Debt collection procedures of finance companies in accordance with the law

10 October, 2026 | TNTP LAW | Debt collection

In consumer lending activities, debt collection is a critical process that enables finance companies to recover outstanding debts, control non-performing loans, and maintain safe and sustainable operations. However, debt collection must not only be effective but also strictly comply with applicable legal regulations governing debt reminder methods, permissible contact hours, customer information confidentiality, and the protection of borrowers’ lawful rights and interests. In this article, TNTP analyzes the debt collection procedures of finance companies in accordance with the applicable laws and highlights key legal considerations for conducting debt collection in a lawful and effective manner.

1. What is debt collection by a finance company?

Debt collection by a finance company is the process of implementing operational and legal measures to require borrowers to fully perform their payment obligations under a credit agreement or consumer loan agreement. This process includes monitoring the status of the loan, sending pre-due payment reminders, following up on overdue debts, negotiating repayment arrangements, enforcing security interests or collateral (if any), and taking legal action to recover outstanding debts when the borrower fails or refuses to cooperate.

Debt collection by finance companies is a lawful business activity carried out within the framework of applicable laws and governed by various legal instruments, including the 2015 Civil Code, the 2024 Law on Credit Institutions, and regulations issued by the State Bank of Vietnam on consumer lending and debt recovery.

Although both aim to recover outstanding loans, lawful debt collection by finance companies is fundamentally different from unlawful debt collection practices. Finance companies may only adopt debt collection measures that are expressly permitted by law while respecting borrowers’ lawful rights and interests. Conversely, acts such as making threats, using coercion, harassing borrowers, insulting their dignity or reputation, unlawfully disclosing loan information, or contacting individuals who are not legally responsible for the debt constitute violations of the law and may be subject to legal sanctions.

2. Debt collection procedures of finance companies

Step 1: Identifying due or overdue loans

This is the first step and plays an important role in the entire debt collection process. Immediately after a loan is disbursed, the finance company monitors the borrower’s performance of payment obligations through its credit management system. Through this system, the finance company reviews the repayment due date, the amount due, the outstanding amount payable, and the overdue period (if any). Accurately determining when a loan becomes due or overdue enables the finance company to proactively implement debt reminder measures and serves as the basis for selecting an appropriate debt collection approach for each loan.

Step 2: Classifying borrowers and assessing debt recovery prospects

After identifying a due or overdue loan, the finance company classifies the borrower based on various criteria, such as the overdue period, repayment history, level of cooperation, reasons for late payment, and current financial capacity. The assessment results enable the finance company to determine the risk level of each loan and, accordingly, apply appropriate debt collection measures, such as sending standard debt reminders, negotiating a repayment plan, restructuring the loan (where the applicable conditions are satisfied), or initiating legal measures in cases where the loan is at risk of becoming a non-performing loan.

Step 3: Sending debt reminders in accordance with the law and the loan agreement

After identifying a due or overdue loan, the finance company shall send debt reminders in accordance with the methods and timing agreed upon by the parties in the loan agreement. Debt reminders may be made through telephone calls, SMS messages, emails, or other electronic channels to notify the borrower of the amount due, the payment deadline, and any obligations arising therefrom (if any).

During the debt reminder process, the finance company must comply with the applicable laws, in particular the provisions of Circular No. 18/2019/TT-NHNN, which amends and supplements Circular No. 43/2016/TT-NHNN and sets out specific regulations on debt reminder activities in consumer lending by finance companies. Accordingly:

A finance company may send debt reminders no more than five (05) times per day. The methods and timing of debt reminders shall be agreed upon by the parties in the consumer loan agreement but must comply with the applicable laws.
The permitted time frame for sending debt reminders shall be agreed upon by the parties in the loan agreement but must be between 7:00 a.m. and 9:00 p.m.
A finance company must not use any means to compel a borrower to make payment. Debt reminder and debt collection measures must not include threatening the borrower.
A finance company must not send debt reminders, demand repayment, or provide information relating to a borrower’s debt collection to any organization or individual that is not obligated to repay the debt to the finance company, except where requested by a competent state authority in accordance with the law.
A finance company is responsible for maintaining the confidentiality of customer information in accordance with the applicable laws.
Step 4: Contacting the borrower to negotiate a repayment arrangement

If the borrower fails to make payment on time, the finance company will proactively contact the borrower to understand the reasons for the delay and discuss the borrower’s ability to fulfill the repayment obligation. Such negotiations are conducted in good faith to facilitate the borrower’s resolution of financial difficulties while enhancing the finance company’s ability to recover the outstanding loan.

Depending on the reasons for the delayed payment and the borrower’s financial capacity, the parties may agree on a repayment schedule, an extension of the repayment period, or a loan restructuring arrangement (if the applicable legal requirements and the finance company’s internal policies are satisfied). Where the loan is secured, the parties may also agree on a plan for handling the collateral. The discussions and the outcome of the negotiations should be documented in writing or retained in another appropriate form as evidence for implementation and for resolving any disputes that may subsequently arise.

If the borrower cooperates and performs the agreed repayment arrangement, the finance company will continue to monitor the repayment process. Conversely, if the borrower fails to cooperate or does not comply with the agreed commitments, the finance company will proceed to the next stage of the debt collection process by applying the debt collection measures permitted under applicable laws.

