Standard Debt Recovery Enforcement Methods

The enforcement of judgment for debt recovery is a legal process that implements judgments, decisions from courts, arbitral awards, and decisions from commercial arbitration (collectively referred to as “Judgments and Decisions”) to recover debts and protect the rights and legitimate interests of organizations or individuals (hereinafter referred to as “Judgment Creditors”) when overdue debts arise. This process is crucial for enhancing the effectiveness of recovering money and assets through legal means, ensuring that Judgment Creditors can uphold their rights after obtaining a valid judgment or decision from a competent court. The following article on Standard Debt Recovery Enforcement Methods will outline the detailed steps involved and other relevant requirements for the enforcement of judgments for debt recovery in Vietnam.

How to understand the meaning of Standard Debt Recovery Enforcement Methods?

First and foremost, the enforcement of judgment for debt recovery is a process that occurs after an organization or individual has utilized legal mechanisms such as commercial mediation, filing a lawsuit in court, or commercial arbitration, and has received a judgment or decision issued by a competent court or arbitration body, or a conciliation agreement made by a conciliator. Once these legal documents take effect, the court is responsible for transferring the judgment or decision along with copies of the minutes regarding asset seizure, temporary detention of assets, or other related documents to the appropriate enforcement authority.

Simultaneously, the head of the judgment enforcement agency will issue a proactive enforcement decision or an enforcement decision upon request (if requested by the parties involved). If the judgment debtor is willing to cooperate and fulfill their debt payment obligations, the debt recovery is considered resolved. Conversely, if the judgment debtor refuses to cooperate and does not meet their payment obligations, the debt recovery process becomes more complex. In such cases, the judgment creditor and the competent authority must work together to carry out various enforcement tasks, including notification, verifying the conditions for enforcement, applying Standard Debt Recovery Enforcement Methods, and continuing these efforts until the enforcement is successfully completed.

The Procedure of Standard Debt Recovery Methods

As mentioned above, the procedure for enforcing a judgment to recover debt begins once there is a legitimate judgment or decision in place. Based on this, the enforcement authority will either proactively issue a decision to enforce the judgment (Proactive Enforcement Decision) or respond to a request from an organization or individual to issue a decision to enforce the judgment (Enforcement Upon Request). In this article, we will focus on analyzing the procedure for Enforcement Upon Request. Accordingly, organizations and individuals will undertake notification, verification, and the application of Standard Debt Recovery Enforcement Methods through the following steps:

Draft and submit the Written Request for Enforcement of Judgement

To prevent the need for multiple revisions of a written request by the enforcement authority, the draft of the legal document, particularly the written request for enforcement of judgment, must be clearly and coherently articulated in content and presented in a professional format. Therefore, organizations and individuals may consider contacting a law firm for assistance in drafting this document. In case of self-drafting, organization and individual should note that the Written request for Enforcement of Judgement must have the following main content:[1]

• Full name and address of the requester;
• Name of the civil judgment enforcement agency requested to enforce the judgment;
• Full names and addresses of the judgment creditor and judgment debtor;
• Contents of the judgment requested to be enforced;
• Information on assets and judgment execution conditions of the judgment debtor, if any;
• Date of making the request;
• The signature or fingerprint of the requester. For a legal entity, its written request must bear the signature of its lawful representative and its seal, if any.

After submitting the written request for enforcement of judgment to the competent enforcement authority, the authority is responsible for receiving the applicant’s request. If the application is deemed valid, the head of the enforcement authority will issue a decision on enforcement of judgment within five (05) working days from the date of receipt of the application. Within two (02) working days of issuing the decision, the head will assign an enforcement officer to carry out the enforcement of the judgment. Simultaneously, the enforcement authority will send the decision on enforcement of judgment to the People’s Procuracy at the same level, to the parties involved in the case, and will also forward the decision on compulsory enforcement of judgment to the People’s Committee of the relevant commune, ward, or town. Additionally, the decision will be sent to agencies, organizations, and individuals involved in the implementation of the enforcement decision.

Verifying the conditions for enforcement of judgement for debt recovery

In practice, not all organizations and individuals are capable of meeting their debt obligations on time. Therefore, it is essential to verify whether an organization or individual possesses the necessary conditions and ability to enforce the judgment for the purpose of debt collection by the judgment creditor. To assess the conditions for enforcing the judgment for debt recovery, organizations and individuals can request that the enforcement officer conduct an evaluation in cases where all necessary measures have been taken, but the judgment creditor remains unverified, or when the time for judgment enforcement has expired without voluntary compliance from the judgment debtor. It is important to note that requests for assistance from the enforcement officer in verifying the conditions for judgment enforcement must be made in writing, providing detailed information about all measures the requester has attempted that yielded no results, along with supporting documents and evidence. The verification of the conditions for the Enforcement of Judgments for Debt Recovery must be carried out quickly and promptly, to ensure that the application of Standard Debt Recovery Methods is carried out quickly and effectively.

