Debt collection activity means the individual or the entitled party’s representative, with their solutions, makes the debtor pay overdue debts. Although the need for debt collection is massive, society still has negative incomprehension about this activity. With this legal article, TNTP will point out and analyze common misunderstandings about debt collection activities of society.
1. Misunderstandings about debt collection activities are illegal and banned by the laws
Before the Investment Law 2020 took effect, debt reclamation service was still a conditional business. Although debt reclamation service was allowed, the provisions of the law were not explicit, and the competent authorities did not strictly supervise, debt reclamation behavior was distorted and caused many destructive effects. Therefore, when the debt reclamation service is officially banned, many people thought that all acts and activities for debt collection became illegal and prohibited by the law. It is incorrect and contrary to the legal rights and interests of the creditor or the entitled party.
In case the debtor fails to pay the debt in full and on time, the entitled party is fully allowed to personally or authorize other individuals or organizations to use legal measures to collect the debt. The actions allowed up to now are: (1) talking face-to-face; (2) contacting by phone or sending in writing to ask the debtor to pay the debt; (3) initiating a lawsuit at the Court; or (4) reporting a crime to competent authorities if the debtor flees the residence, and shows signs of fraud to appropriate property or abuse of trust to appropriate property.
Thus, not all actions for debt collection are illegal and prohibited by the law. The Investment Law 2020 only prohibits the business of debt reclamation services. The entitled party can negotiate with the debtor or authorize individuals or law firms to collect the debt legally and effectively.
2. Misunderstandings about debt collection are “gangsters” action
Until now, there are opinions that all debt collectors are “gangsters”. Referring “debt collection” means “insult to honor and dignity”, “injury to the debtor”, “loss of life and health”, “damage property”, “prevent the debtor from doing business”, … These are the things that make many people have a bad impression of debt collectors and always think that debt collectors are synonymous with “gangsters”.
It is not correct. The “gangsters” form of debt collection has never been admitted by society and the law. The “gangster” groups that collect debts illegally have been handled by competent authorities to ensure social order. Legal debt collectors only apply measures within the allowable limits to put pressure on the debtor. These measures do not cause injury to damage to the life, health, or property of the debtor. In addition, a debt collector is also a position recruited by the employer and recognized by the law. It is the clear difference between a debt collector and a “gangster”. If debt collectors and gangsters can be distinguished, debt collection activities will no longer be as pessimistic as society thinks.
3. Debt collection adversely affects the economy and the society
Because of the fear of illegal acts as well as the consequences that the distortion in debt collection activities will bring, people worry that debt collection will harm the economy and society.
However, the essence of debt collection comes from the creditors’ legal rights. The debtor must violate the agreement and fails to pay the debt on time and in full first. Then, the need for debt collection arises. Because of debt collection activities, the bad debt ratio is controlled, which helps to stabilize the economy. Because of debt collection activities, the parties can prevent law violations and help to ensure social security. If debt collection activities can be monitored and managed with specific regulations, it will bring advantages to the economy and society.
Through this, you can see that debt collection is not as dangerous and scary as many people think. The handling of illegal debt collection acts and “gangster” groups are still well done by the competent authorities. Debt collection is also getting healthier. The entitled party can authorize individuals and organizations to perform debt collection. We hope this article is helpful to readers.