We would like to present an article by Atty. Ho Thi Tram published on Tin Tuc as of 22/04/2019. The article is under the title “What can customers do to get rid of obsession with one-dong debts?”
Many customers reported that they have been frequently claimed by banks for a long time for debts worth just a few thousand dong, some debts even worth just one dong.
Half laughing and half crying with micro debts
Many customers have actually been being claimed by their banks for overdue micro debts, this leaves them confused as to how to pay such debts. For example, a woman in Phu Nhuan District, HCMC, suddenly received a notice from her bank of a debt worth just one dong on her credit card. Before that, she also ran into trouble when she was notified of a debt worth just a few dozen dong even after she had closed her credit card. Afterwards, the bank deducted such amount from her ATM account.
This customer looked frustrated because debts still accrued for 3 years after the credit card had been closed. Only until the customer complained did the bank deal with this issue. The bank representative explained that since the date of debt payment did not match the date of the bank statement so debts still accrued even after she had paid debts two times.
In a similar case, the most “obsessive” debt for which 20 households in Dai Nai Ward (Ha Tinh City) had to pay was just 1,000 dong 15 years earlier. Reportedly, on 16/02/2012, they suddenly received overdue debt claim notices related to large interest amounts from Agribank Ha Tinh.
For example, Mr. Nguyen Huy Thuy (Dai Nai Ward) borrowed Agribank 7 million dong on 4/1/1997. The debt balance until 16/2/2012 was 1,000 dong. However, the overdue interest was as much as 47.88 million dong. According to Mr. Thuy, his family paid off their debt in 2002 and there was not any notice of this loan until they received a “debt claim warrant” for such 1,000 dong.
Another example is Ms. Uong Thi Lien in Dai Nai Ward, she borrowed Agribank 100 million dong and the debt balance until 16/2/2012 was 6,000 dong. The overdue interest was 75.67 million dong. Taking for granted that the debt was paid off and there would be no debt claim notice after that, Ms. Lien was very frustrated with the large debt “coming out of nowhere” which had accrued for tens of years.
How to get rid of petty debts?
Through a number of cases where customers are claimed by banks for too small debts, only a few hundred dong, interesting economic and legal questions are raised. How should banks deal with micro debts when the cost of monitoring, sending notices, debt claim, etc. is greater than those?
According to Atty. Ho Thi Tram with Phuoc & Partners Law Firm, despite the debt valued at one dong only, it is recognized in the books of the banking system and will be recovered under the collecting process. Especially when overdue, the debt must be monitored and recovered as prescribed.
However, “there are microloans of only a few hundred dongs that are hard for customers to find notes of such small denominations as VND 100, VND 200, etc. to pay banks, and banks at times encounter the same in returning customers some change. “That is because there is hardly any circulation of small denomination money” said Atty. Tram.
According to Ms. Tram, from an economic perspective, the collection of micro debts worth only a few dozen dong or a few thousand dong is really ineffective. “If customers owe a few hundred dong but the bank still keeps track of debts and send a reminder letter, this will be so wasteful. Particularly, expenses for tracking, printing, envelopes, stamps (valued at VND 4,000) etc. . total not less than VND 5,000/letter – that is, many times the value of the debt” assessed Ms. Tram.
However, one dong debts may put customers into trouble. With their fully unpaid debts, customers will be classified by the banking system as a group with bad debts, then leaving their loans and credit card opening adversely affected.
From a legal perspective, customers and banks may face unnecessary legal situations. Pursuant to Article 150.2 of the 2015 Civil Code, the statute of limitations for exemption is the time limit for a person to be exempted from his civil obligations upon its expiry. For example, the statute of limitations for initiating a lawsuit to request a court to settle a contract dispute is 3 years from the date when the person having the right to request knows or must know his rights and interests have been violated. After those three years expires, the parties cannot sue each other anymore and are “freed” from the concluded contractual obligations.
If a bank further claims its debt and its debtor customer still voluntarily pays, this will be not in contravention of law because it is the customer’s acceptance.
On the contrary, indebted individuals will be released pursuant to the aforesaid law. At that time, banks will not have a basis to initiate a lawsuit and if banks are rigid in handling, the bad debt record of customers will also pursue them forever. Meanwhile, if applying the statute of limitations for exemption from obligations, banks will have a complete basis to eliminate petty outstanding loans, helping to save costs for banks.
“Banks may choose the solution to apply the aforesaid time limit for civil obligation exemption to flexibly deal with petty outstanding balances. This is a completely legal solution which puts customers out of trouble and confusion” recommended Ms. Tram how banks and customers will be “freed” from unnecessary debt obsessions.
Lawyer Ho Thi Tram
