International Debt Collection

When debtors are foreign enterprises, the debt collection of Vietnamese enterprises will meet many difficulties in clarifying the address, legal capacity of debtors; languages barrier; the parties choose the competent authority to settle dispute abroad; initiating a lawsuit in another country cost a lot of money.

To fix these difficulties, Vietnamese enterprises can authorize Vietnamese law firms to find and work with debt collection companies, law firms in the country where the debtor has headquarters address. The discussion, looking for information of the debtor between Vietnamese law firms and foreign law firms can be implemented faster and more effectively than Vietnamese enterprises work with foreign law firms by themselves. Moreover, currently, some Vietnamese law firms have a cooperation network with foreign law firms. Therefore, clients do not need to find suitable a foreign debt collection company or law firm by itself.

1. What is International Debt Collection?

International debt collection is the process in which a business uses lawful measures to recover payment from a foreign partner who has failed to fulfill their payment obligations in full or on time under a contract for the sale of goods or provision of services.

Unlike domestic debt collection, which relies solely on one country’s legal system, international debt collection must consider the debtor’s national laws as well as differences in language and culture. Therefore, using professional international debt collection services is an effective solution for foreign businesses to minimize risks, save time, and improve the success rate of recovery.

2. Challenges and Risks in International Debt Collection

Based on TNTP’s practical experience in advising and supporting international debt recovery, there are four common challenges and risks businesses should be aware of:

• Differences in Legal Systems: Each country has its own legal framework governing debt recovery. Moreover, international trade treaties to which both countries are parties can directly impact the collection process. These may determine which dispute resolution authority has jurisdiction, requiring businesses to invest more time and resources in the recovery process.
• Language and Cultural Differences: Language and cultural barriers between businesses can complicate debt recovery discussions. For example, direct communication – common in Western cultures – may be perceived as disrespectful in Eastern contexts, potentially escalating tension. Hence, successful negotiation requires a team deeply familiar with local culture, language nuances, and appropriate conduct.
• High Costs and Complex Procedures: Expenses such as legal fees, translation, notarization, consular legalization, and foreign court or arbitration fees are often substantial.
• Geographical and Time Differences: Differences in time zones and locations make it difficult to closely monitor the collection process. Even attending hearings or negotiations can be time-consuming and costly.

3. International Debt Collection Process

The international debt collection process typically includes:

• Communication with the Debtor: The business sends an official payment request to the debtor to discuss payment obligations and agree on a repayment plan. The creditor may also assess the debtor’s solvency and the status of any secured assets.
• Filing a Claim: If negotiations fail, the business prepares documentation and files a lawsuit with the competent dispute resolution body, participating in proceedings to settle the case.
• Enforcement: Once a valid judgment, decision, or arbitral award is issued, the business may request enforcement authorities to verify the debtor’s assets or apply provisional measures such as seizing collateral to compel payment.

4. Required Documents for International Debt Collection

To ensure a smooth process, businesses should prepare a clear and complete dossier, including:

• Contracts, appendices, and agreements between the parties;
• Invoices, payment records, and debt reconciliation minutes;
• Correspondence, letters, emails, or messages regarding payment;
• Evidence showing that payment requests were made but not fulfilled.

A complete and transparent dossier strengthens the proof of debt and helps minimize legal costs.

5. Costs and Factors Affecting International Debt Collection

In international debt recovery, businesses typically incur two main types of costs:

• Fees for Dispute Resolution Authorities: These mandatory fees apply when participating in litigation or arbitration, including court or arbitration fees, translation and notarization costs, consular legalization, and enforcement fees (if applicable).
• Fees for Debt Collection Services: If the business hires a law firm or collection agency, costs usually include a fixed fee and a success fee. The fixed fee offers budget predictability but may still apply even if the debt is unrecovered. The success fee, paid only upon successful recovery, is generally higher.

Businesses should also consider the choice of dispute resolution body. Court proceedings are often less expensive than arbitration, but lengthy litigation can consume significant time and resources. Additionally, the cost of legal service packages will depend on the agreed scope of work between the business and the law firm.

6. How to Improve International Debt Recovery Success Rates

TNTP Law recommends three key strategies to enhance your success rate in international debt collection:

• Choose a reputable law firm experienced in debt collection: An experienced legal team familiar with local regulations can develop an effective strategy to resolve disputes efficiently.
• Maintain complete documentation: Diligent recordkeeping – including contracts, invoices, and correspondence – ensures quick resolution if a dispute arises.
• Draft a valid contract from the outset: Include clear clauses on payment obligations, late payment interest, and dispute resolution (e.g., specifying arbitration venue and applicable arbitration rules.

7. Frequently Asked Questions (FAQs)

Should businesses handle international debt collection on their own?

Businesses may start with simple steps like sending letters of demand or payment reminders. However, for large debts or complex cases involving foreign laws, self-handling can lead to mistakes and wasted effort. Engaging a professional international debt collection agency or law firm saves time, reduces risks, and optimizes costs.

How long does international debt collection take?

The duration depends on the debtor’s cooperation and financial capacity. If both parties reach a settlement through negotiation, it may take only a few weeks. However, if litigation or enforcement is required – especially in cases of insolvency or disputed collateral – the process can take much longer.

Should businesses hire a law firm for international debt recovery?

Choosing the right legal partner significantly affects the outcome, time, and cost of the collection. Law firms possess legal expertise and experience handling cross-border debt disputes, enabling them to craft appropriate strategies and maximize recovery efficiency.

8. TNTP Law’s International Debt Collection Service

When international debt arises, businesses can utilize professional collection services to accelerate the recovery process. With over ten years of experience handling high-value debt recovery cases, TNTP Law has established itself as a leading international debt collection agency, achieving a success rate of over 70%. TNTP applies flexible solutions such as negotiation, mediation, litigation, or arbitration to shorten timelines, reduce costs, and safeguard clients’ legal rights and interests. For each case, TNTP’s legal team tailors an effective debt recovery strategy to the client’s specific situation.

This article “International Debt Collection” is provided by TNTP Law. For further information or consultation, please contact TNTP for support.

Sincerely