Civil Debt Collection

In civil relations, particularly in asset loan transactions or civil contracts that give rise to payment obligations, it is relatively common for one party to either fail to perform or improperly perform its obligation of repayment and other payment obligations. However, not all individuals and organizations are fully aware of their rights and obligations in the process of civil debt collection, nor of the legal framework governing such activities. In practice, due to insufficient legal knowledge, many creditors face difficulties in reclaiming their assets or risk unnecessary legal consequences. This article aims to provide a comprehensive overview of civil debt collection, including the definition, legal grounds, and necessary documentation for exercising the right to collect debts in accordance with Vietnamese law, in order to help individuals and organizations take a more proactive role in protecting their legitimate rights and interests.

1. What is Civil Debt Collection?

At present, neither the concept of “debt collection” in general, nor “civil debt collection” in particular, has been expressly defined in Vietnamese legal instruments. Nevertheless, based on the conventional understanding of “debt” and the prevailing practice of debt collection, the concept may be construed as follows:

Civil debt collection refers to activities carried out by individuals or organizations, either directly or through representatives, by employing legal measures and procedures to demand repayment.

To ensure compliance with the law, the creditor undertaking civil debt collection must satisfy the following conditions:

• Legitimate creditor status: Individuals or organizations seeking to collect a debt must prove that they are the creditor and that they have the right to collect the debt (the right to claim the debt) as recognized by law.
• Compliance with legal provisions: Any measures taken in the collection process must conform to the law and must not infringe upon the lawful rights and interests of the debtor or third parties.
• Valid documentation: All records relating to the debt collection must be complete, accurate, lawful, and legally valid to serve as evidence for payment demands or for dispute resolution before competent authorities.

2. Legal Grounds for Civil Debt Collection in Vietnam

Civil Code 2015: Civil debts typically arise where one party breaches its payment obligations under a loan contract or other civil contracts. Therefore, the provisions of the Civil Code serve as the legal basis for the creditor to prove their right to claim the debt, through the following regulations:

On the grounds of payment obligations and breach of obligations giving rise to debts:

• The Civil Code provides that contracts involving payment obligations include: Contract of sale and purchase of property (Article 440 on payment obligations), Loan contract (Article 466 on the loanee’s debt repayment obligation, Article 468 on interest rates), Lease contract (Article 481 on rent payment), Service contract (Article 519 on service fees), Processing contract (Article 552 on processing remuneration). In addition, the Civil Code also provides for obligations to compensate for non-contractual damages.
• Based on the payment obligations stipulated by the Civil Code, in cases where one party fails to make payment on time or makes an incomplete payment, a debt shall arise, and the other party shall have the right to collect the debt.

On security measures for performance of obligations and collection through enforcement against secured assets (if any):

• Articles 292 to 350 of the Civil Code provide for measures such as pledge, mortgage, deposit, security collateral, escrow account, retention of title, guaranty, credit assurance by reputation, and retention of property (lien).
• In practice, where the obligor defaults upon expiry of the performance period, the secured property (in case of pledge or mortgage) shall be disposed of, and the proceeds applied towards satisfaction of the debt. Accordingly, contractual security arrangements and subsequent enforcement against secured assets constitute an important avenue of debt collection.

Civil Procedure Code 2015, as amended and supplemented in 2025 and Law on Civil Judgment Enforcement 2008, as amended and supplemented in 2022:

Where creditors cannot safeguard their rights by requesting the debtor to make payment or through negotiation or mediation, they are entitled to initiate proceedings before the competent People’s Court. In such circumstances, the Civil Procedure Code 2015, as amended and supplemented in 2025 and the Law on Civil Judgment Enforcement 2008, as amended and supplemented in 2022 are two important legal normative documents enabling the creditor to exercise their right to collect the debt, specifically:

• Civil Procedure Code 2015, as amended and supplemented in 2025 stipulates the order and procedures for the creditor to initiate a lawsuit and to exercise their procedural rights and obligations in order to protect their legitimate rights and interests before the Court. The outcome of litigation is a legally binding Judgment or Decision, forming the basis for compelling the debtor to perform payment obligations.
• Law on Civil Judgment Enforcement 2008, as amended and supplemented in 2022 stipulates the order and procedures for enforcing judgments and decisions of the Court, the rights and obligations of the judgment creditor, the judgment debtor, and related parties, as well as the measures for securing enforcement and compulsory enforcement measures. Through enforcement of judgments, the debtor will be compelled to fulfill the payment obligation in accordance with the Court’s Judgment or Decision, thereby enabling the creditor to collect the debt.

3. Civil debt collection process

The civil debt collection process typically involves the following main steps:

• Review debt-related documents and contact the debtor to request debt payment: Creditors need to carefully review relevant documents such as contracts, invoices, delivery and receipt records and debt comparison to clearly determine payment obligations. The creditor then contacts the debtor to request payment within a reasonable period with and warn of legal consequences in case of non-payment.

