How to Recover Debts from Business Partners in Vietnam

When Vietnamese companies or foreign investors do business with partners in Vietnam, managing debts can be extremely sensitive — mishandling it may lead to financial loss, damaged reputation, or even legal risks. This article provides a practical guide on the procedures, tools, and key considerations for legally recovering debts in Vietnam.

1. Understand the Legal Framework and Risks in Debt Recovery in Vietnam

1.1. Legal foundation for debt recovery in Vietnam

Under the 2015 Civil Code, the right to demand the performance of an obligation (including repayment) is considered a property right of the creditor.

In secured transactions, if the debtor fails to make timely payment, the creditor may request enforcement of the collateral in accordance with Articles 301, 303, and 307 of the 2015 Civil Code.

However, the use of professional “debt collection services” is currently prohibited. According to Article 6, Clause 1(h) of the 2020 Law on Investment, “debt collection services” are listed among banned business activities.

The previous regulation — Decree No. 104/2007/NĐ-CP — which governed debt collection service providers, still provides a framework for lawful debt recovery when conducted in compliance with the law.

Additionally, from December 1, 2025, Circular 31/2025/TT-NHNN introduces new regulations governing the purchase and sale of overdue or non-performing loans by debt management companies.

In practice, this means that companies in Vietnam can no longer hire “traditional debt collectors” as before. Instead, they must either handle the process internally or engage lawyers or legal representatives to pursue debt recovery, initiate lawsuits, and enforce judgments.

1.2. Risks and limitations of non-compliance

• Applying pressure, threats, harassment, or violating the debtor’s dignity or privacy may result in administrative or criminal penalties.

• Hiring an unlicensed “debt collection company” may lead to penalties for both the creditor and the service provider.

• Delaying litigation beyond the statutory limitation period (usually two years for commercial disputes) may result in the loss of the right to claim.

• Once a court judgment is issued, recovery becomes difficult if the debtor has transferred assets, absconded, or declared bankruptcy.

2. Practical Steps for Effective Debt Recovery in Vietnam

2.1. Step 1: Review contracts and supporting documents

When drafting contracts, always include clear payment terms — payment deadlines, late payment interest, and remedies for non-payment. This strengthens your position when pursuing debt recovery.

If a debt arises, gather all relevant documentation: contracts, invoices, delivery notes, payment confirmations, and demand letters (if any).

Check whether collateral exists (e.g. machinery, vehicles, property rights, real estate, or shares) to determine viable enforcement measures.

2.2. Step 2: “Out-of-court” approaches — negotiation and direct collection

Send a letter of demand or email/fax requesting payment within a specified period (e.g., “within 7 or 14 days”). The letter should clearly state the applicable late interest and costs if legal action becomes necessary.

Contact the debtor directly (via meeting or phone) to clarify the reason for late payment and propose feasible payment plans or extensions if they face financial difficulties. This approach maintains business relations while applying reasonable pressure.

If the debtor remains uncooperative, you may send a written proposal for mediation or negotiation through a neutral third party (e.g. lawyer, mediation center). However, you must not engage an unlicensed debt collection agency.

During communication, retain all evidence — such as emails, messages, or call recordings — to support your claims in court if necessary.

2.3. Step 3: File a lawsuit in court

Prepare a statement of claim and evidence dossier to submit to the competent court — typically where the debtor resides or operates.

Pay the prescribed court fees.

The court will accept the case, summon both parties, conduct mediation (if possible), and proceed to trial.

A legally effective judgment forms the basis for enforcement of debt collection.

2.4. Step 4: Enforce the court judgment

Once the judgment becomes final, if the debtor fails to comply voluntarily, the creditor may request the Civil Judgment Enforcement Agency to execute enforcement measures: seizure, freezing, or auction of the debtor’s assets.

If collateral exists, the creditor can request its transfer or sale according to the law (repossession or liquidation).

Note: under the revised Law on Credit Institutions, public notice of at least 15 days is required before seizing real property used as collateral.

In cases involving criminal behavior (e.g. fraudulent asset appropriation or absconding), the creditor may coordinate with the police authorities to pursue criminal charges.

3. Practical Experience and Tips for Maximizing Debt Recovery Success

3.1. Create “reasonable pressure” while maintaining the relationship

In early stages, adopt a soft, professional approach — avoid threats or aggression. In Vietnamese business culture, maintaining dignity and goodwill is crucial.

Once the demand letter is issued, maintain consistent follow-ups — track payment schedules, monitor outstanding balances, and send regular reminders.

If the debtor shows willingness to pay in installments, it is often wise to accept partial payments rather than risk total loss.

3.2. Choose the right time to file a lawsuit

Avoid rushing to litigation immediately after the payment deadline passes; allow a short negotiation window.

However, do not wait too long — missing the two-year limitation period for commercial debt claims will forfeit your right to sue.

3.3. Proactively verify the debtor’s assets

Check business registration, asset records, and land use rights to identify available assets.

If the debtor has collateral, this becomes your legal leverage for enforcement.

If the debtor transfers assets to avoid enforcement, gather documentary evidence of such transfers to challenge them in court.

3.4. Engage legal professionals for support

Given the restrictions on independent debt collection services, the most effective option is to engage a law firm or licensed legal representative to handle negotiation, litigation, and enforcement.

Experienced lawyers can build strategies, trace assets, counter evasion tactics, and coordinate effectively with enforcement authorities.

For large non-performing loans, creditors may consider cooperation with licensed debt management companies under the new Circular 31/2025, applicable to overdue or non-performing debts.

4. Conclusion

Recovering debts from business partners in Vietnam is far from simple. However, by following a structured process — preparing documentation, negotiating, timely litigation, and lawful enforcement — creditors can significantly improve their chances of success.

Given the current legal environment in Vietnam, businesses must not hire unlicensed debt collectors, but should instead rely on lawyers or authorized legal representatives to ensure compliance with the Investment Law and avoid legal risks.

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