WHAT TO DO WHEN YOU ARE UNJUSTLY BLACKLISTED AS HAVING BAD DEBT?
Recently, many clients have unexpectedly discovered that they have been blacklisted as having “bad debt” at banks. They are recorded as having bad debt on the National Credit Information Center (CIC) without knowing the reason. This situation often occurs without notice, especially when these individuals need to borrow money or use credit for living expenses or investments, adding to their stress and anxiety as they do not know how to resolve it.
In this article, HT Legal VN Law Firm would like to share with our clients some legal regulations on bad debt and how to handle it when unjustly blacklisted as having bad debt.
I. Legal Basis for Reference
– Circular 31/2024/TT-NHNN of the State Bank of Vietnam dated June 30, 2024, on the classification of assets in the operations of commercial banks, non-bank credit institutions, and foreign bank branches (Effective from: July 1, 2024)
– Circular 03/2013/TT-NHNN of the State Bank of Vietnam dated January 28, 2013, on the credit information activities of the State Bank of Vietnam (Effective until: December 31, 2024)
– Circular 15/2023/TT-NHNN of the State Bank of Vietnam dated December 5, 2023, on the credit information activities of the State Bank of Vietnam (Effective from: January 1, 2025)
II. Concept
1. What is overdue debt? What is bad debt?
– Overdue debt: According to Clauses 3 and 5, Article 3 of Circular 31/2024/TT-NHNN, overdue debt is the debt that the customer fails to repay on time, either partially or fully, including principal and/or interest, as agreed with the bank or non-bank credit institution. For credit card debt, overdue debt is the debt that the customer fails to repay by the due date as agreed in the credit card issuance, usage, and payment agreement with the bank or non-bank credit institution. Overdue debt includes debts in groups 2, 3, 4, and 5.
– Bad debt: Bad debt is recorded on the balance sheet (on-balance sheet bad debt), including debts in groups 3, 4, and 5 (substandard debt, doubtful debt, and potentially uncollectable debt). Bad debt can be understood simply as debts that are difficult to collect when the borrower cannot repay the debt on time as committed in the credit agreement. Overdue debts of 91 days or more are considered bad debts.
Clients can refer to the regulations on debt classification and off-balance sheet commitments according to quantitative and qualitative methods in Articles 10 and 11 of Circular 31/2024/TT-NHNN.
2. What are the impacts of bad debt?
– Difficulty in borrowing and mortgaging: Bad debt makes it challenging to obtain loans or mortgages.
– Impact on credit score and repayment ability: Bad debt negatively affects your credit score and ability to repay loans.
– Increased borrowing costs: Higher interest rates and fees due to increased credit risk.
– Impact on personal life and employment: Bad debt can affect job opportunities and personal life.
– Legal issues and lawsuits: Potential for legal disputes and lawsuits.
Particularly, the impact on credit scores and difficulty in borrowing is the most troublesome. Customers with overdue debts, especially those in bad debt groups (3, 4, and 5), will find it difficult to continue borrowing from banks or any other credit institutions. All information about borrowers with bad debt, including past loans, current loans, overdue periods, borrower names, and loan locations, is recorded on the CIC, ensuring compliance with credit rating regulations and maintaining the stability of the credit system.
According to Article 11 of Circular 03/2013/TT-NHNN on Credit Information Restrictions:
– Negative information about borrowers is only used to create credit information products for a maximum of 5 years from the end of the negative information, unless otherwise provided by law.
– Information on debts settled by risk provisions is only provided to the State Bank and other state management agencies as prescribed by law.
Similarly, Article 13 of Circular 15/2023/TT-NHNN (effective from January 1, 2025) on the deletion of bad debt information states:
– Negative information about borrowers is only provided for a maximum of 5 years from the end of the negative information, unless required by state management agencies as prescribed by law.
Thus, negative information about borrowers with bad debt can be provided by the CIC for up to 5 years from the end of the negative information. To avoid bad debt, borrowers must fully settle all principal and interest debts. After 5 years, they can borrow again as usual (the bad debt information will no longer exist).
3. What to do when unjustly blacklisted as having bad debt?
– System errors or bank mistakes: Sometimes, technical errors or mistakes in updating information can lead to unjust bad debt listings. Many clients have settled their debts, but errors or mistakes in updating debt information by the bank affect the borrower.
– Fraud or fake loan applications: In some cases, your personal information may be used by fraudsters to borrow money without your knowledge, leading to bad debt listings when the loan is not repaid on time.
– Loans for relatives or friends: If you guarantee or lend money to relatives or friends, and they do not repay on time, you may be listed as having bad debt.
– Not receiving payment notifications: Sometimes, not receiving notifications from the bank or credit institution about due debts can lead to bad debt listings.
If you encounter this situation, you should immediately contact the bank or credit institution to check and request them to adjust the information, and file a complaint if necessary. The adjustment request can be made digitally or by sending a written document, stating the reason for the request and providing supporting documents.
Additionally, you can seek assistance from lawyers and law firms specializing in banking credit, such as HT Legal VN, to resolve this issue.
This is the entire sharing of HT Legal VN Law Firm on the issue of “What to Do When You Are Unjustly Blacklisted as Having Bad Debt?”. We hope it helps our customers understand some information related to bad debt and how to resolve it when unjustly listed as having bad debt.
For legal assistance in protecting borrowers, mortgagors, and resolving credit and mortgage contract disputes, please contact:
CONTACT INFORMATION
HT LEGAL VN LAW FIRM
A Vietnamese Limited Liability Law Firm
📞 Hotline: +84 9 6161 4040 | +84 9 2222 4040
📧 Email: info@htlegalvn.com
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Head Office (Ho Chi Minh City):
Office 1: No. 207B, Nguyen Phuc Chu Street, Tan Son Ward, Ho Chi Minh City, Vietnam
Branch Office (Ho Chi Minh City):
Office 2: No. 12, Alley 602/37, Dien Bien Phu Street, Thanh My Tay Ward, Ho Chi Minh City, Vietnam
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Office 3: No. 5, Alley 252/115, Tay Son Street, Dong Da Ward, Hanoi, Vietnam