Disputes in enterprises occur regularly; the most typical of these are disputes over debts between enterprises. In particular, the dispute over debt with foreign elements is complicated due to geographical distances and differences in the laws of countries, such as disputes involving debt owed by a debtor with United States citizenship. Therefore, the debt collection procedure overseas, in general, especially in the US is more complex than the debt collection procedure in Vietnam. In this article, we will offer advice to Vietnamese enterprises to understanding legal debt collection in the US.
1. Legal debt collection methods in the US
Similar to the Vietnamese law, the US law also allows debt collection within its territory, including the following procedures:
– Make direct contact with the debtor;
– Authorize a third party to collect the debt, and/or;
– Initiate a lawsuit at a competent Court or Commercial Arbitration if the parties are unable to reach an agreement on debt settlement.
2. Applicable law in debt collection
Vietnam has the only one legal system that applies throughout the nation. Meanwhile, the US permits each state to establish its own legal system, known as The State Law. State governments in the US have the legislative, executive, and judicial authorities as a nation but they must follow the provisions of Federal Law and the US Constitution. Because of many states have different regulations for debt collection, enterprises intending to perform debt collection in any state need to thoroughly research its legislation because debt collection which is allowed in one state may be restricted in another.
Accordingly, before proceeding debt collection, the creditor needs to be understanding the applicable law to prevent legal risks, save time and effort.
3. The Fair Debt Collection Practices Act – FDCPA
The Fair Debt Collection Practices Act (FDCPA) belongs to Federal Law. The FDCPA was first enacted on September 20th, 1977 and was last amended in 2017. It specifies the legal debt collection procedures that creditors must follow, contains provisions to limit third parties – authorized or acting on behalf of an individual or organization to collect the debt.
According to FDCPA, popular debt collection methods in Vietnam such as calling and sending payment requests may be illegal in the US if certain requirements are not satisfied.
Under FDCPA regulations, the debt collection procedure in the US is complicated because of legal diversity. Creditors must be understanding of US law and the divisions of the US judicial system to collect a debt properly and lawfully. In the following articles, we will analyse more clearly the benefits and inadequacies of the FDCPA, as well as the solutions those Vietnamese enterprises can choose to efficiently perform debt collection in the US.
The above is our legal share about How to legally collect debt in the US. Hope this article is useful to you.
Best regard,
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