HANDLING BUSINESS HOUSEHOLDS FAILING TO PAY DEBT TO CREDIT INSTITUTIONS

Business households often borrow money from credit institutions on the principle of repayment of both principal and interest to increase capital mobilization. However, how to handle the business households failing to pay debt?

Responsible entities of business households

In a household business, members must bear unlimited responsibility for the business activities of the household business. In the event of debts arising, members are responsible for the full payment of the debt, regardless of the number of business assets they have or whether the household has terminated its business or not. Accordingly, when the business household cannot pay the debt, all members of the household business are responsible for paying off the debt.

Handling business households failing to pay debts

Debt recovery, debt settlement

In case the business household cannot pay the due debt, it will be handled according to Circular 39/2016/TT-NHNN. Accordingly, debt recovery measures will be implemented in accordance with the loan contract, the security contract and the provisions of relevant laws. If, after applying debt recovery measures, the business household still cannot pay the debt, the business household is responsible for continuing to fully pay the principal and interest of the loan to the credit institution. 

The payment of loan interests when the business household fails to pay or fully repay the loan principal and interest as agreed is specified in Circular 39/2016/TT-NHNN. Specifically, when the payment is due but the customer does not pay or fully pay the loan principal and/ or interest as agreed, the business household will have to pay the interest as follows:

– The interest on the principal is at the agreed loan interest rate corresponding to the outstanding loan term;

– In case the business household fails to pay the interest on time, the late payment interest must be paid at the interest rate agreed upon by the credit institution and the customer, but not exceeding 10%/year on the balance of the corresponding late payment interest for the late payment duration;

– In case the loan is transferred to overdue loan, the business household must pay interest on the overdue principal balance corresponding to the late payment period, the applicable interest rate does not exceed 150% of the interest rate in the due date at time to transfer overdue debts.

Being sued in court 

Pursuant to the provisions of the 2015 Civil Procedure Code, credit institutions can initiate lawsuits to request the Court to resolve civil transaction disputes, civil contracts. The court will take coercive action if it does not comply with the court’s decision.

>> DIFFICULTIES IN DEBT RECOVERY FOR CREDIT INSTITUTIONS https://linconlaw.vn/difficulties-in-debt-recovery-for-credit-institutions/

>> LAWFUL DEBT RECOVERY VIA PHONE BY FINANCE COMPANIES https://linconlaw.vn/lawful-debt-recovery-via-phone-by-finance-companies/