BASIS FOR DEBT RECOVERY FROM LOAN CONTRACT

Many disputes of debt recovery have occurred related to loan contracts. When negotiation and conciliation are ineffective and the dispute has no criminal signs but is just a normal civil relationship, the creditor has the right to sue the People’s Court to request for debt recovery complying with regulations of laws. So, in order for the competent authority to resolve a request to initiate a lawsuit for debt recovery from loan contract, what should be noted about the legal basis?

1. Term of loan contract

a. In case of debt recovery from loan contract as a contract for loans without fixed term

With respect to a contract for an interest-free loan without a fixed term, the lender may reclaim the property, and the borrower may repay the debt, at any time provided that each party gives reasonable prior notice to the other party, unless otherwise agreed.

With respect to a contract for a loan with interest without a fixed term, the lender may reclaim the property at any time, subject to giving reasonable prior notice to the borrower, and shall be paid interest until the time when the property is returned. The borrower may also return the property at any time, subject to giving reasonable prior notice to the lender, in which case the borrower shall pay interest only up to the date on which repayment is made.

If the time limit for the notice expires but the borrower still tries not to pay, you have the right to sue in the People’s Court to request settlement.

b. In case of debt recovery from loan contract as a fixed term loan contract

In this case, if the debtor does not pay the debt when the payment is overdue, the creditor has the right to sue in court to request the debtor to repay all principal and interest. In addition, you have the right to require the borrower to pay overdue interest at the base interest rate announced by the State Bank corresponding to the loan term at the time of debt repayment as prescribed by law.

2. Loan interest rate

According to Civil Code 2015, the loan interest rate is agreed upon by the parties but must not exceed 150% of the base interest rate announced by the State Bank for the respective type of loan.

a. If the agreed interest rate is below 150% of the base interest rate announced by the State Bank at the time of signing the contract

In this case, when sueing in court you can ask the borrower to repay the full principal and interest as agreed. In addition, if the payment deadline has passed, you also have the right to request the borrower to pay the overdue interest as required by law. Overdue debt interest is calculated based on the base interest rate announced by the State Bank at the time of debt payment.

b. If the agreed interest rate exceeds 150% of the base interest rate announced by the State Bank at the time of signing the contract

In this case, interest rate is only calculated to be 150% of the basic interest rate announced by the State Bank at the time of signing the contract.

>> POPULAR METHODS OF DEBT RECOVERY https://linconlaw.vn/popular-methods-of-debt-recovery/

>> ARE WRITTEN WILL WITHOUT WITNESS RECOGNIZED? https://linconlaw.vn/are-written-will-without-witness-recognized/

3. Statute of limitations for filing a lawsuit for debt recovery from loan contract

The statute of limitations for filing a lawsuit for debt recovery from loan contract is 03 years, from the date the individual, agency or organization learns that their legal rights and interests have been violated.