Khoá luận regulations on the disposal of collateral which is the right to claim debts at commercial banks

HO CHI MINH CITY UNIVERSITY OF LAW FACULTY OF COMMERCIAL LAW NGUYEN PHAM MINH THAO REGULATIONS ON THE DISPOSAL OF COLLATERAL WHICH IS THE RIGHT TO CLAIM DEBTS AT COMMERCIAL BANKS COMMERCIAL LAW MAJOR HO CHI MINH CITY− 2021 HO CHI MINH CITY UNIVERSITY OF LAW FACULTY OF COMMERCIAL LAW BACHELOR'S THESIS REGULATIONS ON THE DISPOSAL OF COLLATERAL WHICH IS THE RIGHT TO CLAIM DEBTS AT COMMERCIAL BANKS STUDENT CLASS : NGUYEN PHAM MINH THAO : CLCQTL41 STUDENT CODE : 1651101030129 SUPERVISOR : Dr PHAN THI THANH DUONG HO CHI MINH CITY− 2021 COMMITMENT I hereby commit that the thesis "Regulations on the disposal of collateral which is the right to claim debts at commercial banks" is my work of research All information in this thesis is completely cited honestly Besides, I also personally give opinions relevant to issued problems in the thesis with the instruction of Doctor Phan Thi Thanh Duong – lecturer of Faculty of Commercial Law, and I not copy from any previous works I sincerely appreciate the devoted guidance from my instructor I am responsible for this commitment June 28, 2021 Nguyen Pham Minh Thao ABBREVIATION Circular 20/2017/TT-NHNN issued by the State bank of Vietnam on Circular 20 December 29, 2017, on Sale of receivables from financial leasing contracts Circular 27/2002/TT-BTC issued by the Ministry of Finance on March 22, Circular 27 2002, on Guiding the financial regime applicable to debt-managing and assetexploiting companies under commercial banks Circular 219/2013/TT-BTC issued by Circular 219 the Ministry of Finance on December 31, 2013, on Guiding the implementation of the law on valueadded tax and the government’s decree no 209/2013/nd-cp of december 18, 2013, detailing and guiding a number of articles of the law on value-added tax Decision 150 Decision 150/2001/QD-TTg issued by the Prime Minister on October 5, 2001, on The establishment of debt management and asset exploitation companies under commercial banks Decree 163 Decree 163/2006/ND-CP issued by Government on December 29, 2006 on Security transactions Decree 11 Decree 11/2012/ND-CP issued by Government on February 22, 2012, on Amending and supplementing a number of articles of the Government’s Decree No 163/2006/ND-CP of December 29, 2006, on secured transactions Decree 21/2021/ND-CP issued by the Decree 21 Prime Minister on March 19, 2021, on The implementation of the Civil Code to secure the performance of obligations Joint Circular 16/2014/TTLT-BTPBTNMT-NHNN issued by The Ministry of Justice - The Ministry of Joint Circular 16 natural resources and environment The State bank of Vietnam on June 6, 2014, on Guiding a number of matters on disposal of security assets TABLE OF CONTENTS INTRODUCTION .1 CHAPTER 1: Overview of the disposal of collateral which is the right to claim debts at commercial banks 1.1 Overview of the right to claim debts 1.1.1 Concept of the right to claim debts 1.1.2 Characteristics of the right to claim debts 1.1.3 Classification of the right to claim debts 1.2 Mortgage of the right to claim debts at commercial banks .10 1.2.1 Overview of a mortgage contract .10 1.2.2 Mortgage of the right to claim debts at commercial banks 11 1.3 Overview of collateral disposal which is the right to claim debts at commercial banks .14 1.3.1 Overview of collateral disposal at commercial banks .14 1.3.2 The basic legal content of collateral disposal which is the right to claim debts 16 1.3.3 Significance of collateral disposal which is the right to claim debts .22 CONCLUSION CHAPTER 24 CHAPTER 2: Vietnamese legislation on the disposal of the collateral being the right to claim debts at commercial banks 25 2.1 Vietnamese legislation on the disposal of the collateral being the right to claim debts at commercial banks 25 2.1.1 Notification procedure for the disposal of the right to claim debts 25 2.1.2 Disposal methods for collateral being the right to claim debts 26 2.2 Risk identification when disposing of collateral which is the right to claim debts .30 2.2.1 Valuation of the right to claim debts 30 2.2.2 The priority of payment 31 2.2.3 Mortgagor being an individual dies 33 2.2.4 Mortgagor being a legal entity goes bankrupt 35 2.2.5 Defenses used by the debtor 37 2.3 Some recommendations for improvement to the disposal of collateral which is the right to claim debts 40 2.3.1 Some specific recommendations for improvement to the disposal of collateral which is the right to claim debts .40 2.3.2 Some general recommendations on debt claim mortgage contract at commercial banks 46 CONCLUSION CHAPTER 49 CONCLUSION 50 BIBLIOGRAPHY INTRODUCTION The necessity of research The banking sector is one of the pillars of economic prosperity for many countries, especially for a developing country like Vietnam In Vietnam, many enterprises are lack incentives because of the capital shortage However, with commercial banks and their loan policies, enterprises have chances to change, grow, and succeed Nevertheless, the lending activities of banks include many potential