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Author: TNTP LAW

Average time for debt collection

“How long does it take to recover the debt?”, this is the question that many individuals or organizations ask when having difficulty because the debtor does not pay. It is not easy to give an exact answer about the guaranteed time to fully recover a debt. However, in the following article, TNTP will give the average time to debt collection based on our experience in debt collection.

1. Debts which are recoverable under 1 year

The condition for a debt to be recoverable in one year is that it must be a debt that the debtor is able to pay and has a good faith to pay. This is extremely important, because the debt collection process can only be done quickly when the debtor is willing to pay the debt and has enough assets to make this payment.

The debtor’s solvency depends on their financial situation, in case the debtor has good financial capacity but has too many debts to pay at once, usually the creditor having a stronger impact will be “priority” to be paid by the debtor.

However, to ensure that the debt can be recovered in a short time, as soon as it is determined that the debtor still has assets, or is currently able to pay, the creditors should immediately take measures to recover the debt. such as calling, sending official letters, or meeting in person to discuss and request the debtor to fulfill the debt payment obligation. If the creditor does not influence the debtor at these “golden” times, the debt collection period may be prolonged or the debtor is no longer able to pay, leading to the debt becoming more difficult to recover.

2. Debts with a recovery period of 3 to 5 years

These are difficult for debt collection when the debtor is almost unable to immediately pay the entire debt. The reason is usually due to the current debtor’s financial capacity which is no longer able to pay the creditor, or the debtor has too many debts and no longer has enough money to pay the creditor. In addition, it is possible that the creditor’s debt has generated interest, but the debtor has not fully paid the principal, leading to the prolonged interest.

In these cases, the solution for this case is to file a lawsuit with a competent agency such as a Court or an Arbitration Center to be able to use the power of the state to force the debtor to perform its payment obligations. The process from filing a lawsuit to enforcement can take anywhere from 3 to 5 years depending on the value of the debt, financial resources, or remaining assets of the debtor.

3. The debtor is unable to pay the debt.

This is the worst-case scenario that creditors never want, when the debtor is insolvent, meaning the debt will never be able to be paid in full, or not be paid, leading to the creditor will lose his loan forever. Usually this happens when the debtor’s finances are no longer available to pay, or the debtor has gone bankrupt, dissolved, suspended operations, and do not generate any additional revenue or assets to pay the debt.

However, the debtor’s insolvency usually does not occur in the first time when lending, the debtor’s insolvency usually occurs only when the creditor does not take measures to collect the debt, not long-term contact with the debtor. Therefore, if the creditor regularly takes measures to monitor and understand the financial capacity of the debtor, as well as regularly reminds the debtor to make debt payment, it is completely possible to take necessary measures. to avoid the situation where it is too late when the debtor becomes insolvent and has no assets to repay the debt.

In case the creditor has sufficient grounds to determine that the debtor is still able to pay but deliberately fails to make the payment, or intentionally evades to not pay the debt, the creditor has the right to make a criminal denunciation about the crime of “abuse of trust to appropriate property” to the competent investigating police agency. At that time, the investigating police agency will take professional measures to determine the debtor’s illegal behavior in case the investigating police agency determines that the debtor has committed the act that a violation the law and infringing upon the interests of creditors.

The debtor will be prosecuted and tried in accordance with the Criminal Procedure Code. At that time, the debtor will be forced to fulfill the obligation to pay the debt to the creditor along with the sanctions in accordance with the provisions of the Penal Code.

Above are the sharing of TNTP about the average time to collect debts. Hope this article is useful to the readers.

Best regards.

What is the debt collection service?

Bad debts greatly affect the company’s financial resources. These debts can be in form of the payment that the purchasing partner does not make in due course, or the money to perform the service under the contract, etc., and when the partner refuses to make the payment, it will cause the company’s cash flow to be in deficit, which even directly affects the company’s business strategy. Therefore, the debt collection service is a solution to solve the above problem.

