Debt Collection in Vietnam

The debt collection process in Vietnam begins with an assessment of the debtor’s solvency, their business area, 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 on 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 collection.

The average time for informal out-of-court 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 court.

Before initiating judicial collection, it is worth paying attention to the limitation period. The limitation period for debt collection is 3 years. The court applies the provisions on the limitation period only at the request of the defendant, provided that such a request is filed before the court of first instance issues a decision. The limitation period is interrupted if the debtor acknowledges or fulfills part of his obligations to the creditor. After the interruption, the limitation period begins to count anew.

Vietnam law provides for judicial debt collection in ordinary and simplified judicial procedures.

The ordinary judicial procedure is carried out by filing a statement of claim with the court, after which the court, if the court finds that the case falls within the court’s jurisdiction and the statement of claim complies with the requirements of the law, the court will immediately notify all participants in the trial so that they appear in court to carry out the procedure for paying legal costs, if they are payable. After deciding the issue of legal costs, the court sends all participants a notice of acceptance of the case for proceedings and a summons to the court hearing.

Within 15 days from the date of receipt of the notice, the defendant is obliged to submit to the court written opinions on the plaintiff’s application, as well as materials and evidence confirming his position.

The period for preparing for a trial on debt collection, with the exception of cases considered in a simplified manner and cases involving a foreign element, is 4 months. In the process of preparing for the trial, the judge performs the following actions: forms case materials; determines the status of the parties and other participants in the procedure; determines the contentious relationship between the interested parties and the provisions of the applicable law; examines the objective details of the case; applies temporary emergency measures; holds hearings on the verification, transfer, access and disclosure of evidence, as well as mediation.

If the defendant is absent and his representative also does not participate in the hearing, the court holds the trial in absentia.

If it is not possible to complete the necessary actions to prepare for the trial in one hearing, the court postpones the hearing. The period for postponing the hearing must not exceed one month from the date of the ruling on the postponement of the hearing.

Upon completion of the process of preparation for the trial, the court proceeds to the debate in the court hearings. Persons participating in the debate, when giving testimony on the assessment of evidence or when expressing their opinion on the resolution of cases, are obliged to rely on the documents and evidence collected, examined and verified in the court hearing, as well as on the results of the investigation in the court hearing. Upon completion of the debate, the court makes a decision, which comes into force after the expiration of the period for appealing it in the appellate procedure.

The simplified procedure is applicable for the rapid resolution of cases that have simple circumstances, clear legal relations and the parties to the case acknowledge their obligations; or the materials and evidence are sufficient, which ensures that the grounds for resolving the case are sufficient. If the creditor is a non-resident of Vietnam, this procedure is not applied, except in cases where the parties to the case have reached an agreement to resolve the case in a simplified manner. Within one month from the date of acceptance of the case for proceedings, the judge entrusted with resolving the case must issue a ruling on resolving the case in a simplified manner and conduct the trial within 10 days from the date of the ruling.

The decision of the court of first instance may be appealed to the court of appeal within 15 days (7 for appealing the decision in a simplified manner) from the date of the announcement of the decision, and in the absence of a party at the hearing, from the date of delivery of a copy of the contested decision. The decision of the court of appeal comes into legal force from the date of its adoption. If there are grounds established by procedural legislation, the decision of the appellate court may be appealed in cassation within 3 years from the date of the decision.

After the court decision comes into legal force, the creditor should initiate the procedure for compulsory execution. The court decision may be presented for execution within 5 years from the date of the decision coming into legal force. As part of the compulsory execution of the court decision, the creditor’s claims may be satisfied by arresting and writing off funds from the debtor’s accounts; arresting the movable and immovable property of the debtor with their subsequent sale; arresting and confiscating securities; arresting and confiscating sea and aircraft; collecting income from the debtor’s business activities; arresting and selling intellectual property rights; forced exploitation of the debtor’s assets.

An alternative option for debt collection is to use the bankruptcy procedure of the debtor. The creditor has the right to initiate this procedure provided that the debtor is insolvent. According to the Bankruptcy Law, a debtor is considered insolvent if he/she has failed to fulfill a debt obligation within 3 months from the date of payment maturity. 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 cause damage to creditors. Among such actions, the following should be highlighted in particular: unsecured debts are converted into secured debts, partially or fully, secured by the debtor’s assets; repayment of a debt whose maturity date has not yet arrived; transfer of the debtor’s assets to other organizations; the transaction does not correspond to the debtor’s normal operational activities; transactions aimed at dispersing the debtor’s assets; transactions with related parties. The above actions or transactions may be canceled if they were made within 6 or 18 months before the opening of the bankruptcy procedure (the period depends on the type of transaction or action). 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, due to this, 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 Vietnam, 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 VIETNAM

07.10.2024

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