Are Debt Recovery Companies Legal in Vietnam? Explained Under Current Vietnamese Law
Doing business in Vietnam, many individuals and companies encounter late payments or unpaid debts from their business partners, creating significant financial pressure, operational disruption, and increased business risks. As creditors look for fast and effective ways to recover outstanding debts, the question “Are debt recovery companies legal?” has become a growing concern.
Since 2021, Vietnamese law has undergone a major change with the official prohibition of debt collection service businesses. This raises an important question: is debt recovery itself still legal, and if so, what methods can be used to ensure compliance with the law?
In this article, TNTP analyzes and clarifies these issues to help individuals and organizations, particularly businesses, choose appropriate debt recovery solutions while minimizing legal risks.
1. Are Debt Recovery Companies Legal?
The answer is: No, if they operate as debt collection service businesses. However, individuals and organizations are still permitted to recover debts through lawful methods.
Before the Law on Investment 2020 came into effect, debt collection services were included in the list of conditional business lines under Appendix 4 of the Law on Investment 2014. Accordingly, organizations and individuals were permitted to provide debt collection services if they satisfied the conditions required by law.
However, from January 1st, 2021, when the Law on Investment 2020 took effect, Vietnamese law underwent a significant change by officially classifying debt collection services as a prohibited business line under Article 6 of the Law on Investment 2020.
Specifically, Article 6(1)(h) of the Law on Investment 2020 provides:
“Article 6. Prohibited business investment activities
1. The following business investment activities are prohibited:
…
h) Debt collection services.”
This prohibition was retained under Article 6 of the Law on Investment 2025, which took effect on March 1st, 2026.
Accordingly, “debt recovery companies” operating as debt collection service providers are no longer lawful in Vietnam. Establishing an enterprise to provide debt collection services or continuing to provide such services after the Law on Investment 2020 took effect constitutes a violation of Vietnamese law.
Although debt recovery companies operating debt collection service businesses are no longer lawful, it is important to distinguish that Vietnamese law only prohibits the business of debt collection services and does not affect the right of individuals or enterprises to seek payment of outstanding debts. Debt recovery itself remains lawful if carried out through lawful methods in accordance with Vietnamese law.
2. Why was Debt Collection Service prohibited?
Previously, although debt collection service was classified as a conditional business line, in practice the sector gave rise to numerous abuses and negative consequences, adversely affecting individuals, businesses, and public security and social order.
2.1. First, debt collection activities frequently gave rise to acts of intimidation, coercion, and infringements upon the lawful rights and interests of individuals and organizations.
Many debt collection service providers used inappropriate and coercive measures to pressure debtors into making payment within a short period of time, including:
- Repeatedly making phone calls or sending messages to harass debtors;
- Threatening or intimidating debtors or their family members;
- Gathering crowds at residences or business premises;
- Publishing personal information, images, or defamatory content;
- Applying pressure on the debtor’s customers, business partners, or relatives.
Such conduct may infringe upon the honor, dignity, reputation, privacy, and freedom of business of individuals and organizations.
2.2. Second, in many cases, debt collection activities adversely affected public security and social order.
Before debt collection services were prohibited, many debt collection incidents involved:
- Unlawful gatherings;
- Causing disturbances at residences or business premises;
- Using loudspeakers, banners, or images to exert public pressure;
- Blocking roads, premises, or obstructing business operations;
- Violent conduct.
These activities seriously disrupted public order in many localities.
2.3. Third, the sector was particularly vulnerable to abuse for unlawful purposes.
In practice, many organizations operated under the guise of debt collection companies to engage in unlawful conduct. Common violations included extortion, intentional infliction of bodily harm, destruction of property, unlawful entry into residences, and the illegal collection or use of personal informationn.
Debt collection services posed significant risks to society and proved difficult to regulate effectively in practice. Accordingly, Vietnamese law ultimately classified debt collection services as a prohibited business line in an effort to limit and prevent the negative consequences associated with such activities.
3. Do Debt Recovery Companies still exist today?
Debt collection service companies no longer lawfully operate in Vietnam. However, businesses providing debt recovery support through other lawful methods continue to exist.
Debt recovery companies operating as debt collection service providers are no longer lawful in Vietnam. Companies that previously operated in this sector were required either to cease operations or to transition into other lawful business lines or sectors.
Current Vietnamese law only prohibits the business of debt collection services and does not prohibit lawful debt recovery support activities. Debt recovery activities may still lawfully be carried out by law firms and asset management companies.
Accordingly, lawful debt recovery support businesses still exist in practice. However, creditors should remain cautious of individuals or organizations conducting unlawful debt collection activities under the guise of debt trading companies or law firms.