1. Reasons why many companies cannot resolve bad debts – debt collection by themselves

In fact, many companies encounter the bad debts situation but fail to solve this problem due to the lack of experience and professional debt collection methods. Some “traditional” debt collection methods are: Making a written request to debtors for payment; sending an employee or an accountant to negotiate and request payment on behalf of the company; Requesting the competent authority to resolve the problem, etc.

In general, without professional skills, the debt collection’s results are rather unsatisfactory, leading to the prolonged debts because:

  • Unprofessional debt handling staff
  • Lack of skills to prepare and complete debt collection documents in favor of companies
  • Debt collectors do not have experience in communicating, handling and negotiating with debtors
  • Lack of legal understanding and understandings of regulations in debt collection to acknowledge and secure the company’s rights.

2. What is the debt collection service?

The debt collection service means a service where a third party takes on requesting the debtor to pay the creditor for due/overdue amounts and other assets under the signed contract or upon the agreement between the creditor and the debtor or under a decision of a competent State agency.

Debts may inevitably arise in the course of business operations of each company. In fact, when having outstanding debts, companies have to carry out the procedures through arbitration and court, which take a long time and high costs. Only 36% of the cases are received, which is rather low based on the total number of cases. Moreover, even if the effective judgment is issued, the execution in reality is rather challenging, etc. Therefore, the debt collection service is often used by many companies and individuals thanks to its  convenience, efficiency and reasonable cost.

3. Debt collection stages

 a) Debt collection via negotiation

It is a form of debt collection by influencing debtors psychologically and emotionally but still ensures a good relationship with customers at the same time.

This is the first step of debt collection, whereby companies rely on the contract/agreement terms signed between the parties to force the debtor to fulfill the debt repayment obligation. Negotiation is primarily proceeded by the company employees, accounting or corporate legal departments. If such negotiation is not effective, company can use the debt collection services provided by law firms.

b) Debt collection via dispute settlement agencies

In case the debtor is not willing to pay the debt, companies may base on the content of the contract/agreement to select an appropriate dispute settlement agency. Dispute settlement agencies include: Courts and Commercial Arbitration.

The settlement at a dispute settlement agency often comes with costs in accordance with the law and requires careful preparation of records, documents and evidence to prove that the companies’ claim is grounded. In addition, depending on the complexity of the debt-related transaction, the time for debt collection may vary from a few months to many years.

While debt collection through dispute resolution agencies can be costly and time consuming, it is guaranteed by state authority. If the judgment takes into effect, it will force the debtor to make the payment. If the debtor is uncooperative, the competent judgment enforcement agency will use the state power to take appropriate legal measures to force the debtor to pay the debt, even to coerce or freeze the debtor’s assets and accounts to force the debtor to perform their obligation.

Debt collection is very important, not only to ensure the financial health and profits of organizations, individuals, and companies, but also to determine the survival of the business. After the economy has just gone through a difficult time due to the prolonged impact of the Covid pandemic, the debt collection matter becomes more urgent for companies and individuals when the cash flow is becoming exhausted and can even cause the companies to go bankrupt. Therefore, the debt collection service is now an extremely important and necessary solution to solve the debt problem.

Above is an analysis article about the debt collection service of TNTP, hope this article is useful to readers.

Sincerely,

What should a content of debt collection letter should contain?

Debt recovery is a necessary step to ensure the financial resources of the enterprise. Accompanying the necessary activities to force the debtor to pay, the enterprise also needs to send debt collection letter with clear content and can facilitate the debt recovery stage period later can achieve the best results. Let’s find out with TNTP in the following article.

1. Summary of the case

Before starting to offer the debtor to pay, the enterprise needs to clearly present the content from the beginning of the contract/agreement to the arising of the current debt. This is very necessary in case a debt has been protracted and the parties do not regularly exchange and reconcile debts, because each party has many different partners and customers, so the detailed management of debts, as well as the amounts incurred and deducted, if not listed in full and in detail, it may lead to confusion about the amount required by the debtor to pay.