Note that the person subject to enforcement shall not be liable for the costs of verifying the conditions for enforcement carried out by the Enforcement Officer.

Applying the Standard Debt Recovery Methods

When realizing that the Judgment Debtor does not voluntarily and cooperatively comply with the Judgment Execution Decision, in addition, through verifying the conditions for judgment execution, realizing that the Judgment Debtor has assets for enforcement of judgment for Debt Recovery, the Enforcement Officer must, within 24 hours, issue a decision to apply Standard Debt Recovery Methods including security measures and enforcement measures. Accordingly, the Judgment Creditor may request the Enforcement Officer to apply the methods as listed below:

• Blockading accounts;
• Seizing assets and papers;
• Suspending registration, transfer or change in the current state of assets;
• Prohibit or force certain acts to be performed;
• Prohibition of exit for those with obligations etc.

In case the Judgement Debtor resides or has assets in another locality, the Head of the Enforcement Authority must issue a Decision to authorize the Enforcement Authority in that locality to organize the enforcement of the decision to apply temporary urgent measures.

Note, the person requesting the Enforcement Officer to apply security measures is responsible under the law for his/her request. In case the request is applied incorrectly and causes damage to the person subject to the measure or to a third party, compensation must be paid.

• Pay the Judgment Enforcement Fee and Complete the Judgment Enforcement

According to the provisions of the current Law on Civil Judgment Enforcement, payment of money and assets when the Judgment Debtor executes the Judgment Enforcement Decision shall be paid in the following order of priority:

• Costs of enforcement and rental allowance for one (01) year in cases the property subject to enforcement is the sole residence of the Judgement Debor.
• Alimony, salaries, and allowances for employees as prescribed by the Labor Code; compensation for damages as prescribed by the Civil Code.
• Court fees and charges.
• Other amounts to be enforced according to the Judgment and Decision.

If multiple individuals are subject to execution simultaneously, payments will be made according to the established order of priority. In cases where several individuals share the same priority level, the execution amounts will be distributed based on the percentage of their respective executions.

According to legal provisions, the enforcement of judgments will automatically conclude upon receipt of the following documents or confirmations: (i) a confirmation from the civil enforcement agency indicating that the litigant has fulfilled their rights and obligations, or (ii) a decision to suspend the enforcement of judgments. However, in practice, the enforcement agency typically does not provide confirmation regarding whether the litigant has completed their rights and obligations. Instead, this confirmation may be reflected in other documents, such as a payslip for the judgment creditor in cases of payment, or a record of agreement if the litigant consents to enforce the judgment, among other forms.

The important of coordination between the enforcement authotiry and credit instituations and/or organiztions that hold morgages on the assets of the judgement debtor in organizing Standard Debt Recovery Enforcemenr Methods

Enforcement of judgments for debt recovery is a litigation activity. In addition to complying with the processes and procedures prescribed by law to ensure that all decisions and actions of the enforcement agency are issued in accordance with the correct order and procedures, the enforcement agency needs to have the participation and close coordination between the relevant litigation agencies and the requesting organizations and individuals. Good coordination with relevant agencies, organizations and departments in applying Standard Debt Recovery Methods is one of the important factors that determine the effectiveness of Enforcement of Judgments in general.

Applying Standard Debt Recovery Methods, it is necessary to pay attention to whether the person subject to enforcement still has assets to enforce or not. To verify this issue, the enforcement officer must have relationships with credit institutions and/or mortgagees of the person subject to enforcement to promptly contact and prevent acts that risk dissipating assets. In addition, it is also necessary to have relationships with inter-sectoral agencies and local agencies to promptly notify, carry out asset seizure and/or entrust verification of conditions for enforcement.

The above is an overview of Standard Debt Recovery Methods. If you have difficulties in finding a Law Firm to advise and support in the relevant legal field, please contact us. Phuoc & Partners is a professional consulting firm established in Vietnam and currently has nearly 100 members working in three offices in Ho Chi Minh City, Hanoi and Danang. Phuoc & Partners is also rated as one of the leading consulting firms in Vietnam with highly specialised teams in top legal fields such as Labour and Employment, Taxation, Merger and acquisition, Litigation. We are confident in providing customers with optimal and effective service.

[1] Article 31 of the Law on Enforcement of Judgments 2008, amended and supplemented 2014.