• Negotiation/mediation to agree on a debt settlement plan: In case the debtor is still willing and cooperative, the two parties can negotiate or/and mediate to agree on a debt settlement plan such as extension, installment payment or reduction of late payment interest. The agreement should be made in writing, with a signature and a seal of confirmation to ensure legal validity.
• Initiating a lawsuit at a competent People’s Court or Commercial Arbitration to compel the debtor to repay the debt: In case the parties fail to reach an agreement through negotiation or conciliation, the creditor may initiate a lawsuit at a competent Court or Commercial Arbitration. The initiation of a lawsuit helps create clear legal pressure to require the debtor to perform its obligations in accordance with the law.
• Request for enforcement of Judgment/Decision/Award of the Court/Arbitrator: After the Judgment/Decision/Judgment of the Court/Arbitration takes legal effect, if the debtor does not voluntarily enforce it, the creditor has the right to request the civil judgment enforcement agency to organize judgment enforcement to force the debtor to pay the debt.

4. Where to settle civil debt disputes in Vietnam?

Civil debt collection disputes can be resolved through the following methods:

• Negotiation;
• Mediation;
• Courts, Arbitration.

Accordingly, for the method of dispute resolution through negotiation and mediation, the parties can conduct it themselves or proceed with the support of a mediator. For the method of dispute settlement at Court or Arbitration, based on the provisions of Article 26 of the Civil Code 2015 and Articles 2 and 5 of the Law on Commercial Arbitration 2010, in case the case falls under the jurisdiction of the Court or Commercial Arbitration, the creditor may initiate a lawsuit at these agencies to force the debtor to perform the debt repayment obligation.

5. Can a creditor demand payment of both principal and interest on a civil debt?

When a debt arises, the creditor has the right to request payment of the principal debt. Regarding the interest arising from the principal debt, pursuant to Article 357 of the Civil Code 2015, the creditor has the right to request the debtor to pay interest on the late payment amount corresponding to the delayed payment period. Late payment interest shall be determined according to the agreement of the parties but must not exceed the interest rate specified in Clause 1, Article 468 of the Civil Code, if there is no agreement, the provisions of Clause 2, Article 468 of the Civil Code shall apply.

In addition, particularly for property loan contracts, in the case specified in Clause 5, Article 466 of the Civil Code 2015, in addition to the principal and in-term interest, the creditor may also claim: (i) interest on the interest of the principal debt (if the interest on the principal debt is delayed) and (ii) the interest on the overdue principal.

6. Documentation Required for Civil Debt Collection

To ensure that civil debt recovery is legally grounded when requesting payment from the debtor or initiating proceedings before a Court or Arbitral Tribunal, the creditor must prepare a complete and valid debt recovery dossier in compliance with the applicable laws. Key documents typically include:

Evidence establishing the debt:

• Contracts or agreements between the parties (with payment obligations expressly stipulated);
• Records of asset delivery/receipt;
• Debt acknowledgment papers, loan agreements, and debt repayment commitments;
• Transaction records such as bank statements and transfer receipts.

Evidence of collection attempts and communications with the debtor:

• Payment demand notices sent to the debtor;
• Minutes recording meetings or discussions;
• Correspondence via email, messages, or letters;
• Written confirmations or reconciliations of overdue debts issued or acknowledged by the debtor.

Documents containing information about the debtor: Identification documents (Citizen ID/Passport) for individual debtors, Enterprise registration certificate for corporate debtors.

7. Time of civil debt collection cases

The time required for civil debt collection may range from a few weeks, months to several years, depending on the debt collection method the creditor chooses to handle:

• If the two parties can negotiate, reach debt repayment commitments, and fulfill their commitments, the time can be significantly shortened, possibly as little as a few weeks to months.

• On the contrary, if the case is forced to file a lawsuit with the Court or Commercial Arbitration, the proceedings may take between 1 to 3 years.

Concurrently, in the process of settling the case, a number of factors and events may arise that may slow down the progress of civil debt collection, including:

• The debtor does not cooperate, evades, does not respond, or deliberately prolongs the negotiation period.
• The dossier and evidence are incomplete or disputes arise, leading to the Court requesting additional or having to mediate many times.
• The debtor has the right to request a counterclaim or appeal, causing the case to drag on through many levels of trial.
• Difficulties in judgment enforcement, such as the debtor has no assets, the property has been mortgaged, hidden, or involved in other legal disputes.

8. Civil debt collection services in Vietnam.

In Vietnam, since January 1, 2021, the time when the Law on Investment 2020 takes effect, the business of debt collection services has been banned from business investment. Accordingly, creditors in the process of collecting civil debts will only be allowed to apply methods and measures in accordance with the law. Acts that infringe upon the legitimate rights and interests of the debtor may put creditors at risk of facing legal sanctions, including criminal sanctions. 

Therefore, in order to minimize risks as well as optimize benefits, creditors can use the services of law firms for legal support in debt collection. These units not only help draft documents and negotiate with debtors but can also legally represent clients throughout the proceedings and judgment enforcement process. The use of legal services not only increases professionalism, but also helps ensure that debt collection takes place in accordance with the law, avoiding the risk of being sued again or incurring unnecessary additional costs.

The above is the article “Civil Debt Collection in Vietnam” presented by TNTP to valued readers. TNTP hopes that this article will be useful to readers.

Sincerely,