At the same time, the summary, and statistics of the entire process of contract performance as well as debt arising easily bring the goodwill of the debtor when realizing that the other side has had details and clarity in requesting payment.

2. Provide specific and accurate data with evidence

A debt collection letter but giving figures without evidence will hardly have any value to make the debtor “concern”. One of the important principles is that when giving any money, enterprise need to provide enough information and documents to ensure accurate and grounded data. The fact that the enterprise makes a payment request with sufficient grounds for payment, as well as with clear evidence, will prevent the debtor from giving reasons for refusing the payment or reasons for not admitting it. In addition, giving full information and data of the debt also helps the debtor to easily compare their data, thereby helping the debtor to make the payment without taking much time to re-check the debt.

3. Provide a timeline to request the debtor to pay

In a dialogue, when one party has asked a question, the other party must also respond or respond before the two parties can actually conduct the exchange. Similarly, in the case of a business sending a debt collection letter with the purpose of asking the debtor to pay, it will also need the debtor to also have a specific response. But in debt situations, the debtor will often take a “silent” attitude or try to prolong the response time as long as possible to delay payment of the debt. Therefore, in a debt collection letter, there must be a specific timeline to request the debtor to give a response, or to make the payment of part or all of the debt value. Giving a specific time will make the debtor be forced in terms of time and at the same time help the creditor be proactive in terms of time instead of passively waiting for the cooperative attitude with the unfaithful debtor. payment.

4. Take necessary legal measures if the debtor fails to pay on time

In order for the enterprise’s debt collection letter to have weight, in addition to the content of the request must be clear and precise, the enterprise must also show pressure on the debtor when giving a specific time to force the debtor to have to pay. And informing the debtor that the business will absolutely take the necessary legal measures is a must.

Legal measures include: Sending a Complaint to a competent dispute settlement agency; or use debt collection services from law firms. These are measures to ensure the provisions of the law and have a deterrent value, forcing the debtor to consider and under pressure if he does not pay in full and on time.

Initiating lawsuits at competent agencies will ensure the rights and interests of enterprises when agencies can use state power to force debtors to perform payment obligations. At that time, in addition to pressure from creditors, the debtor will have to face state power and be forced to choose to properly perform its payment obligations or will be subject to sanctions in accordance with the law.

If enterprise use professional debt collection services from law firms, it will also bring a lot of benefits and even help save time and costs to collect debts. Law firms with a team of knowledgeable lawyers can conduct negotiation or other legal measures much more effectively than enterprise conducting debt collection on their own.

Above are TNTP’s advice on what enterprise need in a debt collection letter. Hope the above content brings value to enterprise.

Provide evidence when resolving contract disputes in court

Evidence and proof are both rights and obligations of the parties when resolving contractual disputes in court. Litigants have the right to actively collect and hand over evidence to the Court, not to prove that their lawsuit request is valid just and legal.  In this article, TNTP will mention and analyze some documents and evidence that businesses need to provide when resolving contract disputes in Court.

1. Group of documents on the legal status of the subject – Legal entity records

The group of documents on the legal status of the subject is the first type of document that needs to be collected and studied when participating in the settlement of contract disputes at the Court. In particular, legal entity records are mandatory evidentiary documents, which have a general meaning of the legal status of the parties in the disputed relationship and prove the litigant’s status and the enterprise’s legal representative when participating in the proceedings.

The legal entity profile of each enterprise is not the same because it depends on the type of business, business lines, etc. but consists of the following documents:

  • Certificate of business registration.
  • Charter
  • Investment certificate (for enterprises, an investment certificate is required by the provisions of law).
  • List of capital contributors for limited liability companies, partnerships, and register of members for joint stock companies.
  • The power of attorney of the legal representative of the enterprise and the authorizations of shareholders and owners in the enterprise (if any).
  • Certificate of registration of tax code and customs code.
  • Account number of the enterprise at the bank, seal form and signature form of the chief accountant, and power of attorney if any.