To minimize legal risks, creditors should carefully assess the operating methods, debt recovery measures, and legal status of any service provider before engaging debt recovery support services.
4. Lawful Debt Recovery Methods currently available
Within the framework of current Vietnamese law, individuals and organizations, particularly businesses, may consider the following lawful debt recovery methods:
4.1. First, negotiating directly with the debtor and sending formal payment demands.
Individuals and organizations may work directly with debtors to agree on payment arrangements and repayment timelines. At the same time, notices, communications, and payment demands should preferably be made in writing in order to document the parties’ course of dealings and preserve evidence in the event of a dispute.
4.2. Second, initiating legal proceedings before a competent court or arbitral tribunal.
Where a debtor refuses to cooperate or deliberately evades its payment obligations, commencing legal proceedings before a court or arbitral tribunal may become a necessary legal measure. Court judgments or decisions, as well as arbitral awards, serve as the legal basis for enforcement authorities to carry out enforcement procedures, thereby enabling creditors to recover outstanding debts in accordance with the law.
4.3. Third, engaging lawyers to assist with debt recovery matters.
Lawyers may assist in reviewing documents and evidence, developing recovery strategies, preparing legal correspondence, and participating in negotiations with debtors. In the event litigation or arbitration becomes necessary, lawyers may also assist in collecting evidence, preparing procedural documents, and representing clients in court or arbitration proceedings. In addition, lawyers may support enforcement procedures after a court judgment, decision, or arbitral award becomes legally effective. The involvement of legal counsel helps ensure compliance with the law and minimizes legal risks throughout the debt recovery process.
Individuals and organizations, particularly businesses, should choose debt recovery methods appropriate to each specific case, prioritize negotiation where possible, initiate legal proceedings when necessary, and consider seeking legal assistance in order to better protect their lawful rights and interests while minimizing legal risks.
5. Prohibited Debt Recovery Practices
During the debt recovery process, creditors must comply with applicable laws and avoid unlawful debt recovery practices. In particular, prohibited or discouraged debt recovery practices include the following:
5.1. First, threatening, intimidating, or using force against debtors or their family members
Any act involving threats, intimidation, psychological pressure, or the use of violence to compel payment constitutes a violation of law and may result in administrative penalties or even criminal liability.
5.2. Second, publicly disclosing personal information or damaging the debtor’s honor or reputation
Publishing personal information, images, or insulting content on social media or other public platforms for the purpose of pressuring repayment may infringe upon the privacy, honor, dignity, and reputation of individuals or organizations.
5.3. Third, hiring or instructing third parties to carry out unlawful acts to pressure payment
Engaging or requesting unauthorized individuals or organizations to carry out coercive or unlawful debt recovery activities may expose the creditor to joint legal liability in the event violations occur.
The use of unlawful debt recovery practices not only undermines the effectiveness of debt recovery efforts but may also give rise to legal liability for creditors.
6. Should Creditors Engage Debt Recovery Services?
Under the current legal framework, creditors should not engage debt recovery services provided by companies operating as debt collection service providers. Otherwise, creditors may face significant legal risks.
First, where a service provider commits unlawful acts during the debt recovery process (such as threats, unlawful coercion, or the disclosure of personal information …), and there is evidence that the creditor was aware of or participated in such conduct, the creditor may be exposed to civil liability for damages, administrative penalties, or, in serious cases, criminal liability.
Second, the use of inappropriate debt recovery methods may further escalate disputes between the parties, making the debt recovery process more complicated and time-consuming than anticipated.
Third, the use of debt collection services provided by unlawful debt recovery organizations may negatively affect a company’s reputation with business partners, customers, and regulatory authorities.
Instead of engaging unlawful debt recovery companies, creditors should prioritize lawful debt recovery methods, such as negotiating with debtors or initiating legal proceedings before a competent court or arbitral tribunal, either independently or through legal counsel, in accordance with applicable legal procedures.
Choosing safe and appropriate debt recovery methods not only helps individuals and organizations manage legal risks but also contributes to more effective and sustainable debt recovery outcomes.
In response to the question “Are debt recovery companies legal?”, it can be clearly affirmed that debt collection services have been completely prohibited under Vietnamese law since 2021. However, debt recovery itself remains lawful if carried out through methods that comply with applicable laws.
To ensure effective debt recovery while minimizing legal risks, creditors should carefully consider appropriate recovery strategies and may wish to seek assistance from legal counsel in order to better protect their lawful rights and interests throughout the debt recovery process.
Should individuals or organizations, particularly businesses, require specific advice on lawful debt recovery solutions or related legal issues, please contact TNTP for timely and legally compliant assistance.
Sincerely.
