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.

1. 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.
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 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 needs to show information about the
debtor’s assets or judgment enforcement conditions.

2. 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.
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

3. 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 with
experience in litigation and enforcement for debt recovery process in Vietnam.
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