Author: TNTP LAW

The debts of a business can arise from various entities in their business activities. However, the two main entities that may give rise to debts are individuals and legal entities. Distinguishing the characteristics of these two entities will help businesses come up with an appropriate debt collection plan. In this article, TNTP’s lawyer will present the differences between debt collection from businesses and debt collection from individuals.

1. Scale of debt

Business activities between companies often require larger capital and scale to meet the needs of business operations. Depending on each business field, contracts between businesses can range in value from a few hundred million to tens of billions of Vietnamese dong. Therefore, debts arising from contracts between businesses will also have a very large scale.

In contrast, transactions between individuals and businesses are usually related to equity participation or small retail sales, so the amount of capital contributed compared to businesses will be much smaller. Therefore, debts between businesses and individuals can range from several tens of millions to a few hundred million Vietnamese dongs.

2. The object of debt creation

For business debts, the object will be businesses that have business activities and are established under the provisions of the law. These businesses may be domestic or foreign with different scales. These businesses often have a clear operating address, operate as legal entities, act on behalf of themselves to conduct business activities, and are responsible for their assets. Debt collection with business entities is usually easier because creditors can easily look up information about the debtor business to carry out necessary activities.

For personal debts, individuals can be Vietnamese or foreign, living in Vietnam or abroad. Because the creditors are individuals, determining their personal information or address is often very difficult to access because such information is not publicly available and is strictly controlled by the police, leading to difficulties in carrying out debt collection measures.

3. Legal measures that can be applied

For debts owed by businesses, arising from contractual agreements within the civil sector, the business can negotiate payment through email, phone, or sending a request for payment letter. If the debtor does not cooperate, the creditor can file a civil lawsuit with the competent dispute resolution authorities to demand payment. Once a verdict, decision, or judgment has been issued by the dispute resolution authorities, the creditor can file a request for enforcement to the competent civil enforcement agency to take necessary measures to force the debtor to pay.

For individual debtors, the creditor can still perform all debt collection and civil lawsuit filing procedures as with debt collection from businesses. However, if it is determined that the debtor has committed fraudulent acts in the transaction, meeting the criminal offense conditions of asset misappropriation fraud or fraudulent acts, the creditor can send a complaint letter to the competent police investigation agency to initiate an investigation process. If there is enough evidence to verify the criminal behavior of the subject, the competent police investigation agency will initiate criminal proceedings, pursue, prosecute, and impose sanctions on the individual debtor according to the provisions of the law and compensate the business for damages.

Above is an article on the ” Difference between corporate debt collection and personal debt collection” by TNTP lawyer. Hopefully, this article is useful in the business operation process.

Best regards,

One of the most undesirable things for businesses during the debt collection process is when the debtor has committed to payment but does not pay on time. In addition to taking necessary collection measures, the business also needs to understand the reasons that can lead to delayed payments to take necessary actions to ensure their rights. In the following article, TNTP’s lawyer will provide reasons why the debtor may not pay on time.

1. Financial difficulties

This is perhaps the most common reason for a debtor’s not pay on time because business operations are intended to generate profits but also carry many unpredictable risks. If the debtor’s business does not generate enough profit after deducting necessary expenses, they will usually not be able to pay their debts.

Financial difficulties can arise from many reasons, such as natural disasters, disputes with other partners of the debtor, being penalized for not fulfilling tax obligations on time, or suffering losses due to business not meeting expected results. These reasons lead to the debtor not having a stable income to accumulate long-term debt repayment. At that point, the debtor will usually have enough funds only to maintain operations without the ability to repay debts.

When a business discovers that a debtor is facing financial difficulties, it should consider whether the debtor has the financial capability to repay the debt to take appropriate legal measures. Financial difficulties can push the debtor into a state of insolvency, which makes it very difficult for businesses to recover their debts.

