How many years is maximum charge-off for debt paid to the Credit Guarantee Fund in Vietnam?

How many years is maximum charge-off for debt paid to the Credit Guarantee Fund in Vietnam?

Pursuant to Article 12 of Circular 57/2019/TT-BTC regulations on charge-off as follows:

1. Subjects of consideration: Customers facing risks due to one of the cases specified in Clauses 1, 3 and 4, Article 7 of this Circular.

2. Conditions for consideration: Customers are considered for charge-off when they meet the following conditions:

a) Belonging to the subjects specified in Clause 1 of this Article;

b) Having difficulties in production and business activities leading to production and business results of the two (02) years immediately preceding the year of request for charge-off being at a loss and having accumulated losses, unable to repay debt (principal, interest) on time according to the signed Compulsory Debt Acceptance Contract;

c) Have a feasible production and business plan and debt repayment plan after charge-off;

d) The customer's debt has been restructured or has not been restructured but the Credit Guarantee Fund appraises and evaluates:

- If debt restructuring measures are applied, the customer will not be able to repay the debt (principal, interest) to the Credit Guarantee Fund in accordance with the signed Compulsory Debt Acceptance Contract;

- The customer's production and business situation is very difficult, it is necessary to implement charge-off measures to remove difficulties for the customer and after charge-off, the customer will be able to fully repay the principal and interest to the Credit guarantee fund.

3. Charge-off period: A debt can be frozen many times but must ensure that the total charge-off period does not exceed three (03) years and does not exceed 1/3 of the required debt receipt period.

4. Based on the conditions for considering charge-off specified in Clause 2 of this Article and the financial situation of the Credit Guarantee Fund, the Chairman of the Credit Guarantee Fund shall consider and decide on measures to freeze debt according to the provisions at point b Clause 3 Article 37 of Decree No. 34/2018/ND-CP of the Government.

Thus, the maximum charge-off period is no more than 3 years and no more than 1/3 of the mandatory debt receipt period according to regulations in Vietnam. Enterprises must meet the conditions specified in Clause 2 of the above Article to be considered for charge-off by the Credit Guarantee Fund.

How many years is maximum charge-off for debt paid to the Credit Guarantee Fund in Vietnam? (Image from the Internet)

If the credit guarantee fund handles collateral assets, can the surplus be returned in Vietnam?

According to the provisions of Article 13 of Circular 57/2019/TT-BTC, regulations on handling collateral are as follows:

1. Subjects of consideration: Customers facing risks due to one of the cases specified in Article 7 of this Circular or according to the agreement between the Credit Guarantee Fund and the customer in the Compulsory Debt Acceptance Contract and the guarantor in the signed Mandatory Debt Guarantee Contract (if any).

2. Conditions for consideration: The credit guarantee fund is allowed to handle secured assets to recover debt when:

a) Subjects of consideration are specified in Clause 1 of this Article;

b) The customer's debt has been restructured, debt frozen, debt interest written off or has not been restructured, debt frozen, debt interest written off but the Credit Guarantee Fund appraises and evaluates if restructuring measures are applied, charge-off, or interest cancellation, the customer will not be able to pay the principal to the Credit Guarantee Fund as committed.

3. Handling the difference between the amount collected from handling secured assets and the book value of the debt (after deducting costs as prescribed by law):

a) In case the amount of money collected from handling secured assets is higher than the book value of the debt: The Credit Guarantee Fund handles the balance according to the agreement between the Credit Guarantee Fund and the customer in the Compulsory Debt Acceptance Contract and the guarantor in the signed Compulsory Debt Assurance Contract (if any);

b) In case the amount of money collected from handling secured assets is lower than the book value of the debt: The credit guarantee fund is responsible for continuing to monitor and recover the remaining debt (principal, interest) according to the prescribed regime or consider applying other risk treatment measures according to the provisions of this Circular.

4. In case of common collateral for the loan and the guaranteed amount, the handling of the collateral is carried out according to the agreement between the Credit Guarantee Fund and the guarantee recipient as prescribed in Clause 3, Article 33 Decree No. 34/2018/ND-CP of the Government.

According to this Article, after handling the debt assets to obtain an amount higher than the book value of the debt, the Guarantee Fund will handle the balance according to the agreement between the Fund and the customer in the mandatory debt acceptance contract in Vietnam. So the excess amount can be returned depending on the contract signed above.

Best regards!