Consulting on resolution debt dispute through mediation and negotiation

Article overview

Resolving debt disputes through mediation and negotiation is an effective method to resolve financial conflicts between lenders and borrowers. This method helps the two parties reach an agreement on the payment of principal and interest in a fair and reasonable manner. Using professional support and consulting services will help customers assess the payment ability of the parties, thereby providing a reasonable and highly effective debt settlement roadmap.

Resolve debt disputes through mediation and negotiation
Resolve debt disputes through mediation and negotiation

What is mediation and negotiation?

Mediation and negotiation are two popular out-of-court dispute resolution methods in the financial sector. These two methods help participating parties negotiate to reach a common solution. Mediation typically involves a neutral third party, while negotiation takes place directly between the parties involved.

In debt disputes, conciliation and negotiation focus on finding a payment plan suitable to the borrower’s financial capacity, while ensuring the interests of the lender. This process may include adjusting interest rates, extending repayment terms, or even reducing part of the principal if necessary.

According to Vietnamese law, debt dispute mediation can be carried out through commercial mediation centers or independent mediators.

Reference content: Clause 1, Article 3, Decree 22/2017/ND-CP.

The role of debt dispute resolution through mediation and negotiation

Resolving debt disputes through mediation and negotiation plays a key role in maintaining financial stability and business relationships. This method brings many specific benefits to stakeholders.

  • First, mediation and negotiation save significant time and costs. According to data from the Supreme People’s Court, the average time to resolve a debt dispute through court can last from 6 months to 2 years. In contrast, the mediation and negotiation process usually only takes a few weeks to a few months, helping the parties quickly come to an agreement.
  • Second, this method creates an opportunity for the parties to determine the outcome themselves. Instead of depending on a court ruling, lenders and borrowers can negotiate directly on terms such as interest rate, repayment period, or payment method. This ensures the outcome is appropriate to each party’s specific circumstances.
  • Third, mediation and negotiation help protect the reputations of the parties. While court proceedings are often public and can negatively impact a business’s image, the mediation and negotiation process is more private, helping to protect the reputation of both the lender and the lender-borrower.
  • Ultimately, this approach contributes to reducing pressure on the court system. According to a Ministry of Justice report 2023, about 30% of debt disputes are resolved through conciliation and negotiation, significantly reducing the number of cases needing to be tried in court.
 The role of negotiation and mediation
The role of negotiation and mediation

Why should we use measures, conciliation and negotiation in resolving debt disputes?

Choosing mediation and negotiation methods in resolving debt disputes brings many benefits to the parties:

  • First of all, this method offers great flexibility. During the mediation and negotiation process, the parties can propose and discuss many different options. For example, they can agree to reduce the interest rate, extend the repayment period, or even restructure the debt. This flexibility is difficult to achieve in court proceedings.
  • Second, mediation and negotiation help maintain business relationships. According to a study by the Vietnam Chamber of Commerce and Industry (VCCI) in 2022, 75% of businesses said they tend to continue to cooperate with partners after resolving disputes through mediation, compared to only 30% of disputes being resolved in court.
  • Third, this method ensures high security. While trials are often public, the mediation and negotiation process takes place privately, helping to protect the parties’ sensitive information. This is especially important for businesses that want to keep their business strategy or financial situation private.
  • Ultimately, mediation and negotiation often result in a “win-win” for both parties. Instead of one side winning and the other losing as in a court ruling, this method encourages the parties to find a solution that benefits both parties. For example, the lender may agree to partially reduce the interest rate to ensure the principal is recovered, while the borrower has the opportunity to improve its financial situation and maintain its reputation.

You should rely on the benefits of negotiation and reconciliation in debt dispute resolution to make reasonable decisions, and bring the highest efficiency in debt handling.

Benefits of mediation and negotiation
Benefits of mediation and negotiation

Consulting and support services on debt dispute resolution through mediation and negotiation

The organization of commercial mediation must meet strict standards of professionalism and professional ethics. This ensures quality consulting and support services during the debt dispute resolution process. With a team of experts with many years of experience in the field of debt dispute resolution, Long Phan is committed to providing customers with consulting services, scientific support and the highest efficiency.

The services we provide include:

  • Analyze the financial situation of the parties to provide a reasonable, scientific negotiation and mediation roadmap for customers.
  • Evaluate debt repayment ability to come up with an effective agreement plan for customers.
  • Propose appropriate solutions according to the provisions of the law.
  • Authorized representative, supporting negotiations and negotiations with parties, ensuring the protection of customers’ legal rights.

Resolving debt disputes through mediation and negotiation is an effective method, helping parties reach a fair agreement and maintain a good relationship. For customers who need detailed advice on this issue, please contact Long Phan Hotline: 0906735386 for assistance from our legal experts.