing and confiscating securities; collecting income from the debtor’s business activities.

If the debtor is a company, then an alternative option for debt collection is to use the bankruptcy procedure of the debtor. According to the provisions of the Law on Rehabilitation and Bankruptcy of Enterprises, a creditor has the right to initiate this procedure, provided that the amount of the debt is not less than 10,000,000 Lao kip, and the creditor has demanded payment of the debt at least three times with an interval of not less than 20 days, and the debtor acknowledges the debt but is unable to pay it. At this stage, if the debtor’s assets are insufficient to fully satisfy the creditors’ claims, it is possible to cancel the debtor’s actions committed with the intent to harm the creditors. Among such actions, the following should be highlighted: early payment of any debt; conversion of unsecured debt into secured debt; transfer of property to the creditor or any person; sale of assets at a price below the market price; other actions that create advantages for one creditor compared to others. The above actions or transactions may be canceled if they were committed within one year prior to the initiation of bankruptcy proceedings. As a result of the cancellation of the above actions, it is possible to return back to the debtor what he lost from such transactions and thereby increase the liquidation estate to satisfy the claims of creditors and cover the costs of implementing the bankruptcy procedure.

If you have any questions or need support for international debt collection in Laos, our company is ready to provide its expert assistance to effectively resolve your financial issue. Contact us to get additional information and professional support from specialists of the leading debt collection agency.

# DEBT COLLECTION AGENCY LAOS

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