Divorce and the Division of Joint Assets and Debts with Banks in Vietnam
When a married couple decides to divorce while still owing money to a bank, many individuals and business owners wonder: Do they have to pay off all debts before divorcing? Who is responsible for repayment? How does Vietnamese law regulate the division of marital assets and joint debts with banks? This article provides a comprehensive overview of the legal framework regarding divorce and the division of assets and joint debts with banks in Vietnam, helping you make informed legal decisions.
1. Key Concepts: Understanding Common Debts and Their Legal Risks
1.1. Definition of joint property, joint debts, and bank loans incurred during marriage
Under the Law on Marriage and Family 2014 (LMF 2014), spouses may possess both joint property and joint debts during their marriage. Specifically:
Joint property includes income generated from employment or business activities during the marriage, yields or profits derived from separate property, and property jointly received as gifts or inheritance.
Joint debts are defined in Article 37 of the LMF 2014 as obligations arising from: (i) transactions jointly agreed upon by both spouses; (ii) obligations incurred by one spouse to meet the family’s essential needs; (iii) obligations relating to the possession, use, or disposition of joint assets; or (iv) obligations arising when a spouse uses his/her separate property to maintain or develop the joint estate.
If one or both spouses take out a bank loan during marriage for family purposes (such as purchasing a house, home repairs, or joint business investment), the loan is generally considered a joint debt.
Conversely, if the loan is taken by one spouse without the other’s knowledge or consent, and serves personal rather than family purposes, it may be recognized as a separate debt.
1.2. Risks when divorcing while having joint debts with a bank
When a couple divorces while still owing a joint bank loan, several legal and financial risks may arise:
Even if divorce proceedings are initiated, the joint debt remains valid, and the bank retains the right to demand repayment from either or both spouses. According to Article 60 of the LMF 2014, “The property rights and obligations of husband and wife toward a third party remain effective after divorce, unless otherwise agreed by all parties.”
If repayment responsibilities are not clearly defined before or during the divorce, one spouse may later be forced by the bank to cover the other’s share—potentially harming personal finances, credit reputation, and future borrowing capacity.
Where the couple follows the statutory marital property regime (without a prior written agreement), a spouse may unintentionally become liable for debts incurred by the other.
If the joint property is mortgaged to a bank and the loan remains unsettled, complex disputes may arise during divorce. The bank may enforce its security rights, resulting in the sale of mortgaged property under either spouse’s name to satisfy the debt.
2. Legal Guidance and Practical Solutions for Handling Joint Debts in Divorce
2.1. Before divorce: written agreements and clarification of financial obligations
When preparing for divorce while having a joint bank debt, couples should:
Execute a written agreement clearly dividing joint property and specifying who will be responsible for loan repayment — the amount, timeline, and repayment source. This minimizes future disputes and serves as legal evidence if court involvement becomes necessary.
Determine whether the loan was incurred for family or personal purposes. Loans used for household or essential family needs are presumed to be joint debts.
Identify whether the collateral is joint or separate property. If a jointly owned asset is used as security, the bank may seek to enforce or auction the asset either before or after the divorce if repayment obligations are unmet.
When one spouse is assigned future property or income, this must be clearly stated, notarized, and registered (particularly for real estate) to avoid future disputes or unintended shared liabilities.
2.2. During divorce: court determination of joint property and debt obligations
If the spouses cannot reach an agreement or prefer a formal ruling, the court will handle the matter as part of the divorce case:
Either spouse may request the court to determine each party’s liability for the joint debt. The bank (or lending institution) may be summoned as a third party with related rights and obligations.
The court will examine factors such as the loan’s origin, purpose, timing, and whether mutual consent existed to determine whether it constitutes a joint or separate debt.
Even after the divorce, the joint debt remains enforceable by the bank against both parties unless the court’s decision or an agreement with the bank provides otherwise.
If the judgment explicitly states that one spouse bears full repayment responsibility — or if an agreement is reached with the bank — the other spouse may be released from liability. Otherwise, both may remain jointly liable.
2.3. Practical tips to minimize risk when joint bank debts exist
Review loan information carefully: contract date, co-borrower details, loan purpose, and collateral ownership.
Discuss repayment with the bank early — transfer debt liability to one spouse or repay the loan before finalizing the divorce if feasible.
Exercise caution before signing joint loan or mortgage contracts — after divorce, joint signatories remain jointly liable.
Document repayment obligations clearly in the court’s decision or a notarized agreement (e.g., “Ms. A shall repay the entire loan No. X with Bank Y”).
Investigate undisclosed debts: if one spouse took out substantial loans without the other’s knowledge and for personal purposes, those may not constitute joint debts.
Keep all documentation: loan contracts, property agreements, and court decisions — these are essential if a bank or third party later seeks enforcement.
3. Conclusion
Divorce and the division of assets and joint debts with banks are among the most complex legal issues in family and financial law. They require clear agreements, adequate evidence, and a solid understanding of each spouse’s rights and obligations.
If you and your spouse share outstanding bank debts, you should:
Determine whether the debts are joint or separate;
Request the court to specify debt and property division in the divorce judgment;
Communicate with the bank to clarify repayment responsibilities, negotiate settlements, or adjust obligations after divorce.
Understanding and managing these issues early will help you avoid unnecessary disputes and protect your financial stability during and after the divorce process.
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