Third-Party Debt Collection

Third-party debt collection refers to the process in which the creditor does not directly carry out debt collection measures but instead engages another organization or individual to do so. Such third parties may include law firms, debt trading companies, lawyers, or legally authorized entities. The key distinction between internal debt collection and third-party debt collection lies in the factor of “authorization” or “assignment of claim rights”.

In Vietnam, debt collection services have been prohibited under the Law on Investment 2020 due to widespread abuse by certain businesses and individuals who used such services to commit unlawful acts (e.g., threats, psychological intimidation, extortion, and harassment of borrowers and their families). Accordingly, third-party debt collection in the form of commercial services (i.e., debt collection agencies) is considered illegal and has been banned. However, third-party debt collection conducted through legitimate debt purchase, assignment transactions, or legal authorization – particularly when creditors authorize lawyers or law-practicing organizations – is permitted under Vietnamese law.

Within the scope of this article, TNTP focuses on analyzing and clarifying third-party debt collection through legal authorization, especially in cases where businesses or individuals authorize lawyers or law-practicing organizations to act on their behalf. This method is legal, transparent, clearly regulated by law, and ensures safety for both creditors and debtors.

1. What does Vietnamese Law say about Third-Party Debt Collection?

1.1 Prohibition of “Debt Collection Services”

According to Article 6 of the Law on Investment 2020, “debt collection services” are listed among the prohibited business sectors. This marks a significant shift from previous years, when such services were still permitted and widely used by businesses as a channel for handling outstanding debts.

In practice, many debt collection companies employed threatening tactics, psychological intimidation, and even violence to force debtors to make payments. These actions led to public disorder, infringed upon human rights, and negatively affected the business and investment environment.

As a result, businesses are no longer allowed to register for debt collection service activities. Furthermore, any operations disguised as debt collection services may be subject to administrative penalties or even criminal prosecution if they involve extortion, disturbing public order, or unlawful detention. Creditors who engage in underground debt collection services may also face legal liability and reputational risks.

1.2 Legal authorization for Third-Party Debt Collection in Vietnam

Although debt collection services are prohibited, Vietnamese law still permits lawful authorization for debt collection, allowing businesses to collect debts through third parties.

According to Article 562 of the Civil Code 2015, an authorization contract is defined as “an agreement between parties whereby the authorized party is obligated to perform tasks on behalf of the principal, and the principal shall pay remuneration if agreed upon or required by law”. Accordingly, businesses may authorize lawyers or law firms to send demand letters, negotiate with debtors, participate in litigation, or represent them before courts/arbitration and enforcement agencies.

According to Article 186 of the Civil Procedure Code 2015 (amended in 2025), regarding the right to initiate lawsuits: “Agencies, organizations, and individuals have the right to initiate lawsuits either directly or through legally authorized representatives (collectively referred to as claimants) at competent courts to request protection of their lawful rights and interests”. Additionally, Clause 2, Article 55 of the Law on Commercial Arbitration 2010 stipulates: “Parties may attend dispute resolution sessions either directly or through authorized representatives; and have the right to invite witnesses or legal representatives to protect their lawful rights and interests”.

Thus, creditors may authorize third parties to pursue debt collection through court or arbitration. This is a fully legal and protected form of third-party debt collection under Vietnamese law.

2. Why should businesses hire a third party for Debt Collection?

Engaging third parties, such as lawyers, law firms, or debt trading companies offer significant advantages. First and foremost, these entities have professional experience and expertise, making debt collection more effective than if handled directly by the creditor.

Moreover, authorizing a third party allows the creditor to avoid direct confrontation with the debtor, thereby reducing the risk of disputes, conflicts, or legal violations. Businesses will also save considerable time and resources, allowing them to focus on their business instead of dealing with complex debt issues.

Another important benefit is the opportunity for businesses to learn and adopt professional debt collection skills and strategies from third-party experts, which can be applied to internal processes in the future.

3. Regulations on authorizing a third party to collect debts

As mentioned above, under Article 562 of the Civil Code 2015, creditors have the right to authorize other organizations or individuals to carry out debt collection on their behalf. Such authorization must be made in writing, either in the form of power of attorney or an authorization contract, clearly defining the scope, authority, and responsibilities of the authorized party.

Authorization will allow the change regarding the party directly interacting with the debtor during the debt collection process from the creditor to the authorized organization or individual. This is a key legal basis for businesses to lawfully cooperate with third parties in debt collection.