Step 5: Initiating a lawsuit to require the borrower to perform the payment obligation

Where the borrower fails to perform the payment obligation despite the finance company having applied debt reminder, debt collection follow-up, and negotiation measures without achieving any result, the finance company may initiate a lawsuit before the competent court to require the borrower to perform the payment obligation under the executed loan agreement. Before filing the lawsuit, the finance company should review the applicable procedural requirements and examine and prepare all documents and evidence proving its right to make the claim, including the loan agreement, disbursement records, payment history, debt reminder notices, meeting minutes (if any), and other documents and evidence relating to the loan. Proper preparation of evidence will help protect the finance company’s lawful rights and interests during the court proceedings.

3. Solutions for handling borrowers who fail to repay their debts

When a borrower fails to perform the payment obligations under the loan agreement, the finance company should adopt appropriate measures depending on the circumstances of each case while ensuring compliance with applicable laws:

Restructuring the loan or agreeing on an alternative repayment arrangement where appropriate: For borrowers experiencing financial difficulties but demonstrating a genuine willingness to cooperate, the finance company may consider restructuring the repayment term or agreeing on an appropriate repayment arrangement in accordance with applicable laws and its internal policies. This solution enables the borrower to fulfill the repayment obligation while improving the finance company’s ability to recover the outstanding loan.
Initiating a civil lawsuit to require repayment of the loan: Where the borrower fails to perform the payment obligation after debt reminders and repayment negotiations have been conducted, the finance company has the right to initiate a lawsuit before the competent court to require the borrower to repay the outstanding debt under the loan agreement.
Reporting a criminal offense where there are signs of a criminal law violation: Where there are grounds to believe that the borrower has engaged in conduct showing signs of a criminal offense, the finance company has the right to report the criminal offense and provide relevant documents and evidence to the competent authorities for consideration and resolution in accordance with criminal law. However, a borrower’s late payment or inability to repay a loan does not automatically constitute grounds for criminal prosecution. Criminal liability may only arise where all constituent elements of a criminal offense, as prescribed by the Criminal Code, are satisfied.

4. Some notes to help finance companies establish an effective debt collection process

To ensure effective debt collection activities and minimize legal risks, finance companies should establish a comprehensive debt collection process that complies with applicable laws while safeguarding the lawful rights and interests of borrowers. Some important considerations include:

Preparing and retaining complete loan records and documents: Finance companies should properly manage and retain all documents generated during the lending and debt collection process, including the consumer loan agreement, disbursement records, repayment schedule, payment statements, debt reminder notices, call history, emails, text messages, and other documents relating to the loan. Where the parties have held discussions or reached an agreement on a repayment arrangement, a meeting record or written repayment agreement should be prepared and retained. Maintaining complete records and documents not only facilitates the monitoring of the debt collection process but also serves as evidence of the finance company’s right to demand payment in the event of a dispute or legal proceedings.
Establishing internal procedures for debt reminders and debt collection: The finance company should issue internal procedures clearly specifying the sequence of debt reminder activities, debt reminder methods, the responsibilities assigned to each department, and the handling measures applicable to each category of loans. These procedures must comply with applicable laws and the company’s risk management policies.
Training debt collection staff on legal regulations: Employees responsible for debt collection activities should be trained on the legal regulations governing consumer lending, debt reminders, personal data protection, and consumer protection.
Establishing a mechanism for receiving and handling customer complaints: The finance company should establish a mechanism for receiving and resolving complaints relating to debt collection activities in a timely, transparent, and procedurally proper manner. Effectively handling customer complaints not only helps minimize disputes but also improves the quality of services, the finance company’s reputation, and its compliance with applicable laws.

5. Frequently asked questions about the debt collection procedures of finance companies

How many times per day may a finance company send debt reminders?

Answer: Pursuant to Point (d), Clause 2, Article 7 of Circular No. 43/2016/TT-NHNN, as amended and supplemented by Circular No. 18/2019/TT-NHNN, a finance company may send debt reminders no more than five (05) times per day.

Is a finance company allowed to contact a borrower’s relatives to collect a debt?

Answer: Pursuant to Point (d), Clause 2, Article 7 of Circular No. 43/2016/TT-NHNN, as amended and supplemented by Circular No. 18/2019/TT-NHNN, a finance company must not send debt reminders, demand repayment, or provide information relating to debt collection to any organization or individual who is not obligated to repay the debt, except where requested by a competent state authority in accordance with the law.

May a finance company make debt reminder calls after 9:00 p.m.?

Answer: Pursuant to Point (d), Clause 2, Article 7 of Circular No. 43/2016/TT-NHNN, as amended and supplemented by Circular No. 18/2019/TT-NHNN, the time for sending debt reminders shall be agreed upon by the parties in the loan agreement but may only be within the period from 7:00 a.m. to 9:00 p.m. Therefore, making debt reminder calls before 7:00 a.m. or after 9:00 p.m. is not consistent with the time limits prescribed by law, even if the borrower has an overdue loan.

Can a finance company file a lawsuit if a borrower fails to repay the loan?

Answer: Where a borrower fails to perform the payment obligations under the loan agreement and the parties are unable to reach a settlement through negotiation, the finance company has the right to initiate a lawsuit before the competent court to require repayment of the outstanding loan. If a legally effective judgment or decision is issued and the borrower still fails to comply voluntarily, the debt may be enforced through civil judgment enforcement procedures in accordance with applicable laws.

The debt collection procedures of finance companies must be carried out in the proper order, in compliance with applicable laws, and with due respect for the lawful rights and interests of borrowers. Establishing a well-structured debt collection process, maintaining complete records and documentation, and adopting appropriate debt recovery measures will enhance the effectiveness of debt collection while minimizing legal risks and potential disputes.

Yours sincerely,

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