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
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.
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
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.