4. Step-by-step debt collection procedure of a Third Party

Typically, third-party debt collection is carried out through the following basic steps:

• (i) Receiving the case file and verifying the legality of the debt;
• (ii) Reconciling the outstanding balance to determine the debtor’s payment obligations to the creditor. These may include principal debt; interest accrued on overdue principal; interest on unpaid interest (if agreed upon or prescribed by law); penalties for breach of contract; and other financial obligations under the contract or applicable legal provisions;
• (iii) Notifying the debtor of the authorized right to collect the debt;
• (iv) Sending a formal letter or email requesting the debtor to settle the outstanding amount with the creditor;
• (v) Negotiating with the debtor to encourage voluntary payment;
• (vi) If negotiations fail, initiate legal measures such as filing a lawsuit at a competent court or arbitration center and requesting enforcement of the judgment or award.

All steps must comply with legal regulations and avoid any acts of intimidation, coercion, or infringement of the debtor’s lawful rights and interests.

5. TNTP’s Debt Collection Process

TNTP typically undertakes the following tasks during the debt collection process:

Step 1: Collecting and verifying information about the debtor: TNTP will research, gather, and analyze key data such as the name of the business/individual, tax code, legal representative, registered office, actual operating address, business status (active, suspended, or dissolved), and preliminary financial condition. This verification helps assess payment capacity and determine an appropriate debt collection strategy.

Step 2: Direct contact with the debtor: TNTP’s lawyers and legal assistants will proactively reach out to the debtor via various channels such as phone calls, text messages, emails, or in-person meetings to state the payment obligations and request compliance. This process is conducted professionally, in accordance with the law, and with respect for the rights and interests of all parties.

Step 3: Issuing a Letter of Demand (LOD): This is a formal legal step intended to pressure the debtor to review and fulfill their obligations. The LOD drafted by TNTP outlines the outstanding amounts, legal basis, and payment deadline, while also warning of potential legal consequences if the debtor deliberately delays or refuses to cooperate.

Step 4: Representing the client in dealings with the debtor: TNTP will attend meetings, negotiations, or direct discussions with the debtor on behalf of the client to agree on a specific payment plan or develop alternative debt resolution strategies. The goal is to find a mutually acceptable solution that protects the client’s interests while remaining feasible for the debtor.

Step 5: Assessing potential legal violations by the debtor: If the debtor shows signs of fraud, evasion, or conducts acts that may violate the law (e.g., asset concealment, abuse of trust for misappropriation), TNTP will collect evidence and submit a report to the competent authorities for handling under criminal or administrative law. This is a strong measure to safeguard the client’s lawful rights.

Step 6: Initiating legal proceedings at arbitration or court: When determines that litigation is legally grounded and offers a high chance of collection, TNTP will consult, develop a litigation strategy, and file the claim. Throughout the proceedings, TNTP will act as the authorized representative or legal counsel, accompanying the client from filing and trial to enforcement, ensuring the debt is recovered as effectively as possible.

6. Professional Legal Services for Corporate Debt Collection in Vietnam

TNTP & Associates International Law Company Limited specializes in providing legal services in the areas of dispute resolution and debt collection in Vietnam. With extensive experience in handling disputes related to commercial contracts, construction, labor, business cooperation, shareholder conflicts, and credit agreements, TNTP has successfully assisted numerous clients in resolving complex debts – particularly non-performing loans from credit institutions.

TNTP’s debt collection services consist of three core works, which also represent the three main phases of the process:

Negotiation: In the initial phase, TNTP will collect information about the debtor, issues a formal demand letter, and contacts the debtor through various channels such as mail, email, phone calls, or in-person meetings. TNTP’s lawyers and legal professionals represent the client in negotiations, developing a reasonable payment plan that both protects the client’s interests and maintains business relationships when necessary.

Litigation: If negotiations fail, TNTP will support the client in initiating legal proceedings at a competent court or commercial arbitration center. TNTP’s lawyers prepare the statement of claim, compile the litigation dossier, participate in proceedings, gather evidence, and represent the client in hearings and trials.

Enforcement: Once a judgment, decision, or arbitral award becomes legally effective, TNTP will continue to represent the client during the enforcement phase. This includes filing enforcement requests, working with enforcement agencies, monitoring asset-handling progress, distributing recovered funds, and ensuring that the judgment is executed promptly, transparently, and effectively.

In the context of increasingly stringent legal regulations governing debt collection – aimed at ensuring transparency and social order – authorizing reputable law-practicing organizations such as TNTP has become a safe, lawful, and effective option for businesses and individuals. TNTP is committed to accompanying clients throughout the entire debt collection process, from negotiation and litigation to enforcement, helping to safeguard their financial interests to the fullest extent.

This article, “Third-Party Debt Collection in Vietnam” was prepared by TNTP’s Lawyers. We hope it proves useful to our valued readers.