The demand for debt collection services by businesses in today’s society is increasing due to the recovery phase of Vietnam’s and the world’s economy after the Covid-19 pandemic. The change in Vietnam’s law regarding debt collection activities led to an urgent need for debt collection. TNTP will provide information on the service fees that businesses need to pay when using the debt collection services of the law firm to help you choose a suitable service according to their financial capacity.
1. Fixed service fee
Similar to using other services in society, the law firm’s debt collection service will also have a corresponding service fee. The first is the fixed service fee, which is the fee that the business will have to pay before the law firm proceeds with the necessary debt collection activities and is usually paid immediately after the parties sign the legal service contract. This fee will be used by the law firm to maintain personnel and carry out measures included in the debt collection service contract with the customer and is non-refundable in any case.
Depending on the value of the debt and the ability to collect the debt, the value of the fixed service fee will vary. Typically, a debt of several hundred million VND or more will have a fixed service fee ranging from 5,000,000 VND to 10,000,000 VND.
2. Success fee
Unlike the fixed fee, the success fee is the amount the customer pays the law firm for debt collection after receiving any payment from the debtor. Usually, the success fee rate will be calculated on the percentage of the amount of money the business successfully receives from the debtor.
The success fee percentage will be agreed upon between the customer and the debt collection law firm before starting the collection activities. Depending on each specific case, the success fee percentage may range from 10% to 30% of the successfully collected debt.
3. Travel expenses
To carry out debt collection activities, the law firm performing the debt collection service will have to travel regularly to the debtor’s address. It could be a home address, office address, or address of the debtor’s factory. Depending on the distance and means of transportation, the travel expenses will be calculated differently.
However, in many cases, businesses using debt collection services can negotiate to support the law firm in traveling to necessary addresses to serve debt collection activities. Then, depending on the agreement between the parties, the travel expenses may be shared or entirely paid by the customer.
4. Costs for litigation activities
In addition to the service fees for debt recovery that businesses must pay, there are also costs associated with litigation activities if the business agrees to pursue dispute resolution through dispute resolution agencies such as the Commercial Arbitration Center or the Court. In that case, the business will have to pay fees, including the Arbitration Fee if the business initiates the case at the Commercial Arbitration Center, or the Temporary Advance Fee when the business initiates the case at the competent People’s Court.
Similarly to other costs that businesses have to incur in debt recovery activities, the costs for litigation activities at dispute resolution agencies depend on the value of the debt that the business requires the debtor to pay. Generally, the value of the Arbitration Fee will be higher than the Temporary Advance Fee, depending on the content of the Contract, and the business can choose the corresponding dispute resolution agency.
The above is an article by TNTP on ” Expenses businesses need to pay for debt collection services of law firms”, hope that this article will be useful for the activities of businesses.