Debt collection and rule of law?

There are growing problems these days with debt collection in Vietnam.

Deadbeats fail to pay their bills on time or at all.

This is a very fundamental problem. If you cannot enforce a contract and collect money that is owed you then your business could be in serious trouble.

Yet the problem seems to have grown widespread.

Deficient legal system means creditors collect outside the law

...Even in HCMC, where the local Civil Verdict Enforcement Agency is considered the best in the country, nearly 37,800 of the 91,775 civil verdicts issued in 2008 have yet to be enforced.

Many beneficiaries of such verdicts say the agency has inexplicably deemed wealthy debtors “unable to pay.”

“The increasing amount of bad debt accumulated from unenforced civil verdicts has given rise to a thriving legal and illegal debt collection industry,” said lawyer Bui Quoc Tuan in HCMC.

A judge from the HCMC People’s Court, who asked to remain anonymous, said property disputes took a long time to settle in court and that verdicts were unreliable as many of them went unenforced.

“It’s sad but true,” he said, adding that “the law is therefore not people’s first choice.”

“Many creditors turn to illegal gangs to help them collect debt,” he said.

Another judge from the same court said legal amendments were needed. Many debtors have been able to transfer or sell-off their assets to friendly parties to avoid repaying creditors, he said.

“Laws should force officials to compensate creditors if they fail to prevent debtors from getting rid of assets before repaying those they owe,” he said.

The judge also took aim at the lack of qualified personnel in the judicial system.

“Reforming the justice system must concentrate on personnel, not just on improving laws.”

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Without proper rule of law, how can anyone do business?