risks Therefore, Vietnamese legislators have made regulations on security measures, including but not limited to pledge, mortgage, and guaranty The right to claim debts is a common right in business transactions According to Vietnam law, it is a property right and allowed to be used as collateral to secure the performance of obligations Because it is an intangible asset and carries hidden risks, collateral disposal, which is the right to claim debts, is more complex than other types of assets Due to this reason, commercial banks hesitate to accept the right to claim debts as collateral, and even if they accept, they have considerable difficulties in disposing of it It is thought that if the security measures system can provide a transparent and efficient mechanism to dispose of this special asset, commercial banks will be more confident to accept the right to claim debts as collateral At that time, investors can mobilize a more considerable amount of capital to carry on and expand business activities, thereby contributing to national economic development Therefore, clarifying legal aspects of the disposal of this special collateral is an issue that needs to be addressed so that investors can exploit their debt claims as efficiently as possible and banks can ensure their lawful rights and interests The above reasons make the study of collateral disposal, which is the right to claim debts, valuable Additionally, it is of the author’s interest to learn more about the right to claim debts due to its unique characteristics Therefore, the topic "Regulations on the disposal of collateral which is the right to claim debts at commercial banks" is selected to be the author’s graduation thesis Literature review Disposal of collateral is not a new issue and has been studied by many authors at different levels such as bachelor thesis, master thesis, doctoral thesis, papers published in different journals, etc Many outstanding studies have been given on topic analyzing the disposal of collateral from an overview perspective, namely: - Master thesis "Pháp luật xử lí tài sản bảo đảm tiền vay tổ chức tín dụng- Thực trạng hướng hoàn thiện" [Trans: Regulations on loan collateral disposal at credit institutions – Practical issues and recommendations] by Tran Thi Thuy Anh protected at Ho Chi Minh City University of Law in 2006 This thesis focuses on clarifying some theoretical issues as well as practical issues of the disposal of loan collateral at credit institutions, thereby recommending for improvement The problems and difficulties in collateral disposal mentioned in the thesis are still controversial, such as property auction, collateral valuation when handling, judgment enforcement related to bankruptcy proceedings - Master thesis "Pháp luật xử lý tài sản chấp hoạt động cho vay tổ chức tín dụng" [Trans: Regulations on collateral disposal in lending activities of credit institutions] by Lam Minh Duc protected at Ho Chi Minh City University of Law in 2009 The thesis analyzes very specifically the difficulties when applying the collateral disposal regulations in practical situations, such as property auction, problems when disposing of land use rights, properties formed from the loan capital The thesis also mentions some problems when dealing with property rights, which are still challenging issues for lawmakers, such as in case a debtor acknowledges the mortgage and commits to make a payment to the mortgagee, but then - fails to perform or incorrectly perform the payment, what are the sanctions for the debtor? Doctoral thesis "Tài sản chấp xử lý tài sản chấp theo quy định pháp luật dân Việt Nam hành" [Trans: Collateral and collateral disposal in accordance with the current Vietnamese Civil Law] by Vu Thi Hong Yen protected at Ha Noi University of Law in 2013 The thesis contributes scientific concepts and characteristics on collateral disposal Moreover, the thesis analyzes the inadequacies when disposing of collateral in some specific cases, including land use rights and houses to be formed in the future, disposal when the mortgagor goes bankrupt, etc The thesis also mentions the disposal of the right to claim debts, raising typical issues such as the debtor's defenses, the notification obligation Additionally, the thesis contributes a lot of recommendations so that the mortgagee can promptly handle the collateral, especially on step-by-step instructions for disposing of collateral Furthermore, there are also many types of research on disposing of collateral being the right to claim debts in particular, namely: - Bachelor thesis "Pháp luật chấp quyền đòi nợ hoạt động cho vay ngân hàng thương mại" [Trans: Regulations on the mortgage of the right to claim debts in lending transactions of commercial banks] by Vo Thi Dai protected at Ho Chi Minh City University of Law in 2011 The thesis has specifically analyzed the theoretical issues of the right to claim debts, such as the concept and characteristics of the right to claim debts, the concept and characteristics of mortgage of the right to claim debts However, the thesis does not analyze in-depth the