In the operation of the enterprises, the arising of bad debts could be unavoidable. However, in order to be able to file lawsuit and collect debts and minimize bad debts in practice, there are still many difficulties. Currently, the process of debt recovery according to the provisions of the law still encounter many problems and shortcomings, while enterprises need more effective solutions to recover debts fully and quickly in order to ensure revenue and financial balance for enterprise.

1. What Are Challenges in Debt Recovery Litigation
Procedures for Enterprise
In the operation of the enterprises, the arising of bad debts could be unavoidable.
However, in order to be able to file lawsuit and collect debts and minimize bad debts
in practice, there are still many difficulties. Currently, the process of debt recovery
according to the provisions of the law still encounter many problems and
shortcomings, while enterprises need more effective solutions to recover debts fully
and quickly in order to ensure revenue and financial balance for enterprise.
In order to be able to recover debts according to the provisions of the law, enterprises
could hire dispute lawyers or by themselves must go through two stages with
relatively complicated procedures. Accordingly, the lawsuit need to be filed and after
the court’s judgment, the enterprise needs to file a petition for civil judgment
enforcement. Because, the trial stage and the judgment execution phase are two
independent stages, each with a different process.

2. First, the stage of lawsuits in court. When the enterprise’s interests are infringed, the
enterprise will need to file a lawsuit at a competent court. This is a traditional method
of lawsuits that forces enterprise to comply with the court’s strict processes and
procedures and relevant legal regulations.
Specifically, in order to initiate a lawsuit at the court, an enterprise must meet the
following conditions to initiate a lawsuit: (i) there is a debt incurred and the debtor
fails to pay the debt as committed, leading to a dispute and the enterprise believes that
rights and interests are infringed; (ii) the dispute between the enterprise and the debtor
in this case must fall under the exclusive jurisdiction of the court, not under the
jurisdiction of any other agency or organization (arbitration); (iii) in some cases, if
there is an agreement or is required by law to carry out pre-litigation procedures such
as conciliation, negotiation, notification, etc., the enterprise must complete such
procedures before requesting a competent court to settle disputes between the
enterprise and the debtor. In addition, in the petition, the enterprise needs to enclose
invoices, vouchers and loan documents to prove that the debt collection is grounded.
These are the basic conditions that enterprise need to keep in mind when filing a
lawsuit to ensure that the petition is valid and not returned.
After the petition is accepted and the enterprise completes the payment of the court
fee advance, the court will conduct verification and collect evidences; conducting
meetings, checking the handover, accessing and disclosing evidences and conciliation.
In case the involved parties cannot reconcile with each other on the payment plan or
agree on interest and debt, the court will bring the case to trial. During this period,
enterprises need to consider late payment interest, principal and debtor’s financial
situation in order for request to be accepted by the court and serve as a basis for
possible judgment enforcement.
Second, the procedure for requesting judgment enforcement. After the judgment or
decision of the court takes legal effect, it must be respected by organizations and all
citizens. Accordingly, enterprises, especially debtors, within the scope of their
responsibilities, should strictly abide by judgments and decisions and must take
responsibility before law for judgment enforcement. Within 5 years from the date the
judgment or decision takes legal effect, the creditor can by himself or authorize
another person or dispute law firm to make a written request for judgment
enforcement and send it to the district-level judgment enforcement agency where the
court is located for first-instance trial court to request judgment enforcement.
Accordingly, enterprises need to prepare a written request for judgment enforcement
together with the judgment or decision requested for enforcement and other relevant
documents. For the extent of the petition for judgment enforcement, the enterprise

3. needs to show information about the debtor’s assets or judgment enforcement
conditions.
In addition, enterprises have the right to request civil judgment enforcement agencies
to apply measures to secure judgment enforcement, including: freezing of accounts,
temporary seizure of assets and papers, temporary suspension of registration, transfer,
etc. change the current state of assets to avoid the debtor’s dispersal of assets and
inability to repay the debt according to the judgment. At the same time, the judgment
enforcement agency will issue a notice of judgment enforcement, setting a time limit
for the debtor to voluntarily execute the judgment of 15 days from the date the debtor
receives or is duly notified execution decision. At the end of the above-mentioned
voluntary time limit, the debtor who has conditions for judgment enforcement but
does not voluntarily execute the judgment will be subject to coercion.
The enforcement of money assets will be applied by the judgment enforcement
agency one of the measures such as deducting money from the account; subtract from
the judgment debtor’s income, collect money from the judgment debtor’s enterprise
activities; collect money from judgment debtors who are holding or collect money
from judgment debtors who are kept by third parties or sell assets of judgment debtors
to collect debts.
Although the judgments and decisions have taken effect, the initiation of lawsuits and
judgment enforcement in many cases still cannot be enforced and the enterprise can
debt recovery is challenging.
One is the determination of the debtor’s address for the court to serve the documents.
The debtor always tends to evade and not cooperate, i.e. constantly changing
addresses and causing difficulties for the court in the process of settling the case.
Accordingly, the court could not proceed to serve the debtor, then some courts have
decided to return the petition to the claimant, or suspend the case because it considers
that there are not enough conditions to initiate a lawsuit or not summon the defendant.
This is one of the main factors causing delays in the legal process when enterprises
initiate lawsuits.
The second is the application of trial procedure in absentia. In order to fully meet the
conditions for trial in absentia, the court will take time and many measures to verify
and post procedural documents according to regulations. Besides, for debt disputes
with complicated elements, it takes more time to collect more documents and
evidences, conduct solicitation of document expertise, etc. or the case has many
people with interests and obligations related, the trial was adjourned several times.
Therefore, the intangible interests of enterprises have been seriously affected.

4. Third is the execution process. In fact, many enterprises have had court judgments,
but the judgment enforcement process has lasted for many years, and enterprise have
not been able to recover their debts. This problem may arise from the lack of
flexibility in the coordination between banks, other agencies and organizations and the
judgment enforcement agency, which is detrimental to the verification and distraint of
assets of the agency, directly affecting the time of judgment enforcement.
Fourth is for the distraint, auction of assets that are assets that are difficult to
determine the value of, or properties that are in dispute or there are no auction
participants are also reasons for the delay in debt recovery.
Fifth is due to human subjective factors. Specifically, due to opposing and
uncooperative acts of changing the current status of mortgaged assets, obstructing the
verification of judgment enforcement conditions, asset valuation, and asset auction.
For movable property, the debtor could actively move or disperse in order to cause
difficulties in the handling process. In addition, there are cases where enforcers violate
the time limit for notifying or serving judgment enforcement decisions/notices, failing
to conduct verification…
Hence, enterprises that wish to proceed debt recovery effectively need to proactively
collect information, judgment execution conditions of the debtor and provide it to the
judgment enforcement agency. Besides, it is necessary to seek the legal advice of law
firm in Vietnam with experience in litigation and enforcement for debt recovery
process in Vietnam.