Legal debt collection methods

How can debt collection be done without violating the law?

1. Debt collection through negotiation

Debt payment request through sending a letter of request to the Debtor
Enterprises can contact the debtor via letter, email or phone to request payment. However, debt collection requires accuracy and is phased, so businesses often choose to send documents and official dispatches to effectively collect debt. This form needs to be implemented skillfully and flexibly, avoiding creating pressure or even threatening the Debtor to avoid future legal consequences.

Debt payment request through negotiation
Negotiation is a method that is often preferred by buyers and sellers because negotiation has many advantages such as being simple, flexible, inexpensive, not bound by complicated legal procedures and processes, the parties can keep business secrets and can maintain long-term cooperative relationships with each other. Through negotiation, the parties discuss and negotiate to resolve debt collection quickly, saving the parties' time. The State always encourages the parties to negotiate to resolve debt collection in the spirit of respecting the parties' right to freedom of agreement.

Through negotiation, the parties can extend the debt payment period for the debtor, such as allowing late payment in installments, dividing into small periods and setting the final payment deadline, or reducing or exempting some interest, fees, and penalties, or the debtor commits to repay the debt after a certain period of time.

However, debt collection through negotiation also has disadvantages because the success of the negotiation depends on the goodwill of the parties, especially the debtor. If the debtor is willing to cooperate to repay the debt, the debt collection will be resolved quickly. If after many reminders, urgings and warnings, the debtor deliberately delays or prolongs the time to perform the obligation, the negotiation cannot achieve results. At this time, the party whose rights and legitimate interests are violated must file a lawsuit at a competent Court or Arbitration.

2. Debt recovery through filing a lawsuit at a competent court or arbitration

After implementing measures of negotiation, bargaining and considering the feasibility of the case, the Enterprise can consider deciding to file a lawsuit at a competent court or arbitration center.

For the method of dispute resolution by arbitration, to resolve a dispute by arbitration, the parties must have an agreement to submit the dispute to arbitration. This agreement can be a clause of the sales contract between the parties or made in a separate written agreement. Even after the dispute arises, the parties can agree to arbitration. The advantages and disadvantages of this method include:

Advantages: The procedure is simpler and more flexible than the Court, at the same time, the parties have the right to choose the arbitrator, time, place of arbitration, etc. Because the parties' information is kept confidential throughout the dispute resolution process, the parties can keep their business secrets and reputation.
Disadvantages: The arbitrator's decision has intermediate value, the parties do not have the right to appeal.
For the method of dispute resolution by Court, this is the last method when the disputing parties have no other choice after unsuccessful efforts at negotiation and conciliation and the disputing parties do not agree to bring the dispute to Arbitration for settlement. The advantages and disadvantages of this method include:

Advantages: This method is highly coercive, using state power to force the violating party to fulfill its obligations, the parties have a public and equal opportunity to protect their rights before the law.
Disadvantages: One of the disadvantages of this method is that the legal procedures are complicated, time-consuming for the parties to resolve the case and the execution of the judgment is prolonged. In particular, due to the nature of the trial in court being public, some parties cannot keep business secrets and the reputation of the parties may be reduced.

When choosing a method of dispute resolution, the parties need to clearly understand the nature and consider the advantages and disadvantages of each method to make a reasonable decision.

Major