issues related to debt - claim disposal, such as notification obligation, order of payment priority Bachelor thesis "Thế chấp quyền đòi nợ bảo đảm nghĩa vụ tốn hợp đồng tín dụng" [Trans: Mortgage of the right to claim debts to ensure payment obligations in credit agreement] by Pham Thi Huynh Nhu protected at Ho Chi Minh City University of Law in 2014 The thesis has analyzed many aspects of mortgage of the right to claim debts, such as conditions for the right to claim debts used as collateral, valuation of the right to claim debts, registration and notarization of mortgage contracts The thesis also mentions the disposal of the right to claim debts, typical issues such as the order of payment priority, the debtor's defenses However, the thesis has not fully exploited all aspects of it, for example, it has not mentioned the disposal of the right to claim debts when the mortgagor goes bankrupt - Master thesis "Pháp luật xử lý tài sản đảm bảo quyền đòi nợ hoạt động cho vay ngân hàng thương mại" [Trans: Regulations on the disposal of collateral being the right to claim debts in lending activities at commercial banks] by Nguyen Thanh Luan protected at Ho Chi Minh City University of Law in 2014 The thesis focuses on analyzing the issues of disposal of the right to claim debts; thus, it examines comprehensively all aspects of debt claim disposal, such as regulations, risk identifications in specific situations It has given particular recommendations for improvement However, the thesis omitted general theoretical issues of collateral disposal, such as its concept, characteristics, and significance Time limit and content of notice: Decree 21 only stipulates the time limit and content of the notice in the disposal stage without mentioning the time limit and content of the notice on debt claim mortgage The mortgagor and the mortgagee should give notice to the debtor immediately after the mortgage contract becomes effective to avoid the debtor arbitrarily making a payment to the mortgagor ahead of time In terms of content, it is necessary to clarify important information such as the debtor's obligation in debt claim mortgage duration, payment method if debt claim is due before the secured obligation By clearly stipulating the time limit and content, the debtor can perform its obligation properly according to the law The value of notice: What if, after receiving notice from the mortgagee, the debtor still pays the mortgagor? The law does not impose a sanction in such a case Therefore, in reality, the debtor may ignore the notice from the mortgagee, continuing paying to the mortgagor, which prejudices the lawful interests of the mortgagee Such a situation can refer to the United Nations Convention on the Assignment of Receivables in International Trade Article 1772, which stipulates that "After the debtor receives notification of the assignment, the debtor is discharged only by paying the assignee" In other words, if the debtor makes a payment to the mortgagor after receiving notice, the debtor is still obliged to pay the mortgagee 2.3.1.2 Disposal methods for collateral being the right to claim debts (i) Receipt of money amounts or other property from a third party According to Bui Duc Giang, "the solution of receiving other property from the debtor is not feasible for many reasons Firstly, what kind of property can the mortgagee receive from the debtor to replace the debt value when the definition of other property is too broad? The parties may have agreed on this property in the mortgage contract, but if so, the debt claim mortgage appears useless because they can directly mortgage this property instead of the right to claim debts? Moreover, the right to claim debts, in nature, will turn into a sum of money when comes due The best solution for the mortgagee is to receive the money instead of receiving other property then has to sell it Selling property is problematic because of the valuation In many cases, it is a factor that encumbers the disposal of collateral"73 It is a reasonable viewpoint because the dominant advantage of a debt claim compared to other property is liquidity If the received value of the right to claim debts is another property that needs to be appraised to sell to another party after going through a series of debt collection procedures, there is no reason for the bank to accept 72 https://www.yumpu.com/en/document/read/7853569/united-nations-convention-on-the-assignment-ofuncitral, page 10 accessed 21/06/2021 73 See more Bui Duc Giang, tldd(30), accessed 28/5/2021 41 the debt claim as collateral Therefore, "other property" should be omitted in this provision According to Joint Circular 16 Article 7(2)(a), only upon receipt of a written notice of handling the right to claim debts, the debtor is obliged to transfer the money to the bank account designated by the mortgagee in case the debt claim is due before the time for handling the right to claim debts under the mortgage contract The question is, what if the debt claim is due at a time when it has not been determined whether the mortgagor has breached the payment