2. The debtor has too many debts to pay off.

It is normal for a debtor to have multiple debts from different creditors in business operations. Typically, the debtor will have to balance the costs to prioritize paying off the creditors they feel are most in need of payment. The prioritized creditors may include:

• Creditors who are important partners of the debtor
• Creditors who have taken debt recovery measures that have caused inconvenience to the debtor
• Creditors who have exerted significant pressure on the debtor’s operations

In contrast, debts that the debtor typically tries to extend as long as possible may include:

• New debts (less than 6 months old)
• Small debts (less than 10 million VND)
• Debts that the creditor has not requested payment for
• Debts of creditors who are legal entities that have been dissolved or bankrupt

It can be seen that having many debts as a debtor is quite normal. However, the priority order for payment by the debtor will vary depending on the debt and whether the creditors are resolute in debt recovery. Therefore, for the debtor not pay on time, the creditor needs to take necessary and resolute debt recovery measures to create pressure on the debtor to pay on time.

3. Inability to Pay by the Debtor

This is the case where the debtor is unable to maintain its operations due to difficulties in its business activities. As a result, the company will no longer be able to generate profits or be able to pay its debts. This is the worst-case scenario for debt collection because the debtor is no longer able to pay any amount of money to the business.

Extended periods of unprofitable business or a crisis that causes the debtor to suffer irrecoverable losses often lead to a situation where the debtor is unable to pay. This is why creditors must always take action to review, check, and contact debtors, even when they are still operating stably, to assess their ability to pay and prepare necessary contingency plans if signs of inability to pay begin to emerge.

For debtors in this situation, creditors need to quickly initiate legal proceedings with competent dispute resolution agencies to request payment from the debtor. Once there is a legally effective ruling, judgment, or decision, even if the debtor is unable to pay, the creditor can still submit an application for enforcement to the competent civil enforcement agency to request the enforcement of the debtor’s assets and accounts by force to serve the process of debt collection. At that time, the enforcement agency will carry out necessary activities in accordance with legal regulations to force the debtor to fulfill its obligation to pay the debt.

The above is an article on the topic ” The reason why the debtor not pay on time” by TNTP lawyer. Hopefully, this article will be beneficial to businesses in debt collection activities.

Best Regard,

When conducting debt collection activities, in some cases where negotiation solutions do not yield results, or when the debtor does not cooperate in payment, the creditor may consider applying Legal measures to recover the debt. In the following article, the lawyer of TNTP will provide the legal measures commonly applied when collecting debts, for businesses to refer to in their debt collection process.

1. Complaint to the competent tax authority

In some cases, when the debtor no longer operates at the registered address with the competent state agency, the business may file a complaint with the tax authority managing the debtor. According to the law, if the business changes its registered office address without notifying the competent tax authority, it may be subject to administrative fines, and in some cases, the tax authority has the right to suspend the tax code of the debtor. This is a very effective pressure measure if the debtor intentionally avoids changing the operating address without notifying the business.

Upon receiving the Complaint from the business, the tax authority will establish a task force to conduct initial verification of the debtor’s registered office address. The task force will include tax officials at the competent tax authority, combined with the district-level People’s Committee and the competent local police agency where the debtor has registered their address. After verifying that the debtor is no longer operating at the registered address, the verification team will prepare a Verification Report stating that the taxpayer is not operating at the registered address.

Once there is a Verification Report that the debtor is no longer operating at the registered address, the tax authority will issue a Notice stating that the taxpayer is not operating at the registered address. Accordingly, on the content of the information page of the General Department of Taxation, the debtor will be recorded in the state as “Taxpayers not operating at the registered address.”

When the debtor is in the state of “Taxpayers not operating at the registered address”, it will lead to the following consequences for the debtor:

• The debtor’s invoices will no longer be valid and the buyer cannot use them for declaration, deduction of VAT;
• The tax authority will not receive the notification file for issuing invoices from the taxpayer who has informed the tax authority that they are not operating at the registered address;
• The organization providing the e-invoice solution will be notified in case the taxpayer informs through the intermediary system of the e-invoice solution provider to stop issuing invoices.
• Compulsory tax debt as prescribed by law.

2. Proceed with filing a lawsuit at the competent authority to settle the dispute

This is a measure taken when the enterprise has carried out negotiation measures but has not achieved results or the debtor is not willing to pay the debt. At that time, the enterprise will start the process of filing a lawsuit as follows:

a) Submit a lawsuit application to the competent authority to settle the dispute.

According to the law, there are currently two authorities to settle disputes: the Commercial Arbitration Center and the People’s Court with jurisdiction.

