Debt recovery

Debt recovery: who is this service for?

• Businesses with overdue receivables from partners, agents, distributors, or customers where internal collection efforts have failed.
• FDI companies with debts involving Vietnamese partners or vice versa, needing handling under Vietnamese law across language barriers.
• Creditors in sales, service supply, asset lease, construction, or loan and investment cooperation transactions.
• Businesses already holding court judgments, decisions, or arbitral awards but not yet enforcing them effectively.
• Creditors suspecting debtors of dissipating assets or transferring property to evade payment.
• Creditors of companies showing insolvency signs, needing to consider requesting recovery and bankruptcy proceedings to recover debts within the legal framework.

Common legal issues clients face

Many businesses only come to a lawyer when a debt has been overdue for years, while the limitation period for contract disputes is 03 years for civil relations (Article 429 of the 2015 Civil Code) and only 02 years for commercial disputes (Article 319 of the 2005 Commercial Law) and arbitration-resolved disputes (Article 33 of the 2010 Law on Commercial Arbitration). Once limitation expires and the other side asks the court to apply it, the chance of winning is nearly gone.

A weak debt dossier is the second most common cause: no written contract, unsigned debt reconciliation minutes, or transactions conducted via messages and emails without systematic archiving. In court or arbitration, the claimant must prove the payment obligation arose and fell due.

Even after winning, recovery can stall if the debtor has no assets left or dissipated them beforehand. Enforceability assessment — what assets the debtor still has, where — must therefore be done upfront, alongside considering interim urgent measures such as freezing accounts and seizing assets under Article 114 of the 2015 Civil Procedure Code to prevent dissipation during proceedings.

A costly mistake is hiring a “debt collection company” or using extra-legal pressure. Since 01/01/2021, debt collection services have been a prohibited line of business (point h, clause 1, Article 6 of the 2025 Investment Law (143/2025/QH15), effective 01/3/2026); threatening or coercing debtors can expose the creditor to criminal liability. The only safe path is grounded negotiation, litigation, and judgment enforcement.

What FLAT LAW FIRM does

• Assessing recoverability: reviewing the debt dossier, verifying the debtor’s legal status and assets, and giving a straight assessment of recovery probability and cost — including advising not to pursue when costs exceed the recoverable value.
• Negotiation and demand letters: drafting legally grounded payment demands with a final deadline and warning of legal consequences, and negotiating secured installment repayment plans directly.
• Court litigation: drafting claims, collecting and systematizing evidence, representing clients from first instance through appeal, and calculating in full principal, late-payment interest, and penalties for breach.
• Arbitration: assessing the validity of arbitration clauses in contracts, representing clients at VIAC or other arbitral institutions as agreed — see Dispute Resolution and Arbitration.
• Interim urgent measures: requesting courts to freeze accounts, seize disputed assets, and apply other measures under Article 114 of the 2015 Civil Procedure Code from the filing stage.
• Organizing judgment enforcement: filing enforcement requests within the 05-year limitation (Article 30 of the Law on Civil Judgment Enforcement), and coordinating with civil judgment enforcement agencies on seizure, valuation, and auction of assets.
• Bankruptcy escalation: when the debtor shows signs of insolvency, advising and representing creditors in filing requests to open recovery and bankruptcy proceedings under the 2025 Law on Recovery and Bankruptcy, participating in creditors’ meetings, and supervising asset distribution.
• Preventive review: advising on payment, breach penalty, late-payment interest, and dispute resolution clauses in new contracts — see Commercial and Contracts.

Implementation process

1. Receiving and assessing the dossier: cross-checking contracts, delivery records, debt reconciliations, and payment documents; establishing the legal basis of the debt and the remaining limitation period.
2. Verifying the debtor: checking the debtor company’s operating status, seizable asset information, and signs of asset dissipation or insolvency.
3. Negotiation and demand letters: sending formal demands with a final payment deadline; negotiating direct installment or restructuring plans with security (mortgage, guarantee).
4. Choosing the resolution mechanism: filing with the competent court or commercial arbitration depending on the contract’s dispute resolution clause and case strategy. The competent court is determined per file — our lawyers will help you identify the right authority from the first step.
5. Applying interim urgent measures: alongside filing, requesting account freezes and asset seizures to preserve enforceability.
6. Participating in proceedings: representation at conciliation sessions, court hearings, or arbitration sessions until a binding judgment, decision, or award is issued.
7. Organizing judgment enforcement: requesting enforcement within the 05-year limitation, monitoring seizure, auction, and distribution of enforcement proceeds.
8. Escalation: if the debtor is found insolvent during recovery, advising a pivot to recovery and bankruptcy proceedings to protect creditor rights within the collective creditor framework.

