Collecting Commercial Debts Safely under Vietnamese Law is an essential process to protect the lawful rights and interests of businesses in transactions such as the sale of goods, service provision, and commercial cooperation contracts. This process not only ensures stable cash flow but also helps businesses minimise financial risks and potential legal disputes. However, if conducted improperly, debt collection can damage a business’s reputation, lead to violations of the law, or even result in administrative sanctions. Therefore, Collecting Commercial Debts Safely under Vietnamese Law is a key factor for businesses to both achieve economic efficiency and maintain cooperative relationships with partners. The article below will provide readers with a comprehensive and in-depth perspective on Collecting Commercial Debts Safely under Vietnamese Law.
What is Commercial Debt Collection?
Commercial debt collection is the process by which a business, organisation, or individual collects outstanding payments from customers, partners, or purchasers arising from business or commercial activities such as sales of goods, service provision, or cooperation agreements.
Common methods of debt collection include negotiation and settlement, mediation, or initiating legal proceedings through competent dispute resolution authorities, most commonly the courts. The choice of method depends on the value of the debt, the debtor’s cooperation, and the business’s objectives. Each approach carries its own advantages and limitations. Collecting Commercial Debts Safely under Vietnamese Law requires strict compliance with specific steps and Vietnamese legal regulations to ensure legality, safety and efficiency.
Collecting Commercial Debts Safely under Vietnamese Law not only enables businesses to reclaim capital quickly and legally but also enhances financial management professionalism. Moreover, legal compliance helps businesses minimise the risk of counterclaims, protect their commercial reputation, maintain partnerships, and, above all, avoid legal violations during the debt collection process.
5 Steps for Collecting Commercial Debts Safely under Vietnamese Law
Step 1 – Review and determine the debt and debtor information
Before proceeding with debt collection, businesses need to accurately determine the debt and debtor information. This step includes: examining the commercial contract and accompanying appendices to determine payment terms, terms, methods, and late payment interest. Accordingly, compare debts between the two parties, collect documents, invoices, records of delivery and receipt of goods, record of acceptance, confirmation of payment (if any);
Based on these documents, the creditor should collect the debtor’s contact details, including address, phone number, email, and other communication channels. Simultaneously, the business should assess the debtor’s financial situation, assets, and income sources to evaluate repayment capacity and determine the most appropriate collection approach. It is also essential to verify that the limitation period for filing a lawsuit has not expired according to the prevailing laws.
Step 2 – Contact and remind the debtor
After clearly identifying the debt, the business collects the debt by sending a Payment Request Letter/Debt Reminder Letter to the debtor. This document should clearly show: Debt amount, payment deadline and legal consequences if the debtor fails to comply on time. The Payment Request Letter/Debt Reminder Letter should be sent in writing, certified or by secured mail, as evidence to prove that the business has notified the debtor.
In addition, businesses can contact directly by phone or meet to remind debts, but need to show a professional and respectful attitude, avoiding pressure or threats. This is also a way to show goodwill for cooperation and flexible negotiation opportunities before switching to debt collection by legal means. In addition, businesses can contact the debtor via email for further discussion. Note that all debt reminders need to be saved for later proof.
Step 3 – Negotiate
If the debtor is willing to cooperate, businesses should prioritise debt collection measures through negotiation. The parties can agree on a payment plan that is suitable for the debtor’s financial capacity, such as extending the payment period, dividing the debt to pay in instalments, or exemption or reduction of late payment interest when the debtor strictly fulfils the new commitment.
In case of reaching an agreement, the business needs to make a record of the agreement or an additional contract annexe, clearly stating: the amount to be paid; time limit and method of payment; commitments of the parties on the performance of obligations. This record must be made in writing, signed and stamped by the parties to ensure its legal validity.
Step 4 – Send final notice
If, after the negotiation process, the debtor still does not fulfil the payment obligation. Businesses need to send a final notice before proceeding to the step of debt collection by lawsuit. This notice should clearly state: the total amount owed (including late payment interest, if any); the deadline for payment; and legal consequences if the debtor fails to remedy on time.
This is an important warning step, showing that the business has fully fulfilled its goodwill obligations before initiating a lawsuit. The sending of the final notice is not only to remind and create the last opportunity for the debtor to fulfil its obligations, but also serves as important evidence proving that the business has behaved in accordance with regulations, has a cooperative and transparent attitude in the debt collection process. In many cases, it is this notice that motivates the debtor to fulfil its payment obligations to avoid being sued in court or having by commercial reputation.
Step 5 – Filing a lawsuit with the dispute resolution authority and requesting judgment enforcement (if applicable)
When all negotiation measures are unsuccessful, the business can initiate a lawsuit against the debtor to the dispute settlement agency, with the common method of initiating a lawsuit in a competent Court to collect the debt according to the provisions of the Civil Procedure Code 2015.
A lawsuit dossier includes: (i) A lawsuit petition[1]; (ii) Relevant contracts, appendices, documents and invoices; (iii) Debt reconciliation record, notice, letter of payment request; (iv) And documents proving the legal status of the business, such as the Enterprise Registration Certificate, Investment Certificate.
After the judgment or decision of the court takes effect, if the debtor still fails to voluntarily enforce the judgment within the time limit for voluntary judgment enforcement as prescribed in Article 45 of the Law on Enforcement of Civil Judgments 2008 (amended, amended and supplemented in 2024), the business may request the civil judgment enforcement agency to apply coercive measures.[2] Accordingly, measures to enforce judgments include deducting
[1] Article 189 of the Civil Procedure Code 2015
[2] Article 46 of the Law on Enforcement of Civil Judgments 2008 (amended, amended and supplemented in 2024)
