Is the business of debt collection services allowed by law?

Debt collection service is a service that an individual, organization or enterprise authorizes an enterprise that has been granted a Debt Collection Service Business Registration Certificate to perform debt collection activities in accordance with the law.

Is the debt collection service business legal?

Is the debt collection service business legal?
Debt collection service is a service that an individual, organization or enterprise authorizes an enterprise that has been granted a Debt Collection Service Business Registration Certificate to perform debt collection activities in accordance with the law.

In essence, debt collection services are not bad, do not affect society and are a normal business activity of the economy. In the US, there is a separate law related to fair debt collection. But in reality, in Vietnam there are many companies taking advantage of this business service by using illegal measures such as raping the debtor's property, negatively affecting social order, and infringing on the health of the debtor. health, spirit and even the lives of many people.

Therefore, from January 1, 2021, according to the provisions of Article 6, the Investment Law 2020, there are regulations on industries and professions that are banned from business investment, including debt collection service business. Also according to the Investment Law 2020, the contract to provide debt collection services is signed before January 1, 2021; The parties to the contract may carry out activities to liquidate the contract to provide debt collection services in accordance with the provisions of civil law and other relevant laws.

Thus, the current law prohibits the business of debt collection services due to the fact that many debt collection service companies hide under the guise of providing this service but are actually debt collection groups. belongs to a group of gangsters, causes offense, and has a negative impact on society

How are debt collection businesses punished?
Individuals and organizations providing debt collection services will be punished according to the provisions of law, specifically, in Article 7, Decree No. 98/2020/ND-CP regulating administrative sanctions in commercial activities. trade, production, trade in counterfeit and banned goods and protect consumer rights:

For individuals:
"first. Fines from 60,000,000 VND to 80,000,000 VND for acts of providing services in the list of industries and trades banned from business investment.

Additional penalties:
Confiscate evidence and means of violation for violations specified in Clause 1 of this Article.

Remedial measures:
Forced to return illegal profits obtained from violations specified in Clause 1 of this Article.”

For organizations providing debt collection services:
According to Clause 4, Article 4 of Decree 98/2020/ND-CP amended by Point b, Clause 1, Article 3 of Decree 17/2022/ND-CP stipulates:

“The fines specified in Chapter II of this Decree are the fines applicable to administrative violations committed by individuals, except for administrative violations at Point p, Clause 2, Article 33, Clause 2 Article 34, Point b Clause 4 Article 35, Article 68, Article 70, Clauses 6,7,8,9 Article 73 and Clauses 6,7,8, Article 77 of this Decree. In case the administrative violation is committed by an organization, the fine shall be twice the prescribed fine for individuals.

Thus, the penalty level for organizations providing debt collection services is VND 120,000,000 to VND 160,000,000. In addition, this act also results in confiscation of evidence and means of violation and forced return of illegal profits.

How to collect debt legally?
In essence, lending exists in the form of asset loan contracts (can be verbal or written) in many different forms.

In Article 463, the 2015 Civil Code stipulates: “A property loan contract is an agreement between the parties, whereby the lender delivers the property to the borrower; When the repayment is due, the borrower must return to the lender assets of the same type in the correct quantity and quality and must only pay interest if agreed or prescribed by law.

It can be said that the borrower's obligation is to return the property to the lender in accordance with the correct quantity and quality and pay interest in case the parties agree. The failure of the borrower to repay the lender is a violation of the legitimate rights and interests of the lender, therefore, the lender has the full right to collect the debt from the borrower.

To legally collect debt, the first thing to note when collecting debt is not to use force, threaten to use force, or threaten the debtor's health or spirit to collect the debt. The above actions can lead to debt collectors being administratively sanctioned, or even being prosecuted for criminal liability for crimes such as intentionally causing injury or harming the health of others (Article 134, Penal Code 2015); Crime of threatening to kill (Article 133, Penal Code 2015), crime of property appropriation (Article 170, Penal Code 2015),...

So, to legally collect debt in case the loan term expires and the debtor still has not paid the debt, the lender can apply some of the following methods:

Negotiation and reconciliation
The parties work together to resolve issues such as debt repayment period, interest regulations, etc. This method is often applied because it is quick and economical, but recovery efficiency is not high because of the lack of binding between parties. party and depends on the debtor's willingness to cooperate.

Resolved according to court proceedings
The debtor's late payment is a basis to show that the legitimate rights and interests of the lender are violated, therefore, the lender has complete grounds to file a lawsuit at the People's Court with jurisdiction to sue. request to protect their legitimate rights and interests.