The condition for the enterprise to initiate a lawsuit at the Commercial Arbitration Center is that the dispute must arise from commercial activities and the parties must agree to arbitration in the contract that they have signed, choosing the Commercial Arbitration Center to resolve any disputes that may arise during the contract execution process.

For the selection of the court, the enterprise must based on the content of the Civil Procedure Code file the lawsuit application to the court with jurisdiction to settle the dispute.

b) Procedural stage

After submitting the lawsuit application and accompanying documents to the dispute resolution authority, the authority will guide the enterprise to proceed with the next procedures, including reconciliation, dialogue, and participation in the trial session. In the case of a trial, the Commercial Arbitration Center will issue an arbitration award, while the court will issue a decision or a legally effective judgment (if not subject to appeal or protest as stipulated in the Civil Procedure Code).

c) Judgment execution stage

When the dispute resolution authority has issued an arbitration award, decision, or legally effective judgment, the enterprise can apply to enforcement to the competent authority to request the enforcement authority to carry out necessary legal measures, including seizing assets and bank accounts of the debtor until the debtor fulfills the debt obligation.

The above is the content of the article by the lawyer TNTP on “Legal measures often applied when collecting debts”, hope that this article is useful in the debt recovery process of enterprises.
Best regards,

What to do when the debtor has conditions but does not pay the debt?

One of the problems that make businesses “headache” during the process of debt collection is when the debtor has enough conditions but ignores or does not pay the debt. What should the creditor do to protect their legal rights and interests? In the following article, TNTP will provide an overview of what the creditor can do when the debtor has conditions but does not pay the debt.

1. In case the debtor is an individual

If lending money, or assets between a business and an individual is a civil transaction that is not contrary to the law, then if the debtor does not have a good faith attitude towards payment when due, even if they have enough conditions, the business can consider filing a lawsuit at the competent dispute resolution authority such as the Court or the Commercial Arbitration Center to request these agencies to settle according to the provisions of the law. After the case has been resolved and the business has received a Judgment/Verdict/Decision from the Court or the Commercial Arbitration Center, they can proceed to submit an Application for enforcement of the judgment to the Civil Enforcement Agency with jurisdiction to apply legal measures to compel the debtor to perform their debt payment obligation.

In addition, in the case of an individual borrower who has enough financial capacity but intentionally does not pay the debt, they may also be prosecuted for the crime of Misappropriation of Property under Article 175 of the Criminal Code. According to the provisions of the Criminal Code, if someone borrows, or rents property but intentionally does not pay money or property at the agreed repayment deadline, this may be considered fraudulent behavior and depending on the degree of severity may be subject to criminal prosecution.

Thus, if the business encounters the situation of an individual debtor not paying the debt even when they have enough conditions as described above, they can consider filing a civil lawsuit against the competent dispute resolution authority. In case the business believes that the case may be serious, they can submit a Report of crime denunciation to the competent police investigation agency to report on the criminal act of the perpetrator.

When receiving the report of crime denunciation, the police investigation agency will conduct an investigation. If there is enough evidence to determine that an individual or legal entity has committed a crime as provided by the Criminal Code, the investigation agency will decide to initiate a criminal case and initiate prosecution of the accused. The investigation, prosecution, and trial of the criminal case will be conducted according to the provisions of the law.

2. If the debtor is a legal entity

According to the provisions of the Criminal Code, the crime of Abuse of Trust for misappropriating property as stipulated in Article 175 of the Criminal Code only applies to individuals. Therefore, in the case where the debt arises from an agreement/contract between two legal entities and the debtor does not cooperate to pay the debt despite having the ability and conditions to do so, the business can only file a lawsuit against the competent authorities to resolve the dispute and request a settlement under the provisions of the law.

In this case, when filing a lawsuit to the competent authorities to resolve the dispute, the business needs to submit a Petition for Filing Lawsuit clearly stating the demand for the debtor to pay the debt, along with the documents and evidence proving their claim, such as the Contract/agreement; Debt reconciliation document; Invoice; Payment confirmation,… If the documents and evidence provided by the business meet the conditions for accepting the case, the dispute resolution agency will proceed to resolve the case and issue a legally effective Judgment/Verdict/Decision (if not appealed or protested).

