Consulting on effective dispute resolution and bad debt handling

Directions for resolving disputes and handling bad debts are becoming a big challenge for many businesses and individuals. In the current economic context, bad debts not only affect profits but also impact relationships with customers and partners. Therefore, finding effective methods to handle debt is extremely necessary. In the following article, Long Phan will introduce to customers information about the above issue.

What is bad debt? The statute of limitations for filing a lawsuit to request the Court to resolve a debt collection dispute

Bad debt is understood as bad debts, arising when the borrower does not fulfill its payment obligations on time according to the terms committed in the credit contract. Specifically, according to the provisions of Clause 8, Article 3 of Circular 11/2021/TT-NHNN, if the payment deadline is more than 90 days, that debt will be classified as bad debt.

According to the provisions of Article 155 and Article 429 of the Civil Code 2015, in case an individual requests to pay only the principal without interest, the Court will not apply the statute of limitations for filing a lawsuit, so this is not considered a requirement to protect property rights. However, if there is a request to pay interest, the statute of limitations for filing a lawsuit will be 3 years from the date the person with the right to request knew or should have known that his or her legal rights were violated.

Popular debt collection methods for businesses and individuals

Currently, there are a number of popular debt collection methods that businesses or individuals often apply:

• Send debt collection notice: Prepare and send a letter, email or text message reminding the debtor to the debtor, clearly informing about the amount and payment deadline.
• Negotiate and make a payment plan: Propose flexible payment plans, possibly splitting the debt or extending the payment time.
• Court or arbitration: If the above methods do not work, you can sue in court or use commercial arbitration to request payment.
• Implement security measures: If there is a contract or collateral, assets can be recovered in accordance with the law.
• Bad debt registration: Notifies credit institutions or regulatory agencies about a debtor’s non-payment, affecting their financial reputation.

Effective dispute resolution and bad debt handling methods

Currently, there are many methods to resolve disputes and handle bad debts. However, businesses need to equip themselves with some necessary methods to minimize risks in the debt lending process, specifically:

Negotiate

Negotiation is one of the first methods that businesses can apply to resolve disputes. This process involves meeting in person between the parties involved to discuss the debt or disputed issue. The goal is to find consensus without resorting to the intervention of a third party.

• The first step in negotiating is to establish a comfortable atmosphere that facilitates open communication. The parties should show respect and be willing to listen to each other’s opinions.
• Each party should clearly define what they want to gain from the negotiation. This helps shape arguments and decisions during discussion.
• The ultimate goal is to reach an agreement that both parties are satisfied with. The parties may discuss flexible payment terms or other incentives to promote payment.

Reconcile

Mediation is another method that helps parties resolve disputes peacefully. During this process, an intermediary, called a mediator, helps the parties find a common solution.

• Using an intermediary: Mediators are usually people with experience and expertise in the relevant field. They help guide the discussion and ensure that all perspectives are heard.
• Encourage cooperation: The mediator can offer resolution options to encourage the parties to cooperate more, thereby creating a consensus more quickly.
• Confidential and friendly: Mediation usually takes place in a confidential atmosphere, which helps the parties feel more comfortable expressing their views and concerns.

Use of Commercial Arbitration

Commercial arbitration is an effective option for resolving disputes without having to go through the court system. This provides flexibility and speed in handling legal matters.

• Choosing arbitration: When signing a contract, the parties can agree that all disputes will be resolved through arbitration. This saves time and reduces costs compared to suing in court.
• Jurisdiction: The arbitrator will make a final, binding, and non-appealable award. This helps the parties feel secure in performing their obligations according to the judgment.
• Flexible process: Parties can agree on the arbitration process, including how evidence is presented, processing time and location. This creates convenience for participating parties.

File a lawsuit in court

Filing a lawsuit in court is the last method to resolve a dispute when other methods fail to produce results.

• Determining the statute of limitations for filing a lawsuit: According to the provisions of the Commercial Law, the time limit for filing a lawsuit is 2 years from the date rights are infringed. Businesses need to be careful not to lose the right to sue.
• Prepare documents: When deciding to sue, businesses need to prepare complete documents such as contracts, original documents, and evidence related to the debt. This will help the court have a basis to consider and make a decision.
• Participate in court hearings: Enterprises need to send representatives to participate in court hearings to protect their rights. Being represented by an attorney can increase your chances of success in your case.

Register for Bad Debt

Registering bad debt is a measure to put pressure on the debtor to pay.

• Notification of bad debt: Enterprises can register debtor information with credit institutions or bad debt management agencies. This will negatively affect the debtor’s financial reputation.
• Strong impact: Being recognized as bad debt can make it more difficult for the debtor to borrow money or perform other financial transactions, thereby creating motivation for them to pay off debt.

Consulting services, dispute resolution support and bad debt handling

At Long Phan, we provide support services for dispute resolution and bad debt handling as follows:

• Analyze and evaluate contract terms to determine the rights and obligations of the parties.
• Assist customers in understanding their rights in debt-related disputes.
• Provide mediation experts to assist the parties in reaching an agreement.
• Providing arbitration services to resolve disputes quickly and effectively.
• Help clients prepare necessary documents for the arbitration process.
• Assess financial situation: Analyze the customer’s financial situation to determine the ability to pay.
• Assist customers in making reasonable financial plans to deal with bad debt.

Handling bad debts and resolving disputes effectively not only helps businesses protect their finances but also maintains good relationships with customers and partners. Choosing the right consulting and support services will equip businesses with the necessary tools to respond to difficult situations. If you have more questions about dispute resolution or need support from Long Phan, please call the hotline 0906735386.