Debt trading service business and things to keep in mind

Article overview

The business of debt trading services is becoming an attractive field, attracting the attention of many businesses. However, this activity requires a deep understanding of legal regulations as well as important notes to ensure effectiveness. This article will provide customers with an overview of debt trading business and necessary notes.

Note on debt trading service business
Note on debt trading service business

What is debt trading?

Debt purchase and sale is a written agreement on the transfer of debt claim rights for debts arising from lending transactions, payments in lieu of guarantee transactions, according to which the debt seller transfers ownership of the debt to the debt buyer and receives payment from the debt buyer.

Debt trading activities bring many benefits to both the seller and the buyer. Debt sellers can recover capital quickly, minimize risks and focus on core business activities. The debt buyer can profit from debt recovery or use the debt for investment and business.

What conditions must be met for debt to be traded?

Not all debt can be traded. To ensure the legality and effectiveness of the transaction, the debt needs to meet certain conditions. Specifically the following conditions:

  • The records, vouchers and related documents of the debt being purchased, sold, and the security contract (if any) provided by the debt seller must fully and accurately reflect the actual status of the debt in accordance with the provisions of law.
  • Debt cannot be used to secure the performance of civil obligations at the time of buying or selling debt unless the secured party agrees in writing to the debt sale.

Compliance with these conditions is mandatory to ensure legal and effective debt trading transactions.

Conditions for debt to become an object of sale
Conditions for debt to become an object of sale

Things to note when performing debt trading activities

Debt trading activities have many potential risks if not carried out properly. Below are some important notes that customers need to understand:

Right to enter into debt purchase and sale contracts

Pursuant to Article 115 of the Civil Code 2015 stipulates: Property rights are rights that can be valued in money, including property rights to intellectual property rights, land use rights and other property rights.

  • Debt buying and selling is a written agreement on the transfer of debt collection rights for debts arising from lending operations or payments on behalf of guarantee operations, whereby the debt seller transfers ownership of the debt to debt buyer and receives payment from the debt buyer.
  • According to the provisions of Article 450 of the Civil Code 2015, buying and selling property rights includes the right to collect debts. At this point, debt becomes the subject of a contract that the parties can transfer like a special type of asset.
  • At the same time, a debt purchase and sale contract aims to transfer ownership of the debt and at the same time transfer the debt seller’s obligations to the debt buyer.

Thus, there is the right to enter into debt purchase and sale contracts.

Main contents of debt purchase and sale contract

A debt purchase contract is a document that binds the rights and obligations of the participating parties. To ensure validity and avoid disputes, the contract needs to be drafted clearly and fully with the following main contents:

  • Time to sign debt purchase and sale contracts;
  • Names and addresses of the parties involved in signing the debt purchase and sale contract;
  • Names and titles of representatives of the parties participating in signing the debt purchase and sale contract;
  • Name and address of the debtor and related parties (if any) to the debt being purchased or sold;
  • Details of debt purchased and sold: Loan amount, loan period, purpose, book value of the debt at the time of purchasing and selling debt;
  • Security measures for the debtor’s payment obligations for the purchased and sold debt (if any);
  • Debt selling price, payment method, payment term;
  • Time, method and procedure for transferring debt documents and records, including documents and records on debt collateral (if any); Time when the debt buyer becomes the person in charge of the debt seller’s rights and obligations for the debt;
  • Rights and obligations of the debt seller and debt buyer;
  • Liability of the parties due to breach of contract;
  • Resolve disputes that arise.

In addition to the above contents, the parties can agree on other contents in the debt purchase and sale contract that are not contrary to the law.

Consulting on effective debt trading services

To ensure efficiency and minimize risks, customers can use Long Phan’s consulting and support services. Our Services include:

  • Consulting on business conditions for debt trading services;
  • Consulting and guiding the order and procedures for business registration of debt trading services;
  • Consulting on subjects allowed to participate in debt trading transactions;
  • Assess the risks of debt trading transactions and work out solutions to limit and overcome;
  • Draft, review and edit debt purchase and sale contracts;
  • Negotiate and negotiate with relevant parties;
  • Instructions for implementing debt trading procedures;
  • Consulting on dispute resolution (if any);
  • Consulting and answering other related issues.
Effective debt trading business consulting
Effective debt trading business consulting

Debt trading service business is a potential field but also full of challenges. With legal knowledge, professional skills and practical experience, Long Phan will accompany customers, helping them seize opportunities, overcome challenges and achieve success in this field. Contact us immediately via the hotline: 0906735386 for detailed advice.