According to the law in Vietnam: What is overdue principal? When shall delinquent debt procedures in Vietnam be performed?

According to the law in Vietnam: What is overdue principal?

Pursuant to Clause 11 Article 2 of the Circular 39/2016/TT-NHNN stipulating as follows:

Definition

For the purposes of this Circular, the terms used herein is construed as follows:

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11. Overdue principal is composed of:

a) The outstanding amount of principal to become delinquent as prescribed in Article 20 hereof;

b) The outstanding amount of principal on which a customer is delinquent in the event of a credit institution’s termination of a loan or collection of debt prior to the due date as stipulated by Clause 1 Article 21 hereof.

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As regulations above, overdue principal is composed of:

- The outstanding amount of principal to become delinquent as prescribed in Article 20 hereof;

- The outstanding amount of principal on which a customer is delinquent in the event of a credit institution’s termination of a loan or collection of debt prior to the due date according to the agreed terms when it discovers that the customer provides false information, violates regulations in the loan agreement and/or the loan guarantee contract.

According to the law in Vietnam: What is overdue principal? When shall delinquent debt procedures in Vietnam be performed? - Source: Internet

When shall delinquent debt procedures in Vietnam be performed?

Pursuant to Article 20 of the Circular 39/2016/TT-NHNN stipulating delinquent debt as follows:

The credit institution shall perform delinquency procedures for the principal amount of which repayment is not made by the agreed due date and rescheduling is not accepted by the credit institution; notify the customer of such delinquency. That notification shall include at least the following contents: outstanding amount of overdue principal, time of delinquency of such debt and interest rate charged for that overdue principal amount.

As regulations above, the credit institution shall perform delinquency procedures for the principal amount of which repayment is not made by the agreed due date and rescheduling is not accepted by the credit institution.

In case the customer fails to make repayment of debt due in Vietnam, what methods are the credit institutions entitled to?

Pursuant to Article 21 of the Circular 39/2016/TT-NHNN stipulating loan termination, debt treatment, loan interest or fee exemption or reduction as follows:

Loan termination, debt treatment, loan interest or fee exemption or reduction

1. The credit institution shall be accorded the right to terminate a loan and collect debt prior to the payment due date under terms and conditions of a loan agreement when it has established that the customer provided unauthentic information or violated terms and conditions of a loan agreement and/or loan guarantee contract. Upon terminating a loan and recovering debt prior to the agreed due date, the credit institution shall notify the customer of such loan termination and early debt recovery. The minimum contents of such notification include the date of loan termination and debt collection prior to the due date, the principal amount to be recovered prior to the due date; deadline for repayment of principal amount to be recovered prior to the due date, date of debt delinquency and interest rate applied to the outstanding amount of principal to be recovered prior to the due date.

2. Where the customer fails to make repayment of debt due, the credit institution shall be entitled to apply methods for debt recovery under terms and conditions of a loan agreement, loan guarantee contract and regulations of relevant laws. If the amount of money obtained after application of methods for debt recovery is not adequate to fulfill obligations to pay debt owed to the credit institution, the customer shall keep on assuming responsibility for paying off loan principal and interest in full to the credit institution.

3. Where the customer or guarantor is affected by the court’s decision to open the bankruptcy proceedings or declaration of bankruptcy, the credit institution's recovery of debt owed by the customer and guarantor shall be carried out under regulations of the law on bankruptcy.

4. The credit institution shall have the right to decide to offer the customer loan interest or fee exemption or reduction in accordance with internal rules of the credit institution.

As regulations above, where the customer fails to make repayment of debt due, the credit institution shall be entitled to apply methods for debt recovery.

If the amount of money obtained after application of methods for debt recovery is not adequate to fulfill obligations to pay debt owed to the credit institution, the customer shall keep on assuming responsibility for paying off loan principal and interest in full to the credit institution.

Best regards!