Friendly Loans: Loan Notes & Lawful Collection

A close friend asks for VND 200M “for 3 months”, a colleague wants you to co-sign — lending to friends is emotional, but collecting is legal. No paperwork = 90% lost. Here’s how to lend “warmly but securely”.

Lending right: 4 elements of a loan note

1. Written form: handwritten loan notes are legally valid with complete contents — notarisation unnecessary for ordinary civil loans. But get both signatures + a witness (best).
2. Mandatory contents: full names, IDs of both parties; amount (figures + words); purpose; interest rate (state %/year, not exceeding 20%/year — Art. 468, 2015 Civil Code); term; repayment method.
3. Disbursement proof: bank transfers marked “loan” — cash needs signed receipts. Without disbursement proof, even loan notes struggle.
4. Security (large sums): mortgaged/pledged assets or a guarantor — see the guarantee article in this series.

Collecting lawfully: 3 rungs

Rung 1 — Documented negotiation: written repayment demands (saved messages/emails), extensions with specific deadlines — every new agreement in writing.
Rung 2 — Civil suit: overdue and unpaid → sue at the borrower’s residence court. Limitation: 3 years from the due date (2015 Civil Code).
Rung 3 — Enforcement: won but unpaid → request civil judgment enforcement against assets.

3 things NEVER to do collecting debts

No force or threats: risks extortion (Art. 170 Penal Code) or intentional injury charges — creditor becomes defendant.
No thug “debt collectors”: hired debt collection has been banned since 1/1/2021 (2020 Investment Law).
No seizing IDs or locking people in: unlawful detention offences.

FAQs

Interest-free loans — document?

Yes — state “interest-free”. Unstated rates mean interest-free by default; you can’t claim interest later.

Borrower fled abroad?

You can still sue (in-absentia trials where service conditions are met); enforcement is harder — hence security for large loans.

Small friendly loans (a few million)?

Transfer messages noting “loan + repay by…” count as evidence. But suing over millions costs more time than money — negotiate.

Contact us

FLAT Law Firm advises foreign nationals and their families on inheritance, wills, driving licences, health insurance and money transfers in Vietnam. Contact us for advice on your specific case.