Documents clients should prepare

• Original contracts (sale, services, loan, investment cooperation, etc.) with annexes and amendment minutes.
• Delivery records, service acceptance minutes, VAT invoices, and payment documents already made.
• Debt reconciliation minutes signed and sealed by both parties — the most important evidence of acknowledged debt.
• Correspondence, emails, and messages about the debt (including the debtor’s repayment commitments).
• Debtor information: enterprise registration certificate, head office address, legal representative, known assets (if any).
• Documents previously sent to the debtor: demand letters, working minutes, installment agreements (if any).
• Judgments, decisions, or arbitral awards already obtained (if the case has gone through proceedings).

Expected timeline

Recovery time depends on the debtor’s cooperation and case complexity. The negotiation and demand phase usually lasts 02–06 weeks. If litigation is needed, the first-instance trial preparation period under the 2015 Civil Procedure Code is 02 months, extendable by another 02 months for complex cases (Article 203), not counting appellate time if appealed. The enforcement phase depends entirely on locating the judgment debtor’s assets — fast with clear assets, potentially years of asset tracing. Actual timing varies per case — send us your dossier for an assessed roadmap and timeline suited to your situation.

Our principle is therefore to act early: demand letters go out as soon as the dossier is grounded, and interim urgent measures are considered from filing rather than discovering at enforcement that the debtor has no assets left.

Common legal risks

• Waiting until limitation expires (03 years civil, 02 years commercial/arbitration) before acting, losing the right to court protection when the other side invokes limitation.
• Weak debt dossiers: no signed debt reconciliation minutes, fragmented documents, difficulty proving the exact debt amount.
• Debtor dissipating assets while the creditor hesitates — transferring real estate, withdrawing funds, shell dissolutions.
• Winning the case but unable to enforce because enforceability was never assessed upfront; expiry of the 05-year enforcement request limitation (Article 30 of the Law on Civil Judgment Enforcement).
• Hiring debt collection services or using unlawful pressure — violating the prohibition at point h, clause 1, Article 6 of the 2025 Investment Law (143/2025/QH15), with criminal liability risk.
• Contracts without breach penalty, late-payment interest, or arbitration clauses, reducing leverage and prolonging proceedings.
• Ignoring debtor insolvency signs, missing the shift to recovery and bankruptcy proceedings to share asset distribution with other creditors.

Legal updates through September 2026

The 2025 Law on Recovery and Bankruptcy (No. 142/2025/QH15), effective 01/3/2026, replaces the 2014 Bankruptcy Law. For creditors, the key point is the right to file requests to open recovery and bankruptcy proceedings when the debtor is insolvent (Article 38), and the principle of prioritizing recovery procedures — creditors must monitor closely to not miss debt declaration and creditors’ meeting participation.

Debt collection services remain a prohibited line of business under point h, clause 1, Article 6 of the 2025 Investment Law (143/2025/QH15) — the prohibition has been in force since 01/01/2021 under the 2020 Investment Law and is carried over into the 2025 Investment Law, effective 01/3/2026. Creditors should only recover debts through lawyers, courts, arbitration, and civil judgment enforcement agencies.

On late-payment interest: where parties do not agree a rate, it is set at 10%/year under clause 2, Article 468 of the 2015 Civil Code (referenced at Article 357); for commercial contracts, Article 306 of the 2005 Commercial Law applies the average overdue debt interest rate on the market at payment time, unless otherwise agreed. On breach penalties in commercial contracts: the penalty is as agreed but capped at 08% of the value of the breached contractual obligation (Article 301 of the 2005 Commercial Law).

Full texts of the above instruments can be found at the Government’s legal normative documents system. Page content should be cross-checked against the instruments in force at the time of the procedure.

Why choose FLAT LAW FIRM?

Debt recovery is one of FLAT LAW FIRM’s real practice areas, tied to the firm’s commercial dispute and bankruptcy strengths. We tell clients straight from the first assessment: which debts are worth pursuing, which should be dropped to avoid throwing good money after bad. Our team works in Vietnamese, Chinese, and English, suited to cross-border debts of FDI companies. See also Commercial Disputes and Arbitration and Ongoing Legal Advisory for FDI Companies.

Frequently Asked Questions

Useful links

You should talk to a lawyer if:

• The debt has been overdue for more than 06 months and internal collection efforts show no results.
• The limitation period is about to expire (especially commercial disputes at only 02 years) while the debtor keeps stalling.
• The debtor shows asset dissipation signs: transferring real estate, withdrawing funds, repeatedly changing representatives.
• You already have a court judgment or arbitral award but don’t know how to organize enforcement effectively.
• The debtor is a company showing insolvency signs and you need to consider the bankruptcy escalation.
• The debt has a foreign element: the debtor is an FDI company, the contract applies foreign law, or enforcement is needed abroad.