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Why ban the business of debt collection in Vietnam?

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Debt collection is a familiar problem to everyone, borrowers are constantly facing problems that are difficult to solve when they cannot pay their debts, even harming their mental health or their lives. Currently, the state has banned the business of debt collection. In this article, LSX legal firm would like to give you an insight into: “Why ban the business of debt collection in Vietnam?”

  • Law on Investment 2020
  • Decree 98/2020/ND-CP
  • Criminal Code 2015

Banned business lines

Article 6 of the Law on Investment in 2020 stipulates the prohibited business lines as follows:

Article 6. Banned business lines

1. The business investment activities below are banned:

a) Trade in the narcotic substances specified in Appendix I hereof;

b) Trade in the chemicals and minerals specified in Appendix II hereof;

c) Trade in specimens of wild flora and fauna specified in Appendix 1 of Convention on International Trade in Endangered Species of Wild Fauna and Flora; specimens of rare and/or endangered species of wild fauna and flora in Group I of Appendix III hereof;

d) Prostitution;

dd) Human trafficking; trade in human tissues, corpses, human organs, and human fetuses;

e) Business activities pertaining to asexual human reproduction;

g) Trade in firecrackers.

h) Provision of debt collection services.

2. The Government’s regulations shall apply to the production and use of the products mentioned in Points a, b, and c Clause 1 of this Article during analysis, testing, scientific research, medical research, pharmaceutical production, criminal investigation, national defense, and security protection.

Penalties for debt collection service provider

Article 7 of Decree 98/2020/ND-CP stipulates that sanction of providing services on the list of industries and trades banned from the business investment:

  • A fine ranging from VND 60.000.000 to VND 80.000.000 imposed for providing services included in the list of banned business lines.
  • Additional penalty: Confiscate the exhibits and instrumentalities used for committing the violation.
  • Remedial measure: compelled to return any benefits illegally obtained from the commission of the violation.

Why ban the business of debt collection?

According to Point h, Clause 1, Article 6 of the Investment Law in 2020, business in debt collection belongs to the prohibited business lines.

Initially, the debt collection service did not harm society but its variations appeared in these years. In other words, individuals and debt collection organizations take advantage of the business registration of this line of business to conduct debt collection activities by illegal means.

The law has prescribed for organizations and individuals to settle debts: settle the relationship between property rights and obligations with each other.

  • To settle a debt, the problem that needs to be solved is first to determine the debt, that is, to determine the property obligations of one party to the other. If the parties involved do not agree or agree but fail to fulfill their debt repayment obligations, or a dispute has arisen, they must bring the case to court or arbitration. In fact, many creditors and debt collectors have acted on behalf of the court or arbitrator.
  • In case the debt repayment obligation has been determined according to a legally effective court decision or an arbitral award, but the debtor still fails to voluntarily perform the obligation, the creditor who wants to recover the debt must file a written request for debt recovery to the competent civil judgment enforcement agencies to carry out procedures for coercive judgment enforcement. But in practice, many creditors and debt collectors have acted on behalf of the enforcement agency.

In addition, some organizations and individuals do not have the coercive function or authority, but apply measures to coerce others to perform property obligations. Then, the law will consider it as an act of stealing or robbing another person’s property, a crime specified in the current Criminal Code.

Does debt collection service business go to jail?

In fact, it can be seen that debt collection is the appropriation of other people’s assets, forcing others to pay debts when they are unable to pay in various forms.
According to the provisions of the Criminal Code 2015, the crime of extorting other people’s property:

Article 170. Extortion

  1. Any person who threat of violence, or mental intimidation to obtain another person’s property shall face a penalty of 01 – 05 years’ imprisonment.
  2. This offense committed in any of the following cases shall carry a penalty of 03 – 10 years’ imprisonment:
    a) The offense committed by an organized group;
    b) The offense committed in a professional manner;
    c) The offense committed against a person under 16, a woman whose pregnancy known by the offender, an old and weak, sick, or defenseless person;
    d) The obtained property assessed from VND 50,000,000 to under VND 200,000,000;
    dd) The offense has a negative impact on social safety, order, and security;
    e) Dangerous recidivism;
  3. This offense committed in any of the following cases shall carry a penalty of 07 – 15 years’ imprisonment:
    a) The property obtained is assessed from VND 200,000,000 to under VND 500,000,000;
    b) The offender takes advantage of a natural disaster or epidemic to commit the offense.
  4. This offense committed in any of the following cases shall carry a penalty of 12 – 20 years’ imprisonment:
    a) The property obtained is assessed at VND 500,000,000 or over;
    b) The offender takes advantage of war or state of emergency to commit the offense.
  5. The offender might also be liable to a fine of from VND 10,000,000 to VND 100,000,000 or have all or part of his/her property confiscated.

Besides, if the business of debt collection services affects public order, it may have to take criminal handling as follows:

Article 318. Disturbance or public order

  1. Any person who causes disturbance of public order which negatively impacts social safety, order, or security, or previously incurred a civil penalty for the same offense or has a previous conviction for the same offense which has not been expunged, shall be liable to a fine of from VND 5,000,000 to VND 50,000,000 or face a penalty of up to 02 years’ community sentence or 03 – 24 months’ imprisonment.
  2. This offense committed in any of the following cases shall carry a penalty of 02 – 07 years imprisonment:
    a) The offense is committed by an organized group;
    b) The offense involves use of weapons or vandalism;
    c) The offense results in serious traffic congestion or suspension of public activities;
    d) The offender incites other people to cause disturbance;
    dd) The offender attacks the person who intervenes to maintain public order;
    e) Dangerous recidivism.

LSX legal firm provides legal services to clients in various legal areas. To make your case convenient, LSX will perform:

  • Legal advice related to new regulations;
  • Representing in drafting and editing documents;
  • We commit the papers to be valid, and legal for use in all cases;
  • Represent to submit documents, receive results, and hand them over to customers.

With a team of experienced, reputable, and professional consultants; The firm is always ready to support and work with clients to solve legal difficulties.

Furthermore, using our service, you do not need to do the paperwork yourself; We guarantee to help you prepare documents effectively and legally.

Also, you will not have to waste time preparing the application, submitting application, or receiving results. At those stages, we will help you do it smoothly.

After all, LSX provides the service with the desire that customers can experience it the best way. Additionally, we guarantee the cost to be the most suitable and economical for customers.

Contact LSX

Finally, hope this article is useful for you to answer the question about “Why ban the business of debt collection in Vietnam?”. If you need any further information, please contact  LSX Law firm+84846175333 or Email: [email protected]

What is debt collection service business?

Debt collection, or debt collection service industry, means businesses that granted a business registration certificate for debt collection services perform an act of debt collection at the request of creditors.

Does the obligation to repay the debt end when the borrower dies?

When the borrower dies, his/her heir has to pay within the scope of the deceased’s estate, unless otherwise agreed upon in the loan contract that the payment obligation must be paid by the borrower himself.

Can you denounce debt collection service business?

According to the Law on Denunciations, “denunciation” means an individual, according to the procedures prescribed by this Law, notifying a competent organization or individual of a violation committed by any organization or individual which causes or threatens to cause damage to the State’s interests or legitimate rights and interests of organizations and individuals.
Therefore, when detecting individuals, agencies, or organizations providing debt collection services, people can report them to competent authorities in accordance with the law.

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