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How to collect an unpaid invoice from a debtor in Hanoi?
If you're aiming to recoup a debt that is owed to you in Hanoi, Vietnam then this guide is for you! It covers all the things you should know about gathering what is rightfully yours. If you need the help of a local debt collection authority or lawyer, just complete our form and get three free quotes within two days.
Overview of the debt collection process in Hanoi
In Hanoi, debt collection is approached through a series of customizable, strategic steps. Initially, we evaluate the borrower's situation and analyze the claim according to size, debtor type and more. With a tailored approach to each situation, we are able to maximize recovery rates and provide optimal collection results.
The image below explains our standard framework for collecting debt in Hanoi:
Step 1: Find a local collection agency or attorney
Utilize Debitura and you can obtain 3 quotes from Hanoi-located debt collection businesses who are keen to help with your case.
Step 2: Pre-legal collections
Hanoi-based debtors will be sent a series of kind reminders via email, SMS and post. The objective of this approach is to secure a payment or negotiating a mutually-agreed repayment plan, and there's no need for you to be worried about the costs as we don't charge a fee unless we are able to secure your debt.
Step 3: Evaluation:
If you have not been given the amount you are owed even after the preliminary legal procedures have been fulfilled, it is time to decide the subsequent action. The measures we take will depend on the size of your claim, the likelihood of obtaining repayment, and the legal environment in Hanoi to make sure you take the most sensible course of action. The three standard courses of action which are generally viable in Vietnam are...
Step A: Surveillance:
If the value of your claim is less than 5000$, it is frequently not worthwhile to take additional legal steps. In these instances, "debt surveillance" may be the best option; this means that we will continue to contact your debtor, attempting to reach a mutually beneficial agreement. This can be perceived as an early stage of a legal process, during which we will stay alert and will inform you should any conditions change.
Step B: Legal collections:
In cases where the claim is considered significant (usually above $5,000), we suggest commencing a legal process subsequent to the pre-legal stage. The specifics of the process will depend on the particulars of your claim, the debtor's response to pre-legal steps, and the amount you are claiming. Generally, less complex and expensive legal proceedings are applicable to less significant claims. The legal collection process can take up to 18 months and typically involves a fixed fee for the lawyer's services. Therefore, it is wise to obtain quotes from different debt collection attorneys in Ho Chi Minh City so that you may compare and select a cost-efficient solution.
Step C: Debt enforcement:
If you have been acknowledged by the debtor or you possess a court order, you can carry out a bailiff's court to fulfill your claim. Generally, the process requires a duration of 12-18 months in Hanoi. Often, the courts will require a certain sum to be paid in taxes, and further costs for a debt collection lawyer will depend on the scale of the claim. To obtain an estimation of the expenses, you can simply upload your claim onto Debitura.
Pre-legal debt collection in Hanoi
Pre-legal debt collection describes the process of recovering unpaid debt without involving the court system. This is sometimes referred to as ‘amicable collection’. Generally, recovering debt without court intervention is the best way to start, providing the debtor does not dispute what they owe. Pre-legal collections offer a number of advantages, including the potential to maintain a good relationship with the debtor, quicker results than legal action and no need to risk any money upfront.
First-party debt collection involves businesses collecting unpaid accounts themselves by communicating directly with the debtor. Through this route, businesses can often maintain a positive rapport with the customer. On the other hand, third-party debt collection allows companies to appoint experienced debt collection professionals to collect unpaid accounts on their behalf. With third-party debt collection, businesses can choose a lawyer or a collection agency, depending on the gravity of the debt and the preference of the company.
Being patient and understanding throughout the process
Attempting to negotiate a payment plan, or a settlement if the full amount cannot be paid
You can charge a reasonable interest rate for unpaid invoices, including late payment fees if applicable, within the legal limits. Depending on the age and size of the claim, the exact fees may vary - but we can advise you on the best rates and ensure that you are complying with the laws.
Legal debt collection in Hanoi
This will help ensure the cost and effort associated with taking legal actions are warranted. The decision to take legal actions should take into account the likelihood of success, the value of the claim, and the expected legal costs. If you have any doubt about the extent of the debtors’ financial resources, we may be able to provide you with some information on the debtor’s ability to pay.
If a claim remains unpaid after you've attempted to collect it in an amicable way, it may be worth considering legal action. However, you should only pursue this action if your claim exceeds $5,000, since legal collections can be lengthy and costly. Keeping the likely success, value of the claim, and estimated legal costs in mind, can help you make an informed decision. You should evaluate the debtor's financial situation too. Obtaining sufficient information about the debtor's ability to pay might help you decide if legal action is indeed the best option.