Attached to the legal entity dossier are documents and records proving the legal status of the representative of the enterprise participating in the proceedings such as identity card/citizen identity card/passport.

2. Group of documents and evidence related to the process of entering into contracts

  • Contracts are legal corridors in the process of civil and commercial transactions. For settlement of disputes related to contracts, including but not limited to disputes over invalid contracts; disputes over the terms of the agreement on rights and obligations; disputes over the contract term, etc. the contract that the parties have signed is a key document for the agency conducting the proceedings to delineate the trial, based on the content of the rights and obligations agreed upon by the parties.
  • In case the parties sign multiple contracts to agree on the implementation of a commercial relationship, the enterprise only needs to provide a contract containing the disputed relationship. In case the parties sign subcontracts, and contract annexes attached to the main contract, the enterprise provides both subcontracts and annexes to the accompanying contract.
  • Besides the main object of the contract, documents related to the process of entering into a contract should also be reviewed and collected as it relates to the existence, and validity of the contract, how to understand the contract and the practice of entering into it. Some documents can be listed such as Power of Attorney, Memorandum of Understanding, Letter of Request, etc.

3. Group of documents and evidence related to the contract performance process

  • Accounting for the majority of disputes from or related to contracts are disputes arising during the performance of contracts by the parties. Accordingly, records and documents that the parties store and exchange during the performance of the contract are valid for verifying the exercise of rights and obligations of each party in the contractual relationship. However, depending on the type of contract and the way the contract is performed, documents and evidence related to the contract performance process are often a group of documents that are not focused on establishing and backing up. This omission, whether derived from objective causes or subjective reason, is detrimental to the dispute settlement process due to insufficient grounds to prove and validate the performance of each party’s rights and obligations or verify whether there is a breach of contractual obligations.
  • Depending on the contract type, the contract’s performance will be accompanied by different documents. In addition to the legal documents required to be established during the performance of the contract such as acceptance minutes for construction contracts, and documents related to goods for contracts for international sale and purchase of goods; To proactively prevent disputes arising from contracts, each party in the process of contract performance needs to complete a system of documents and documents verifying the performance of specific rights and obligations.
  • The determination of evidence and the handover of evidence when settling contract disputes at the Court must be based on the basic principles specified in Articles 94 to 97, Chapter VII of the Code of Civil Procedure 2015.

Above is the article “Provide evidence when resolving contract disputes in court”. We hope this article is useful to you.

Respect.

Techniques for drafting a rental contract

According to the development trend of society, capital and labor will be concentrated in large urban areas, which leads to the increasing demand for housing of individuals, households and businesses. However, when entering into a rental contract, the parties often do not anticipate possible risks and lacks of the important agreement and necessary provisions, leading to the parties’ interests not being guaranteed. In this article, TNTP will provide readers with some issues to keep in mind when drafting and reviewing rental contracts.

1. Determine the authority of the lessor

  • One of the most important issues that the lessee needs to determine before entering into a tenancy agreement is who has the authority to perform the lease. In order to determine whether the lessor has the right to lease the house, the lessee should ask the lessor to provide documents proving the lessor’s right to lease such as the certificate of land use right, house ownership, residence and other properties attached to the land; Tenancy agreement with a third party; Certificate of business registration; Authorization letter; …
  • For individuals, the lessor’s contract signatory can be the owner or an authorized representative. The lessee should note that in case the house is owned by more than one person, the signatures and personal information of all co-owners are required. For example, a house that is a common property of a husband and wife or a household must have full signatures and personal information of all members of the co-owner.
  • For legal entities, the lessor can sign the contract of the lessor as the legal representative or the authorized representative. At the same time, the lessee needs to determine whether the leasing legal entity has the right to lease the house (in the business line). Because only when the business line has the real estate business, it has the right to rent houses, except for the case of small-scale and irregular real estate rental organizations, it is not necessary to have a business line of: real estate business. Cases considered as small-scale and irregular house rental specified in Article 5 of Decree 02/2022/ND-CP include:

i) House rental is a public property.