obligation, which means the bank cannot send a written notice of handling the right to claim debts to the debtor? What should the debtor in such a case? The debtor obviously can neither assign money to the mortgagor nor the mortgagee If the debtor assigns money to the mortgagor, it will prejudice the lawful interests of the mortgagee In case the debtor assigns money to the mortgagee, how can the debtor it without payment instruction from the mortgagee? The law should modify this provision by regulating that after receiving the notice of the debt claim mortgage, the debtor shall transfer the debt amount into the debtor's account opened at a bank designated by the mortgagee when the debt claim is due although the mortgagor has not violated the payment obligation In case the mortgagor fulfills the debt repayment obligation to the mortgagee, the mortgagor will be the beneficiary of the mentioned account; otherwise, the mortgagee will become the beneficiary of it In order to implement such a regulation, the law must supplement the content of the notice of the debt claim mortgage; one of its essential content is bank designation Although the law allows the mortgagee to receive the transfer of other property from a third party, the law leaves many issues untouched regarding "other property" "Other property" is mentioned only in Article 7(4)(a) of Joint Circular 16, whereby "the mortgagee may take the security assets into custody for disposal according to the procedures specified in Article 63 of 163 in case the debt is in kind" Joint Circular 16 references Article 63 of Decree 163 on procedures for taking mortgaged assets into custody However, Decree 163 has ceased its effectiveness, and Decree 21 does not address the issue of seizing collateral Decree 21 Article 52 only mentions the obligation to hand over the collateral of the secured party or the holder of the security property It can be seen that Decree 21 is aiming to abolish the mortgagee's right to taking assets into custody to restrict social violence Instead of stipulating the right of coercion for the mortgagee, the law stipulates the obligation to deliver the security property of the mortgagor or the 42 debtor If they fail to hand over the collateral, the mortgagee may propose the Court settle the case This method helps to reduce social violence, but it is detrimental to the mortgagee because asking the Court to settle is time-consuming and costly "It is possible to stipulate if the security transaction has been legally notarized or duly registered with the competent authority when the securing party fails to cooperate in the handling of the security asset, (i) the secured party may request the court to issue a decision to enforce the seizure of the security property according to summary procedures based on which the secured party can request the civil judgment enforcement agency to apply coercive measures to recover the security property for the disposal or (ii) the secured party may directly request the civil judgment enforcement agency to apply coercive measures to recover the security property for the disposal"74 In case the law still keeps the provision on "other property", the law should amend, supplement the above provisions so that collateral in general and the right to claim debts in particular can be handled promptly, ensuring the mortgagee's interests Simultaneously, it reduces the court's workload as the court only needs to issue a decision instead of resolving a dispute (ii) Sale of the right to claim debts Since the right to claim debts has two natures, which is a right to claim and a property right, its assignment can be done in the form of a transfer of the right to claim or sale of property rights Although both of these forms result in the assignment of the right to claim debts to a third party, the way they implement still has differences In particular, in regulations for transfer the right to claim, notification is one of the essential obligations However, the sale of a property right does not mention notification obligation Noteworthy, in both cases, the law does not specify what necessary documents are With very few and vague regulations, the buyers face many risks Furthermore, the buyer may also face defenses invoked by the debtor to refuse payment With many risks mentioned above, it is hard to find a buyer, and even if there is a buyer, it will also tend to squeeze price to the lowest as possible It is thought that this method would be more feasible if the law stipulates the form that the sale of the right to claim debt should follow, whether transfer the right to claim or sale of property right Then the law must clarify the obligation to notify, its content, and the documents required to prove the right to claim debts In addition, the Bui Duc Giang, "Sửa quy định giao dịch bảo đảm: bước tiến hay lùi?'' [Trans: Amend the rules on secured transactions: forward or backward step?], https://thongtinphapluatdansu.edu.vn/2014/08/22/sua-quy-dinh-vegiao-dich-bao-dam-buoc-tien-hay-li/, accessed 28/5/2021 74 43 law needs to specify the main contents of the sale