After obtaining a legally effective Judgment/Verdict/Decision, the business can submit a Petition for Enforcement of Judgment to the competent enforcement agency. At that point, the enforcement agency will use state power to take enforcement measures such as sealing the debtor’s property, and bank accounts if the debtor does not fulfill the obligation to enforce the judgment under the provisions of the law; compulsory seizure of property, accounts, and restrictions on leaving the country for those who have an obligation to ensure the enforcement of the judgment,… Then, the debtor’s obligation to pay the debt to the business will be ensured to be carried out under the provisions of the law.

Above is the article on the topic: “What to do when the debtor has conditions but does not pay the debt?” by TNTP. Hopefully, this article is useful in the activities of businesses.

Sincerely,

In debt recovery operations, businesses may encounter situations where the debtor is no longer operating at the registered address. In this case, the business will have difficulties in the debt recovery process, and many businesses may even stop the debt recovery process because they believe that they cannot continue to collect the debt. TNTP will analyze and provide methods and procedures that businesses need to follow when the debtor is no longer operating at the registered address.

1. Is it difficult to collect debts when the debtor is no longer operating at the registered address?

The registered address is an important piece of information to determine the location and operations of the debtor, as well as the basis for verifying the debtor’s operating status. In the case where the debtor is no longer operating at the registered address with the competent authority, it may be due to one of the following reasons:

• The debtor has changed their registered address without notifying the competent authority to update the national portal on business registration.

• The business is no longer operating or has temporarily suspended operations but has not notified the competent authorities to update the information.

• The debtor only declares a “fake” registered address to complete the registration process with the competent authority, while operating at a different address.

In reality, many debtors do not disclose their operating address or change their address without notifying the authorities to avoid their debts from their creditors. Therefore, businesses that cannot determine the actual address of the debtor will have difficulties in taking debt recovery measures such as contacting to exchange, urging, and requesting the debtor to pay through official letters or directly exchanging to request payment.

2. How do companies recover debts from longer active debtors at registered addresses?

It can be seen that failure to determine the exact address of the debtor will create difficulties in implementing debt recovery measures. However, companies can still carry out necessary tasks to serve debt recovery as follows:

a) Complaint to the tax authority managing the debtor

According to the provisions of the law, each company must pay taxes according to regulations while operating, and tax collection will be directly managed by authorized tax agencies according to the corresponding administrative boundaries. Therefore, in case a company identifies that the longer active debtor is not at the registered address, it has the right to complain to the competent tax agencies about the longer active debtor at the registered address.
After receiving the information, the competent tax agencies will carry out initial verification tasks regarding whether the debtor is still operating at the registered office address. In case the tax agencies have sufficient basis to verify that the debtor is no longer operating at the registered address without notifying to update information on the change of the office address, they may be administratively sanctioned, or even have their tax identification number revoked. Closing the tax identification number will make the debtor unable to perform tasks such as tax payment or invoice issuance, in other words, it will seriously affect the debtor’s operation process. If the debtor wants to restore their tax identification number, they will have to contact the competent tax agencies to restore the tax identification number and pay related costs, as well as provide an accurate office address to prove their operation. Therefore, this is an effective measure to handle longer active debtors at registered addresses.

b) Initiating legal proceedings against the debtor at the competent court

When it is not possible to contact and verify the address of the debtor, the business can still initiate legal proceedings at the court. In this case, the business can request the court to assist in verifying the address of the debtor through competent authorities. As the court is a judicial agency, requesting competent authorities to verify the debtor’s address will ensure a faster process than if the business were to request state authorities to verify the debtor’s information on their own.

Legal proceedings at the court will be carried out according to the provisions of the Civil Procedure Code. The business needs to provide sufficient information and documents to prove its claim for debt recovery, as well as evidence that they have taken all measures to verify the debtor’s address but has not obtained any results, as a basis for requesting the court’s assistance in verifying the debtor’s address.

After the court has performed the tasks to assist the business in verifying the debtor’s address, but no results have been obtained, the court will still proceed with the litigation process according to the provisions of the law to issue a legally effective Decision/Judgment. Even if the debtor does not participate in the litigation process, they will still be responsible for paying the debt to the business.