Need help collecting a debt in Hanoi? Debitura can give you the means to get localized, expert advice. With us, you will receive 3 free quotations from local debt collection attorneys, quickly allowing you to compare prices and identify the best one for your circumstances. No obligation - just reliable, tailored advice to suit your needs.
Our local legal partner will start the debt collection process with negotiation. If that fails, they'll begin legally recognized steps tailored to the size of your claim. This involvement of the court system includes litigation, enforcement of the debt, mediation, or even bankruptcy proceedings. All are regulated by civil law in Vietnam. The process usually takes 12-18 months.
Cost of debt collection in Hanoi
Average success fee for pre-legal debt collection in Hanoi
The success rate of debt collection in Hanoi can be maximized with the payment of a success fee. This fee varies based on the amount of the claim and the stage of debt collection. Generally, an amicable collection offers a good chance of collecting the debt, while the success fee is proportionate to the total amount of the claim.
Hourly rate for legal-debt collection services in Hanoi
For debt collection in Hanoi, you will likely have associated costs that include repaying taxes to the court and legal assistance for a debt collection agency or attorney. The amount you will have to pay depends on the specifics of your claim and the associated legal fees required to support it. On average, debt collection attorneys in Hanoi charge a certain hourly rate.
Hanoi city risk profile
We have looked at Hanoi's critical financial data and extrapolated a risk assessment. You can use this analysis to evaluate your payment terms and manage your risk when trading with customers in Hanoi.
Our analysis concludes that the risk of conducting business in Hanoi is medium.
Based on this medium score, we recommend being careful providing credit and considering charging upfront payment or using credit insurance when trading if you don't know the customer in Hanoi well. If possible, provide a short credit period or even better upfront payment.
The average risk is conluded on the following areas:
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Economic risk in Hanoi
Vietnam has a large economy ranking as #40 out of 183 countries, with a gross domestic product (GDP) of 362.64 bn USD. The economic growth of the country is slowly increasing by 2.59% per year, resulting in an average GDP per capita of 3694 USD. The purchasing power of citizens in Vietnam is average in comparison to the rest of the world. Inflation in 2021 was 1.8%, which is considered low and the business credit interest rate is 7.81%. All of these factors contribute to the relatively high economic risk of 5 out of 6 in Vietnam, in comparison to the rest of Asia.
Business risk in Hanoi
Businesses considering establishing operations in Hanoi should be aware of the potential risks within the city's business environment. Our analysis shows the risk to be of medium-high level (4 out of 6), which is typical in Asia. Factors contributing to this include property rights (51/100), freedom from corruption (38/100), fiscal freedom (80/100), business freedom (65/100), monetary freedom (69/100), trade freedom (79/100), investment freedom (40/100) and financial freedom (50/100). Also, Vietnam's overall economic freedom index is 62 out of 100, based on factors such as the rule of law, regulatory efficiency, and market openness. Thus, it is important to research and assess the business environment before starting operations in Hanoi.
Political risk in Hanoi
Hanoi's political risk score is medium-high, according to recent data. The governance and political stability indicators are critical components of political risk and Hanoi has a low rule of law index (-0.15 points) which indicates difficulty in enforcing contracts. Control of corruption, political stability index and shadow economy are also weak, at -0.29, -0.11 and 14.78% respectively. These figures warrant a cautious approach when conducting business in the city, with upfront payment advised for any contracts. However, it is important to be aware that alongside these weaknesses, Hanoi also performs above average when compared to similar cities in Asia.
Commercial risk in Hanoi
The city of Hanoi, located in Vietnam, has a commercial risk score of 1 out of 4. This score is relatively low in comparison to other countries in Asia. This low score is determined in part by the country's international trade and investment relationships, which boast a trade balance of 1.96 billion USD, as well as foreign exchange reserves of 109.37 billion currency units. This financial security within the city provides a risk-free environment for traders, investors and businesses, making the city of Hanoi a great choice for engaging in commercial activities.
Financial risk in Hanoi
Hanoi is a city of moderate financial risk for creditors. With an interest rate of 7.81%, the cost of borrowing from banks is high. However, the credit information sharing index is 8, ensuring a reliable, accessible source of credit information for businesses looking to make investments. The real interest rate is 4.91%, so the effects of inflation are mitigated. Juridical rights for creditors and borrowers are rated at 8 out of 12, which is considered a medium rating. After taking these factors into account, the average financial risk of Hanoi is calculated to be 3 out of 4.
Looking for more detailed information? Then have a look at our country guide.
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