contract of the right to claim debts to better protect the interests of the third party These contents can be referred to the provisions of the "Receivables sale contract" specified in Article 11(1) of Circular 20/2017/TT-NHNN (iii) Acceptance of the debt claim as a replacement for the performance of the secured obligation The shortcoming of this method is that after receiving the collateral, the mortgagor is not responsible for the debtor's insolvency In case the debtor invokes lawful defenses to refuse payment, the bank takes the risk of being unable to recover the debt In these cases, the law needs to supplement that if the debtor refuses to pay or only pay a portion of debt the debt due to lawful defenses, the mortgagor and the debtor are jointly responsible for paying the debt to the bank 2.3.1.3 The priority of payment According to Bui Duc Giang, "the order of priority of payment between comortgagees of a debt claim should be determined based on the notification order to the debtor instead of basing on the order of registration or establishment of security transaction"75 However, according to Nguyen Thanh Luan, this suggestion is not reasonable because, "if the order of payment priority is determined based on the order of notice when a dispute arises, the debtor may not admit that the debtor has received the notice or the debtor may invoke that the notice's content is unclear"76 In the event that the mortgage contract is registered, all information will be public and transparent In order to ensure the interests of co-mortgagees, the law should stipulate that it is compulsory to register the debt claim mortgage contract Firstly, the registration guarantees that information will be public, transparent; thus, reduce the risk of fraud Once a mortgagee has registered a secured transaction, latecomers will know this information, so they only accept the debt claim mortgage when they have confirmation from the first mortgagee Furthermore, the following mortgagee can consider the residual value of the debt claim to ensure debt recovery without relying on information provided by the mortgagor Thereby diminishing disputes arising from the debt claim, reducing the workload for the court In addition, "through the secured transaction registration system, the State will obtain the necessary 75 Bui Duc Giang, tldd (56), accessed 29/5/2021 Nguyen Thanh Luan (2014), Pháp luật xử lý tài sản đảm bảo quyền đòi nợ hoạt động cho vay ngân hàng thương mại [Trans: Regulations on the disposal of collateral being the right to claim debts in lending activities at commercial banks], Master Thesis, Ho Chi Minh City University of Law, page 64 76 44 information for the process of making macro-policy, especially directly related to the credit security policy"77 Additionally, the law should stipulate procedures instructing the payment in the order of priority Because there will be cases where the party disposing of the debt claim is not the prioritized party In case the handled party does not voluntarily hand over the money to other co-mortgagees, what should other co-mortgagees to recover the money without initiating a lawsuit? To solve these problems, lawmakers may refer to the United Nations Convention on the Assignment of Receivables in International Trade Article 1478: "(a) If payment in respect of the assigned receivable is made to the assignee, the assignee is entitled to retain the proceeds and goods returned in respect of the assigned receivable; (b) If payment in respect of the assigned receivable is made to the assignor, the assignee is entitled to payment of the proceeds and also to goods returned to the assignor in respect of the assigned receivable; and (c) If payment in respect of the assigned receivable is made to another person over whom the assignee has priority, the assignee is entitled to payment of the proceeds and also to goods returned to such person in respect of the assigned receivable" And the law should supplement a provision which clearly states that in case the receiver intentionally denies to return proceeds and goods, the mortgagee has the right to request the enforcement agency to enforce it 2.3.1.4 Mortgagor being a legal entity goes bankrupt First of all, the law needs to extend the time limit for sending the debt collection paper: According to Article 66 of the Law on Bankruptcy 2014, the time limit for sending the debt collection paper is only 30 days from the date people's court issues a decision to initiate bankruptcy procedures This provision prejudices the interests of the secured party The law should stipulate in the direction of "not limiting the time for sending the debt collection paper until the decision to declare bankruptcy is issued"79 Secondly, The Bankruptcy law needs to supplement new provisions to protect the interests of secured creditors Accordingly, after initiating bankruptcy procedures, the mortgagee is entitled to handle the mortgaged property according to "Vai trò đăng ký giao dịch bảo đảm thể rõ nét Nghị định số 83/2010/NĐ-CP'' [Trans: The role of secured transaction registration is clearly shown in