WHY DO MANY CREDITORS FACE LEGAL RISKS WHEN HANDLING DEBT RECOVERY BY THEMSELVES?

(A Perspective from Legal Practice)

In the application of law in practice, the right to claim repayment of a debt is a lawful civil right. However, not every method of exercising the right to debt recovery is protected by law.

In reality, many creditors, despite holding legitimate and lawful debts, may still face significant legal risks if they attempt to handle debt recovery on their own without placing their actions within the proper legal framework.

1. Exercising the Right to Debt Recovery Beyond Legal Limits

Pursuant to Article 3 of the 2015 Civil Code on the fundamental principles of civil law:

Individuals and legal entities must establish, exercise, and terminate their civil rights and obligations in good faith and honestly.

The establishment, exercise, and termination of civil rights and obligations must not infringe upon national interests, public interests, or the lawful rights and interests of others.

Civil law recognizes the creditor’s right to demand the performance of obligations. However, the law does not permit creditors to exercise this right through acts that infringe upon the lawful rights and interests of the obligor.

In practice, acts such as:

• Exerting prolonged pressure beyond what is necessary to protect lawful interests;
• Threatening the reputation, dignity, or private life of the debtor;
• Directly or indirectly affecting the debtor’s relatives or business partners;

may give rise to legal liability against the creditor, even when the debt itself is genuine and lawful.

The legal risk does not lie in the right to recover the debt, but in how that right is exercised.

 

2. Failure to Adequately Assess the Legal Basis of the Debt Before Taking Action

A common misconception is the assumption that:

Having a contract or a loan document automatically guarantees successful debt recovery.

In judicial practice, for a debt to be protected by the court and capable of enforcement, multiple legal factors must be assessed simultaneously, including:

• The legal capacity and authority of the contracting parties;
• The form and substance of the transaction;
• The statute of limitations;
• The validity and enforceability of the obligation.

Taking unilateral action to recover a debt without thoroughly reviewing the legal documentation may result in:

• Initiating legal proceedings at an improper time;
• Losing evidentiary advantages;
• Failing to meet the conditions for applying asset-preservation measures.

When these legal issues are eventually discovered, creditors often have already missed the opportunity for effective recovery.

3. Improper Handling of Secured or Committed Assets Contrary to Legal Procedures

The existence of pledged, mortgaged, or otherwise secured assets does not mean that a creditor may automatically seize or dispose of such assets at their own discretion.

While the law permits creditors to enforce security interests to recover debts, such enforcement must strictly comply with the procedures and methods prescribed by law.
The 2015 Civil Code clearly provides:

Article 299. Cases of Enforcement of Secured Assets

• Upon the maturity of the secured obligation, where the obligor fails to perform or improperly performs the obligation.
• Where the obligor must perform the secured obligation ahead of schedule due to breach of obligation as agreed or as prescribed by law.
• Other cases as agreed by the parties or as provided by law.

The actual recoverability of a debt largely depends on the timing and manner of asset enforcement.
Missing the appropriate timing or violating procedural requirements may cause the matter to become prolonged, disputed, and unnecessarily costly.

The law strictly regulates:

• Conditions for enforcing secured assets or agreed enforcement arrangements;
• Enforcement procedures;
• The lawful rights and interests of all related parties.

In practice, there are numerous cases where:

• Secured assets exist but cannot be enforced due to procedural errors or lack of knowledge; or
• Improper enforcement leads to prolonged disputes and additional legal complications.

As a result, the debt not only remains unrecovered, but new legal risks arise for the creditor.

4. Failure to Control the Boundary Between Civil Relations and Criminal Risks

One of the most serious latent risks in self-managed debt recovery is the failure to properly identify the boundary between civil rights and criminal liability.

In practice, there have been cases where creditors unilaterally seized a debtor’s automobile to offset a debt after late payment, despite not having completed the legally required enforcement procedures.
Subsequently, the debtor filed a criminal complaint alleging unlawful possession of property, causing a civil dispute to escalate into potential criminal exposure and significantly complicating the recovery process.

Certain debt collection behaviors, if exceeding the limits permitted by civil law, may be scrutinized under criminal law, even when the original intent was merely to recover a lawful debt.

In many situations, creditors shift from being lawful rights holders to parties facing:

• Legal liability;
• Obligations to explain or defend their actions before competent authorities.

The root cause lies not in the debt itself, but in uncontrolled, legally uninformed debt recovery methods.

From practical experience in legal defense, many “over-the-line” debt collection actions may be subject to criminal liability, as criminal law strictly protects property rights and the inviolability of personal integrity, dignity, and reputation.

5. Lack of a Comprehensive Legal Strategy for the Entire Debt Recovery Process

Debt recovery is not a single legal act, but a continuous legal process, comprising:

• The pre-litigation stage;
• Litigation proceedings;
• Judgment enforcement;
• Post-enforcement issues and risk prevention.

Self-managed debt recovery often focuses on only one stage, while overlooking legal consequences in subsequent phases.

As a result:

• Court judgments may exist but remain unenforceable;
• Legal rights may be recognized but fail to materialize into actual benefits.

Conclusion

Many creditors face legal risks not because their debts are unlawful,
but because their debt recovery methods fall outside the legal framework.

Debt recovery is a legal activity that requires:

• A correct understanding of rights and obligations;
• Strict compliance with legal procedures;
• Risk control throughout the entire process;

and, critically, must be embedded in a legally enforceable and practicable strategy.

When should a creditor consider engaging a lawyer for debt recovery?

• The debt involves a large value or secured assets;
• The debtor shows signs of evasion, delay, or asset dissipation;
• There is a risk of cross-allegations, complaints, or criminal exposure.

In such cases, a sound legal strategy from the outset often determines both the recoverability of the debt and the level of legal risk faced by the creditor.

At HT Legal VN, debt recovery is not merely about collecting money,
but about protecting creditors’ rights lawfully, effectively, and sustainably.

This is how HT Legal VN approaches debt recovery:
not hastily, not recklessly, and always with enforceability as the central focus.

HT Legal VN
Right Solutions – Effective Results – Trust.
Law is not merely regulation, but trust.

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