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​Ho Chi Minh City proposes banning mafia-like debt collectors

​Ho Chi Minh City proposes banning mafia-like debt collectors

Saturday, September 29, 2018, 11:22 GMT+7

Ho Chi Minh City administrators think it is time to exert suppression on the debt collection service as the legal and regulated business is being transformed into mafia-like activities by some agencies.

The municipal People's Committee has called on the Ministry of Finance to advise the government to put debt collection into the list of prohibited businesses.

Debt collection is the process of pursuing payments of debts owed by individuals or businesses. An organization that specializes in debt collection is known as a collection agency or debt collector.

Most collection agencies operate as agents of creditors and collect debts for a fee or percentage of the total amount owed.

But Ho Chi Minh City officials believe that there is no need for collection in the local context.

In Vietnam, the borrowers and lenders usually negotiate to reach a consensus or initiate a lawsuit whenever a dispute arises during their borrowing-lending activities, rather than counting on a debt collector.

The state also has a full legal system, law enforcement and enforcement agencies such as courts, prosecutors, executors of sentences, to serve such purposes.

Therefore, there is no need for debt collection as a kind of business, the municipal administrators underscored.

In case the proposal to have this kind of business banned, the Ho Chi Minh City administration suggested that the government should at least issue a set of mandatory regulations for debt collectors.

The proposed regulations cover uniform requirements and the maximum number of employees per collection agency, intended to regulate debt collectors’ operations to avoid urban disorder and unsafety.

Ho Chi Minh City has witnessed many exasperating stories with regard to collection agencies before the municipal administration put forward the proposed ban.

Non-debtors harassed for repayment

L.D.D., a 32-year-old resident in the southern province of Binh Duong, told Tuoi Tre (Youth) newspaper on Wednesday that his family was repeatedly threatened by debt collectors.

According to D., in 2016, one of his relatives asked to be included in the household registration of his family to facilitate the operation of that person’s business.

It is not until recent times did he discover that his household register was photographed and shared on Facebook, along with information about his family.

D. later learned that people involved in a debt collection service company in Ho Chi Minh City were behind this, and they did so because the very relative he added to the household registration had defaulted on a VND80 million (US$3,440) debt.

The creditor therefore handed over the loan to a debt collector, which collected the aforementioned documents and shared on social media to squeeze the repayment out, without knowing that D. and his family members have nothing to do with the loan.

“My family has tried to keep silent for a long time to avoid any involvement with the debt collector,” D. said.

A debt collector kicks the door of an alleged borrower in a security camera’s capture. Photo: Tuoi Tre
A debt collector kicks the door of an alleged borrower in a security camera’s capture. Photo: Tuoi Tre

T. N.V., a resident in Tan Binh District, sent a petition to Tuoi Tre newspaper after a group of people, who identified themselves as employees of a collection agency, issued an ‘emergency notice’ to his house demanding a repayment of more than VND60 million ($2,580) borrowed by his younger sister.

The younger sister had her name registered in V.’s family book, thus causing the collection agency to mistake him as the debtor and intimidate his family for repayment time after time.

V. said their actions caused his family to be stressed, losing face to his neighbors even though he was not a borrower.

“I was mentally disturbed because they were calling me in the middle of the day and even at night,” another victim in District 4 facing the same threat told Tuoi Tre.

Getting away with laws

It is easy to see that the mafia-like activities of debt collection services are rampant due to inadequacy of regulations.

Under the law, debt collection is included in the list of conditional business lines.

Therefore, in addition to the business registration certificate issued by the Department of Planning and Investment, a debt collection company must be granted a certificate of satisfaction of security and order conditions by the police office, while its representative office does not need one to process the collection service.

Taking advantage of this loophole, debt collection companies legitimately registered in other provinces and cities and then authorized their representative offices in Ho Chi Minh City to pursue the repayment.

By the end of 2017, 68 enterprises have been granted business registration as debt collection service providers in Ho Chi Minh City.

Of these, however, only 44 enterprises have been granted a certificate of satisfaction of security and order conditions by the police.

It means that 24 debt service providers are currently operating in Ho Chi Minh City even though they do not meet the security and order conditions.

A house with its gate sabotaged by debt collectors is seen in Can Tho, southern Vietnam. Photo: Tuoi Tre
A house with its gate sabotaged by debt collectors is seen in Can Tho, southern Vietnam. Photo: Tuoi Tre

To control, not to ban

As if the accounts shared by the victims to Tuoi Tre were not horrific enough, lawyer Pham Van Thanh at Ho Chi Minh City Bar Association added more to the list of mafia-like activities by debt collectors.

“They collect debts by loudspeakers, installing sirens like those of the emergency police on their vehicles when coming to collect debt,” Thanh told Tuoi Tre.

“The newest technique the collectors used is to spy the schools that the debtors’ children go to, then following them home to keep track of their addresses,” the lawyer said.

One colleague of Thanh at the same association, lawyer Ha Hai on the other hand thinks that debt collection should only be put under control, rather than banned.

Hai said even when a court has ruled that one repay debt to his creditor, cases where the sentence is not enforced are not uncommon in Vietnam. “Debt collection services, consequently, are still necessary,” he said.

“There should be a system of by-law documents to closely guide the order, procedures, processing steps [of debt collection],” said Hai.

Lawyer Tran Xoa, director of Minh Dang Quang Law Firm, likewise recommended that there should be a regulation to withdraw licenses from debt collection companies that are found doing mafia-like activities.

In addition, experts suggested the government apply rules including uniforms that must be worn when collecting debt, the maximum number of employees involved in each debt collection, notifying the list of employees who are sent to collect debts to the police of the ward where the debt is collected, just like the recommendations of Ho Chi Minh City People's Committee.

The Ministry of Finance also proposed the same regulations in a draft amendment issued in August on regulating debt collecting business.

Specifically, debt collection firms must provide uniforms showing company name, public address at head office and branches for employees.

Employees must wear employee cards and present letters of recommendation from the company when working with debtors or relevant organizations or individuals.

When employees terminate their labor contracts and no longer work for debt collection companies, they must return the uniforms and cards.

Bao Anh / Tuoi Tre News

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