Decree 83/2010/ND-CP], http://www.isl.vass.gov.vn/tin-tuc/gioi-thieu-van-ban/Vai-tro-cua-dang-ky-giao-dich-bao-dam-duoc-thehien-ro-net-tai-Nghi-dinh-so-83-2010-Nd-CP3553.17#:~:text=%C4%90%C4%83ng%20k%C3%BD%20giao%20d%E1%BB%8Bch%20b%E1%BA%A3 o,c%E1%BB%A7a%20b%C3%AAn%20nh%E1%BA, accessed 29/5/2021 78 tldd(72) accessed 23/06/2021 79 Duong Thanh Thuan, tldd (64), accessed 22/05/2021 77 45 the mortgage contract without depending on the decision of the creditors' meeting, unless the mortgagee voluntarily refuses to handle the mortgaged property immediately and wait for the resolution of the creditors' meeting 2.3.1.5 Defenses by the debtor In case the debt claim arising contract is void: The bank is a bona fide third party; therefore, its interest must be protected If for other tangible assets, the bank has the right to dispose of the property after receiving ownership transfer lawfully The owner is not entitled to reclaim the property from a bona fide third party but has the right to initiate a lawsuit to request the subject whose mistakes led to the established transaction with the third party to refund reasonable expenses and pay compensation for damage The same should be applied to debt collection rights Accordingly, the bank is entitled to request the debtor to transfer money, and then the debtor may initiate a lawsuit to reclaim payment from the mortgagor Grounds arising from the relationship between the mortgagor and the debtor: Although the law does not expressly prohibit contractual termination agreements such as replacement or offsetting obligations; however, according to Article 320 of the Civil Code 2015, the mortgagor's obligation is to preserve and keep the mortgaged property The mortgagor is refrained from selling, replacing, exchanging, or donating the mortgaged property, except it is allowed by the mortgagee Therefore, it can be seen that any agreement or amendment that puts the debt claim in danger of losing its value or declining in value without the consent of the mortgagor is illegal; thus, it is a void transaction However, it would be better if the law expressively prohibits such agreements or amendments It would reduce the likelihood of a dispute arising between parties 2.3.2 Some general recommendations on debt claim mortgage contract at commercial banks Even though Decree 21 has made much progress compared to Decree 163 However, there are still a number of shortcomings that remained untouched in terms of mortgage of the right to claim debts in general and its disposal in particular For the debt claim disposal to take place promptly and successfully, developing a comprehensive legal framework for the mortgage of the right to claim debts is a prerequisite First of all, the right to claim debts is utilized as collateral The law should provide a specific definition of the right to claim debts to avoid using wrong terms in legal documents such as "right to claim debts" and "creditor's right" According to Le Trong Dung, it is necessary to "clearly stipulate and explain the concept that the right 46 to claim debts is a property right of an individual or organization that is used to require other individuals or organizations to perform the payment obligation arising from lawful grounds" "Such regulation will help to apprehend the right to claim debts and play a very important role in the establishment and execution of transactions related to debt claim"80 Moreover, in order to ensure the safety in credit activities of commercial banks, the law needs to set conditions for mortgaging the debt claim at banks Particularly, it is necessary to supplement the condition that only when there is no dispute over the right to claim debts can it be used as collateral "If the right to claim debt is in dispute, only when such dispute is resolved by written agreement between the parties or through a court judgment or decision of a competent agency will it become an object of the mortgage contract"81 Secondly, the issue of valuation of the right to claim debts The law only stipulates the issue of valuing the debt claim when it comes to the stage of collateral disposal While the valuation of the debt claim at the time of establishing the security transaction "is the basis for determining the scope of obligations that the debt claim can secure and determining the reasonable loan"82 If the debt claim is appraised higher than its actual secured capacity, the risk falls on the bank If the opposite occurs, the borrowers will not receive the commensurate value of their property, leading to insufficient funds for its demand "In reality, the valuation method that credit institutions often apply is the method of self-evaluation based on the debt (amount to be paid under the contract) combined with market price reference and self-analyze the operation situation as well as information related to the debtor, taking into account the trend of future price movements"83 However, due to the fact that the bank does not receive support from the debtor, the collection of information about the debtor encounters many difficulties Issues such as incomplete