Practical Priority Competition Among Creditors
There is a priority competition among creditors. Practical priority and the debtor's asset situation have a greater impact than legal priority.
- Legal Priority: Legally determined based on security rights, workers' wages, taxes, etc.
- Practical Priority: Creditors who take legal action first have a practical advantage
- Debtor's Asset Situation: Are there remaining assets for debt settlement?
Quick response is a key factor in increasing the possibility of debt recovery. The creditor's prompt action plays a crucial role in securing practical priority, and can secure opportunities for preservation measures (such as provisional attachment, provisional disposition, etc.) and compulsory execution (such as seizure of balance, physical assets, etc.) before assets are depleted in the process of settling other creditors' debts.
4-Step Process for Effective Debt Recovery
A systematic approach is necessary for successful debt recovery. The following is an overview of the 4-step process.
Importance of Legal Debt Recovery
The Vietnamese government has strengthened the enforcement standards for debt collection activities since 2023. Private companies that can perform debt collection activities in Vietnam include debt collection companies managed by public security and law firms managed by the Ministry of Justice. However, debt collection companies are not agencies that represent legal dispute resolution. If a creditor entrusts the resolution of a debt dispute to a company that is not a law firm registered with the Ministry of Justice, the creditor may also be held legally responsible.
Composition of Debt Recovery Fees
The fees for outsourcing debt recovery are generally composed as follows:
- Initial Fee: Initial costs and basic service fees
- Court Evidence Storage Fee: Vietnam has a system of evidence stored by local courts
- Success Fee: Calculated as a percentage of the recovered amount
- Administrative Costs: Litigation costs, arbitration costs, etc.
- Other Expenses: Transportation costs, actual expenses, etc.
Many clients are afraid to contact law firms due to fee issues. We understand this tendency of clients, so we provide a verbal estimate of the fees during the initial phone consultation. Please feel free to call us.
Develop a Strategy Before It's Too Late
Even if you're not starting legal action immediately, there are matters that need to be identified in advance:
- Valid Evidence: It's difficult to secure valid evidence after the relationship between the parties has deteriorated.
- Status of Other Creditors: Are other creditors already taking legal action?
- Debtor's Asset Status: Are there assets that can be secured through legal action?
All of the above items are difficult to identify directly unless you're a law firm. Before it's too late, seek advice from a law firm specializing in debt recovery.