Coercive enforcement of payment obligations: Deduction of money from accounts and subtraction of incomes of judgment debtors
In civil judgment enforcement, payment obligations represent the most common type of obligation arising from court judgments, decisions, or arbitral awards. When the judgment debtor fails to voluntarily pay the amount due despite having the means, the civil judgment enforcement authority must implement coercive measures. These measures may target non-cash assets or directly seize cash assets held by the debtor. This article provides an in-depth analysis of two direct coercive enforcement measures applied to cash assets: deduction of money from accounts and subtraction of incomes of judgment debtors.
1.What is enforcement of a payment obligation?
Although the current legal framework does not provide a definition for “enforcement of payment obligation,” it can be interpreted based on the definitions of “enforcement” and “payment obligation” as the process by which the debtor fulfills the obligation to pay an amount of money as determined by a court judgment, decision, or arbitral award.
2.Coercive enforcement of payment obligations involving cash assets
Where a debtor is obligated to pay money but refuses to comply voluntarily, and the judgment enforcement officer determines that the debtor possesses cash assets (e.g., cash on hand, money in bank accounts, or income), the law allows direct enforcement against those cash assets. These measures are generally more efficient, less procedurally burdensome, and yield quicker results compared to enforcement against other types of property. Two such measures are outlined below.
- Deduction of money from accounts
Deducting money from a debtor’s bank account is one of the fastest and most effective means of recovering amounts owed, particularly when the debtor maintains significant balances in accounts held at credit institutions or the State Treasury.
This measure is implemented upon the issuance of a deduction decision by the judgment enforcement officer, pursuant to Article 76.1 of the Law on Enforcement of Civil Judgments 2008, as amended in 2014. Upon receipt of this decision, the financial institution managing the account (e.g., a credit institution or the State Treasury) must promptly deduct the specified amount. The deducted money is then transferred to the civil judgment enforcement authority’s account or directly to the judgment creditor, as specified in the decision.
The amount deducted must not exceed the total payment obligation and any enforcement-related costs. If the debtor maintains multiple accounts at different institutions, under Article 21.2 of Decree No. 62/2015/ND-CP, the judgment enforcement officer may apply deductions to one or more accounts based on available balances.
Example: Mr. A is obligated to pay VND 500,000,000 under a court judgment and holds an account at Bank X with a balance of VND 600,000,000. Judgment enforcement officer C verifies the ownership of the account and issues a decision directing Bank X to deduct VND 500,000,000, plus enforcement costs, from Mr. A’s account.
- Subtraction of incomes
Where the debtor has a stable source of income such as salary, pension, or allowances the judgment enforcement officer may consider income subtraction to enforce the payment obligation.
This measure may only be applied under one of the following conditions: (1) the parties agree to the subtraction; (2) the court judgment or decision explicitly provides for such subtraction; or (3) the obligation involves periodic payments, relatively small amounts, or where the debtor lacks sufficient assets to satisfy the judgment.
Income includes wages, salaries, pensions, incapacity benefits, and other lawful income. The law sets a maximum subtraction to ensure the debtor and dependents retain a minimum standard of living. For wages, salaries, pensions, and incapacity benefits, the maximum subtraction rate is 30% of the monthly amount received, unless the parties have agreed otherwise. For other types of income, the subtraction amount is based on the debtor’s actual income, subject to the statutory minimum living conditions for both the debtor and their dependents.
The enforcement process begins with the judgment enforcement officer issuing an income subtraction decision. The employer, organization, or social insurance authority responsible for disbursing the debtor’s income must cooperate and subtract the specified amount as required.
Example: Ms. D is employed at Company Y, earning VND 15,000,000 per month. Under a court judgment, Ms. D must pay VND 50,000,000 in damages to Mr. E. The court decisions that 30% of Ms. D’s monthly income be subtracted to pay the judgment debt. The judgment enforcement officer issues a subtraction decision requiring Company Y to subtract VND 4,500,000 per month from Ms. D’s salary and remit it to the enforcement authority until the full amount is satisfied.
This article, “Coercive enforcement of payment obligations: Deduction of money from accounts and subtraction of incomes of judgment debtors” is provided by TNTP for readers’ reference. We hope it proves useful to those interested in this subject.
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