Scenario: an investor is offered a portfolio of Vietnamese corporate debts at 30% of face value. Whether that is high or low is unanswerable without dissection: how well documented the debts are, what the debtors still own, and how long recovery realistically takes. Debt trading is a full investment transaction — with its own pricing and risk discipline, not «buy cheap and go collect».
The deal frame: buying a debt outright is not hiring collection
A debt sale runs on the assignment of claims mechanism in Article 365 of the Civil Code 91/2015/QH13: the seller transfers the claim, and the buyer becomes the new creditor with all attached rights (including rights over security). Draw a hard line against «collection mandates» of the hired-collection type — the debt-collection service business has been prohibited in Vietnam since 1 January 2021. A lawful debt buyer owns the claim and bears recovery risk itself; it is not an agent «collecting for a percentage» for the old creditor.
The market also has professional vehicles such as bank asset-management companies (VAMC for bank bad debt, DATC for state-sector corporate debt) — but trades between companies and investors remain civil sales under the Article 365 frame, centred on the debt purchase agreement.
Pricing a debt: the four variables that set the price
- Legal quality of the claim: the underlying contract, a signed reconciliation, an enforceable judgment already in hand — a debt with a judgment prices far above a debt still at the «documented» stage;
- Security and the debtor’s assets: a claim secured by properly registered real-estate mortgage is a different species from an unsecured claim against an emptied debtor — price tracks expected asset recovery, not face value;
- Limitation and dispute status: a claim near its limitation deadline (2 years commercial / 3 years civil), or facing a quality counterclaim from the debtor — every weakness converts into discount;
- Recovery cost and time: court fees, enforcement costs, an expected 1–3 years for a contested file — professional buyers price from «how much comes back, when, at what cost», plus a risk margin, and only then name a bid.
Deal process and the risks most often skipped
A standard process: diligence the debt file (a data room with the contract, delivery documents, reconciliations, demand correspondence); diligence the debtor (enterprise registration, secured transactions, pending cases, tax status); sign the debt purchase agreement with warranties that the claim is real and price-adjustment mechanics if part proves non-existent or already paid; notify the debtor of the assignment in writing; and register the change of secured party for registered security.
The most-skipped risks: (i) the claim was already pledged or assigned twice before — registry searches are an uncuttable step; (ii) the debtor holds a set-off right against the old creditor (mutual debts) shrinking the claim’s real value after transfer; (iii) an anti-assignment clause in the underlying contract voiding the trade from the start. All three live in the diligence checklist, not in intuition.
Frequently asked questions
What is the procedure for debt trading in Vietnam?
At its core, an assignment-of-claim agreement under Article 365 Civil Code 2015 between seller and buyer, preceded by diligence on the debt file and the debtor, followed by written notice to the debtor and registration of the change of secured party where security is registered.
What is a debt’s price based on?
Expected recovery value: the claim’s documentation quality and legal status (judgment in hand or not), security and the debtor’s real assets, remaining limitation, minus expected recovery cost and time plus a risk margin. Face value alone does not set the price.
How does buying debt differ from hiring a collection company?
Buying debt transfers ownership of the claim — the buyer becomes the creditor and bears recovery risk, fully lawful under the Civil Code. The hired debt-collection service business (collecting for a fee for the creditor) has been prohibited in Vietnam since 1 January 2021.
What is the biggest risk when buying a debt?
Buying an «unclean» claim: previously assigned or pledged twice, a debtor set-off against the old creditor, an anti-assignment clause in the underlying contract, or documents insufficient to prove the debt in court. All must be excluded by diligence before money moves.
This article has been quality-reviewed by the FLAW AI Legal Council