The Government Decree regulates conditions for collateral seizure of bad debts

1. Rationale and scope of application

According to the State Bank of Vietnam (SBV), the objective of issuing this Decree is to ensure a balance between the legal rights and interests of both the borrower (debtor) and the lender (creditor). It calls for a more comprehensive and balanced approach to the regulations on the seizure of secured assets for non-performing loans, aiming to minimize the impact on the daily life, production, and labor of citizens, thereby contributing to social security and stability.

Simultaneously, the Decree ensures respect for the principle that "individuals and legal entities shall establish, exercise, and terminate their civil rights and obligations based on the freedom and voluntary nature of their commitment and agreement. All commitments and agreements that do not violate legal prohibitions and are not contrary to social ethics shall be effective for the parties and must be respected by other subjects," as stipulated in Clause 2, Article 3 of the Civil Code No. 91/2015/QH13.

The Decree comprises 8 articles, prescribing the conditions for collateral of bad debts to be seized, pursuant to Point dd, Clause 2, Article 198a of the Law on Credit Institutions No. 32/2024/QH15 (as amended and supplemented by Law No. 96/2025/QH15).

It applies to:

Credit Institutions (CIs);
Foreign bank branches;
Debt Trading and Resolution Organizations (entities 100% owned by the State with functions of purchasing, selling, and resolving debts);
Related agencies, organizations, and individuals.

The Decree is designed to ensure that when seizing secured assets which constitute the sole residence or the primary or sole working tool, the Credit Institution must deduct a sum of money for the securing party (obligor). This is intended to provide the obligor with the necessary capacity and resources to sustain their livelihood and ensure minimum living expenses for themselves and their family.

Prescribe conditions for collateral when seizing bad debts.

2. Conditions for seizing collateral of bad debts

The Decree stipulates the conditions for the seizure of secured assets for bad debts as follows:

2.1. Collateral being the Sole Residence or Primary/Sole Working Tool (Clause 1, Article 4)

The secured assets that are the sole residence or the primary or sole working tool may only be seized when they meet the conditions specified in Points a, b, c, d, e, Clause 2, Article 198a of the Law No. 32/2024/QH15 (as amended and supplemented by Law No. 96/2025/QH15) AND one of the following conditions:

2.2. Other Collateral (Clause 2, Article 4)

Secured assets that are not among those specified in Clause 1 above shall be seized when they satisfy the conditions stipulated in Points a, b, c, d, e, Clause 2, Article 198a of the Law No. 32/2024/QH15 (as amended and supplemented by Law No. 96/2025/QH15).

3. Rights and responsibilities of the securing party (obligor)

The Decree sets out the rights and responsibilities of the securing party as follows:

Commit to confirming and proving whether the secured asset falls under the cases specified in Clause 1, Article 4 of this Decree, upon the secured creditor’s request, within 10 working days from the date of receiving the request.
Should the securing party fail to confirm and provide proof as stipulated above, the secured asset (residence or working tool) shall be determined as not belonging to the cases specified in Clause 1, Article 4 of this Decree.
Be responsible for the content of the confirmation and the accuracy and legality of the provided documentation, which includes:
- Certificates of ownership for the secured asset and other assets (if any);
- Bank statements recording the securing party's monthly income;
- Documents proving the securing party's fulfillment of personal income tax obligations;
- Electricity, water, or internet bills recording the securing party's permanent or temporary residence address;
- Other relevant evidentiary documents.

4. Rights and responsibilities of credit institutions, foreign bank branches, and debt trading and resolution organizations

The Decree also stipulates the rights and responsibilities of the secured creditors:

Fully provide information to the securing party regarding their rights and responsibilities, as well as the secured creditor’s rights and responsibilities as prescribed in this Decree.
Deduct the sum of money for the securing party as stipulated in Clause 1, Article 4 of this Decree and account for this sum in the cost of disposing of the secured asset (collateral resolution cost).
Proceed with the seizure of the secured asset when the conditions specified in Article 4 of this Decree are met, or proceed with the seizure of assets determined not to be special cases (Clause 2, Article 5) when the conditions specified in Clause 2, Article 4 are met.

The procedures for collateral seizure shall comply with Clauses 3, 4, 5, 6, 7, Article 198a of the Law on Credit Institutions No. 32/2024/QH15 (as amended and supplemented by Law No. 96/2025/QH15).