ii) Lease house, land use right under their lawful ownership.

iii) Renting out houses built by them but not real estate investment projects for business. In particular, construction investment activities are specifically explained in Clause 20, Article 3 of the Law on Construction 2014 as follows: “20. Construction investment activities means a process of conducting construction activities including construction, repair and renovation of a construction work”

2. Information about rental houses

The rental contract should clearly state information about the rental house such as address, usable area, etc as well as the condition of the house and accompanying equipment.

3. Purpose of renting

Because the purpose of renting a house is quite diverse, the parties need to specify a specific and clear rental purpose such as renting a house to live in, renting for business, renting as a warehouse, etc.

4. Rental contract period

The contract should clearly state how long the lease is, when the contract begins and when it terminates, when it is handed over and when to return the house. The parties should also clearly agree in the contract on the extension of the rental period (if any).

5. Rental price

The parties should stipulate the rental deposit level and the conditions for receiving the deposit back after the contract is terminated. The lease contract should clearly stipulate the rental price, the obligation to pay the rent and the payment of fees incurred during the use period, including taxes and fees as prescribed by law and electricity, water, environment, etc. Beside, the lessor also needs to stipulate the method of handling when the lessee does not pay the rent, taxes and fees in full and on time such as unilateral termination of the contract, and how to handle it. equipment of the lessee in case of unilateral termination of the contract, etc.

6. Cases of unilateral termination of the rental contract

The parties can refer to the provisions of law to stipulate in the contract the cases of unilateral termination of the contract. According to Article 132 of the Law on Housing 2014, during the lease term as agreed in the contract, the lessor may not unilaterally terminate the lease contract and withdraw the house being leased, except in the following cases:

  • The lessor lease out the state-owned houses or social houses ultra vires and not satisfying requirements as prescribed in this Law;
  • The lessee has not paid the rent for 3 months or more without reasonable explanation;
  • The lessee uses the house for improper purposes as agreed in the agreement;;
  • The lessee expands, renovates, or demolishes the house under lease agreement without the consent of the homeowner;
  • The lessee exchanges, lends, sublets the house under lease agreement without consent of the lessor;
  • The lessee still creates disorder or breaches hygiene an environment conditions causing negative effects on activities of the neighborhood although he/she is warned for the third time by the lessor or the chief of neighborhood, the chief of village;
  • If the lessor renovates the house with consent of the lessee although the lease term does not expire, the lessor is entitled to adjust the housing rents. The new rent shall be agreed by contracting parties; if not, the lessor is entitled to unilaterally terminate the lease agreement and pay compensation to the lessee as prescribe

7. Obligations of the parties when unilaterally terminating the contract

The parties may consider stipulating the following contents in the contract:

  • Penalties when one party unilaterally terminates the contract not according to the provisions of law and not according to the provisions of the contract.
  • Time to notify the other party of the termination of the contract.
  • Refund of rent.

Above are the tips of TNTP when drafting and reviewing the rental contract. Hope this article was useful to you.

Best regards.

TNTP & ASSOCIATES INTERNATIONAL LAW FIRM

  • Office in Ho Chi Minh City:
    Room no. 1901, 19 th Floor Saigon Trade Center Tower, No. 37 Ton Duc Thang Street, Ben Nghe Ward, District 1, Ho Chi Minh City
  • Office in Hanoi City:
    No. 2, Alley 308 Tay Son str, Thinh Quang Ward, Dong Da Dist, Hanoi City
  • Email: ha.nguyen@tntplaw.com


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