With the strong development of the international integration market economy in Vietnam today, the trend of using debt collection rights in business and commercial transactions is increasing. The right to collect debts is increasingly valued due to its popularity and to meet the needs of convenient circulation in civil transactions, commercial business… In the following article, TNTP’s lawyers will clarify questions on debt collection rights and transfer of debt collection rights.
1. What is the right of debt collection?
According to the law, the right to collect debt is a property right. As a property right, debt collection right is used to secure the performance of a civil obligation. Property right is one of four types of property under current regulations (Article 105 of the Civil Code 2015), specifically: Property includes Material, money, valuable papers and property rights.
Debt collection right is a civil right recognized and protected by law, enabling the obligee to request the obligor to perform a property obligation towards him/her. A right of debt collection is used to require an obligor to pay the property arising from a contract or legal event or as required by law. The subject of debt collection right is an amount of debt, whereby it allows the holder of debt collection right to require the obligor to perform a financial obligation towards the obligee. In a broad sense, the debt collection right is understood as the right to demand the obligor to pay a sum of money or things, including receivables, the right to demand payment and other claims arising from a contract or legal event. or as required by law.
In terms of property law, debt collection right is a relative property right, which is only binding on the obligee. In other words, the holder of debt collection right can only satisfy his/her rights through the performance of the obligation of others (the obligee is always specified).
2. Legal provisions on transfer of debt collection rights
Not all individuals and organizations own real estate and tangible assets to carry out civil and commercial transactions. Now they can learn to use the right to collect debt. (a form of the intangible asset) to perform transactions such as purchase, sale, mortgage, transfer and other transactions for debt collection rights. On the other hand, contrary to the previous concept of always attaching importance to real estate and tangible assets and disregarding the role of movable property, intangible movables such as the right to collect debts now are being increasingly respected, and even occupying most of the assets of individuals and organizations.
According to the provisions of law, the right of debt collection is a property right, whereby the right holder can demand the debtor to pay the debt or have the right to request a competent State agency to force the debtor to make the payment, this is a legal claim.
The debt collection right is a claim, hence, it is transferable under the provisions of the claims transfer, then the assignee will be the party to have the right to claim the debt. Since the debt collection right is a type of property, its holder has the right to dispose of the debt collection right to others in different manners and through different forms of transactions such as buying, selling, giving, exchanging, inheritance, mortgage, etc. The transfer of debt collection right is closely related to the transfer of claim right in the civil obligation relationship. Accordingly, the party having the right to demand the performance of a civil obligation transfers that right to subrogation of the obligee as agreed. The transfer of debt collection rights is also different from that of other assets. In case of tangible assets, upon the transfer, existing assets must be handed over to the transferee. In case of debt collection rights, the transferor can only hand over documents to the transferee to prove ownership of such debt collection rights, which are already signed documents, papers and contracts.
The transfer of the right to collect debts will comply with the following provisions:
• Regarding the transfer:
Article 365 “Civil Code 2015” provides for the transfer of the right to demand:
“A party having the right to demand the performance of a civil obligation may transfer such right to demand to a subrogated of the obligee as agreed… here a person having a right to demand transfers such right to a subrogatee, the subrogatee of the obligee shall become the person having the right to demand…”
• The following requested rights are not transferable:
+ The right to demand alimony, claim compensation for damage caused by infringing upon life, health, honor, dignity and reputation;
+ The obligee and the obligor have an agreement that such rights are not transferable;
+ Other cases prescribed by law.
The transfer of the right to claim does not require the consent of the obligor. However, the assignor of the right to claim must notify the obligor in writing of the assignment of the right to claim, unless otherwise agreed.
• The obligor has the right to refuse to perform:
Article 369 of the Civil Code stipulates: The obligor’s right to refuse:
“Where the obligor is not notified of the transfer of the right to demand or where the subrogatee of the obligee does not prove the authenticity of the transfer of the right to demand, the obligor has the right to refuse to perform the obligation with respect to the subrogatee of the obligee.
Where the obligor is not notified of the transfer of the right to demand and has already fulfilled the obligation with respect to the person having transferred the right to demand, the subrogatee of the obligee may not demand the obligor to perform the obligation with respect to that subrogate.”
Understanding the right to collect debt plays a very important role in the establishment and execution of transactions related to debt collection. Hopefully, with the above sharing of TNTP lawyers, readers can get an overview of the concept of debt collection rights and legal provisions for the transfer of debt collection rights.