After the Decision/Judgment of the court becomes legally effective, the business can request the competent authority to carry out the enforcement stage. At this point, the competent enforcement agency will act on behalf of the state to take necessary measures to verify, and seal the accounts, assets, and account information of the debtor, forcing them to fulfill their obligation to enforce the Decision/Judgment.

The above is an article on the topic of “What to do when the debtor is no longer operating at the registered address?” by TNTP. It is hoped that this article will be helpful in the debt recovery process for businesses.

Sincerely,

In the context of the economy gradually recovering after the difficult period of the Covid-19 pandemic, businesses are not only focusing on their operations but also on the process of debt recovery to ensure their financial sources. However, during the debt recovery process, businesses may encounter cases where the debtor is no longer able to repay the debt. What should be done to ensure the best cost and efficiency in debt recovery? In this article, TNTP will provide its opinion to answer the question.

1. Classification

A business is determined to be unable to repay the debt when it is no longer able to maintain its operations, does not generate revenue, and thus cannot have a source of money to pay the debt. Businesses that are no longer able to pay their debts can be divided into two groups:

• Group of businesses that are temporarily suspended
• Group of businesses that are still operating but not generating revenue

Verifying the status of a business to determine whether it is temporarily suspended or still operating can be done through the Taxpayer Information Lookup portal or the National Business Registration Portal. Knowing which group the debtor belongs to will affect the choice and implementation of necessary measures, so businesses need to verify the debtor’s operating status before proceeding with legal measures to recover the debt.

2. Case of the debtor’s temporary suspension of operations

A business’s temporary suspension of operations is a state where the business has notified the competent management agency of its decision to suspend all operations for a certain period. During this time, the business will not conduct any business activities, will not generate revenue, and will not have to submit tax declarations. However, after some time, the suspended business can perform procedures to resume its operations.

Therefore, if the debtor of a business is currently in a state of temporary suspension of operations but may have the ability to operate in the future, the business may consider initiating legal proceedings at the competent dispute resolution agency, which may be the Commercial Arbitration Tribunal or the Court with jurisdiction, to demand that the debtor fulfill its payment obligations.

After the competent dispute resolution agency has issued a legally effective Judgment/Ruling/Decision, the business can submit a request for enforcement of this Judgment/Ruling/Decision. The enforcement will be carried out by the competent civil enforcement agency using state power to force the debtor to make the payment. Even if the debtor is in a state of temporary suspension of operations, the enforcement agency will take necessary measures to contact and require the debtor to make a payment or provide a specific payment plan. In case the debtor is no longer able to pay, the enforcement agency will verify, enforce, seal off assets, and bank accounts, and may take measures to influence the legal representative such as issuing a Decision to temporarily prohibit leaving the country to ensure the enforcement process.

3. The case where the debtor is still in active status but has lost the ability to pay

In the case where a business looks up information on the Taxpayer Information Portal or the National Business Registration Portal and sees that the debtor’s status is still active. However, in reality, the business determines that the debtor is no longer operating and has lost the ability to pay debts. In this case, the business can submit a Petition for Bankruptcy Declaration as prescribed in the Bankruptcy Law.

According to the provisions of the Bankruptcy Law, if the debtor does not make payment when due for more than 03 months, the creditor has the right to file a Petition for Bankruptcy Declaration with the debtor along with relevant documents and evidence. Then, the competent court will consider the contents of the case to issue or not to issue a Bankruptcy Declaration.

After issuing the Bankruptcy Declaration, those who carry out the bankruptcy procedures such as the court enforcement agency, the administrator, the chief judge, the judge, and the prosecutor’s office will proceed to verify and evaluate all remaining assets of the debtor for asset liquidation. Accordingly, the debtor is obliged to fulfill tax obligations, financial obligations to the state, and outstanding debts with assets owned by the debtor. Moreover, after the court has issued the Bankruptcy Declaration, all transactions aimed at transferring the debtor’s assets to another third party will be considered invalid to ensure the process of fulfilling the debtor’s asset obligations during the bankruptcy procedures. Therefore, after the debtor has undergone bankruptcy procedures, the business will receive the loan amount back in case the debtor’s assets are sufficient to fulfill the debt repayment obligation.

Above is an article on the topic “What to do when the debtor is no longer able to pay?”. We hope this article will be useful in the debt recovery process for businesses.

Best regards,