Mortgage the debt collection right
In today’s social life, civil transactions take place very frequently, and so does the debt in civil transactions. Among them, cases where the person has the right to collect debts from the person who is obliged to pay appears more (such as debts from the sale of assets, loans, service fees,…) and from the incurrence of these debts, creditors can carry out civil transactions with other subjects (third parties) using the debt collection right to secure their civil obligation.
In this article, TNTP will analyze the topic of “mortgage of debt collection rights” based on the provisions of Vietnamese law so that readers have more perspectives on this issue.
1.The concept of mortgage, debt collection rights
- The concept of mortgage
The concept of “mortgage” is based on Clause 1, Article 317 of the Civil Code 2015: “Mortgage of property is the use of property owned by one party (hereinafter referred to as the mortgagor) to secure the performance of obligations and does not hand over the property to the other party (hereinafter referred to as the mortgagee)”.
Regarding collateral, Article 346 of the Civil Code 1995 stipulates that the mortgaged property is only real estate owned by the obligor, and the Civil Code 2005 and the Civil Code 2015 have eliminated this requirement.
- The concept of debt collection rights
According to Article 105 of the Civil Code 2015, “property” is stipulated, which includes property rights, however, Vietnamese law does not specify the concept of “debt collection rights”. It can be understood that the debt collection rights is a special asset expressed in an intangible form and allows the party with the right to request the other party to pay the debt to fulfil their obligations.
Thus, the mortgage of the right to collection debts is a form of security, whereby the mortgagor will mortgage their debt collection right to the mortgagee to ensure the performance of obligations for the mortgagee.
2.Establishing a mortgage measure with the right to collect debts
- Accepting the use of debt collection right to mortgage
According to Article 14 of Decree 21/2021/ND-CP stipulates that “The party with the right in the contract may use the right to collect debts, other receivables, and the right to request payment; the right to exploit and manage investment projects; the right to lease or sublease; the right to enjoy yields, incomes and other benefits of money formed from the contract; the right to compensation for damages; other rights to be valued in money arising from the contract to secure the performance of obligations”. From this provision, creditors have the right to mortgage their debt collection right to other third parties.
In addition, according to Clause 2, Article 365 of the Civil Code 2015, Article 33 of Decree 21/2021/ND-CP stipulates: “The mortgage with the right to collection debts, receivables, and other rights to request payment does not require the consent of the obligor, but this person must be notified by the mortgagee before performing the obligation as agreed or in accordance with the provisions of the law”. Accordingly, the creditor can mortgage the right to collect debt to a third party without the consent of the obligor to pay the debt. When making this transfer, the creditor needs to notify the obligor.
From the above provisions, the creditor can mortgage his right to collect debt to a third party without the consent of the party obliged to pay, if there is no other agreement, the creditor is obliged to notify the debtor in writing of this change.
- Forms of the mortgage
According to Article 318 of the Civil Code 2015 and Article 22 of Decree 21/2021/ND-CP, the form of mortgage transactions is significantly relaxed. The mortgage contract is only required to be notarized or authenticated when prescribed by specialized laws or according to the needs of the parties. In the remaining cases, the transaction is valid on the basis of agreement or at the time of entering into it, not required in form including actual words or acts.
Since then, in the current Vietnamese law, the “mortgage of debt collection rights” has the flexibility to allow the parties to freely agree on a form suitable to the nature of each type of property.
3.Handling the mortgage of debt collection right
Regarding the request of the obligor, according to Clause 2, Article 54 of Decree 21/2021/ND-CP stipulates that “the secured party has the right to request a third party, which has the obligation to pay, to transfer the amount or property to the secured party. The secured party must prove its rights in case the obligor requests”, that is, the mortgagee has the right to collect debts for these debts from the mortgator’s obligor. And if there is a request from the obligor, the secured party needs to prove this right to the requesting party.
Above is the article “Mortgage of debt collection rights” that TNTP sends to readers. If you have any information to discuss, please contact TNTP for answers.
Best regards.