and nontransparent information or "information interference" have a negative effect on the valuation of the debt claim Therefore, the bank needs the debtor's assistance in verifying the completeness and accuracy of the information so that the bank can have a comprehensive and correct assessment of the debt claim Le Trong Dung (2021), "Quyền đòi nợ theo pháp luật Việt Nam vấn đề cần hoàn thiện'' [Trans: The right to claim debts under Vietnamese law and shortcomings need to be improved], State And Law Journal, No.4 (396), page 26 81 Le Trong Dung, tldd(6), page 38 82 Le Trong Dung (2020), "Một số vấn đề cần lưu ý sử dụng quyền đòi nợ làm tài sản chấp" [Trans: Some noteworthy issues when using debt claim as collateral], Banking Journal 2020, no.17, page 31 83 Le Trong Dung, tldd(82), page 32 80 47 According to Phan Tran Minh Hung, "basically, the debtor does not want to assist the bank in appraisal and signing the mortgage contract, because they receive fewer benefits than their responsibilities Therefore, to solve this problem, credit institutions need to approach the debtor and commit to providing what they need"84 However, this solution does not seem feasible because it invisibly creates an additional burden on the bank to commit to supporting the debtor The law needs to stipulate the debtor's obligation to confirm the debt And for other information about the debtor, such as financial results, it is desirable if an enterprise information system is built and managed by the tax authority because enterprises must submit reports to the tax authority every year85 If the tax authority can gather and update such information to the system annually, business information will be transparent, public, and accessible Thirdly, Decree 163 has ceased its effectiveness and been replaced by Decree 21 However, a new circular to guide Decree 21 specifically has not been adopted; therefore, Joint Circular 16 is still in effect to guide a number of matters on the disposal of security assets even though it has several opposite regulations against Decree 21 The lawmaker must set up a new Circular to provide specific guidance for Decree 21 Fourthly, no matter how advanced the law is, it is impossible to avoid shortcomings and inadequacies Therefore, the bank itself needs to improve its expertise and build its supervisory mechanism to protect its interests The personnel must be trained rigorously, and the customers must be carefully selected based on reputation and financial ability Moreover, "the credit institution must have a team dedicated to monitoring the cash flow of the enterprise through the transaction account, conducting the determination of the value of the debt claim in each period, on a monthly basis, or as soon as there is a change in cash flow, fact-checking must be carried out on an ongoing basis"86 Phan Tran Minh Hung, (2016), "Bàn chấp quyền đòi nợ'' [Trans: Discuss of mortgage of the right to claim debts], Economy and Forecast Journal, 03/2016, no 05, page 37 85 See more Phan Tran Minh Hưng, tldd(84), page 37 86 Phan Tran Minh Hưng, tldd(84), page 37 84 48 CONCLUSION CHAPTER The prevailing regulations on the disposal of collateral being the right to claim debts only raise several issues but have not resolved all the shortcomings of the old regulations The law only focuses on the obligation to notify when disposing of the right to claim debts However, it does not specify the notification obligation on mortgage transactions at the first stage This shortcoming needs to be modified by supplementing the content, method, time limit, and especially the value of the notice In addition, it is necessary to amend Article 7(2)(a) of Joint Circular 16, specifically stipulating that after receiving the notice of the debt claim mortgage, the debtor shall transfer the money into the debtor's account opened at a bank designated by the mortgagee when the debt claim is due although the mortgagor has not violated the payment obligation Moreover, the law should stipulate which method is used to selling the debt claim, specifying the necessary documents and the content of the debt claim sale contract It also should supplement the joint liability of the mortgagor and the debtor in case the debtor invokes defenses to refuse repayment to the mortgagee if the using method is acceptance of the debt claim as a replacement for the performance of the secured obligation The law also needs to stipulate the registration of security transactions is mandatory when mortgage a debt claim Additionally, to protect the lawful interests of the prioritized mortgagee, the law shall create a prompt and convenient judgment enforcement mechanism At the same time, the law shall supplement a prompt solution in case the mortgagor goes bankrupt Accordingly, the mortgagee is entitled to handle the mortgaged property according to the mortgage contract without depending on the decision of the creditors' meeting Last but not least, the law needs to provide a protection method to ensure the bank's interest in case the debtor invokes defenses due to the mortgagor's fault Accordingly, if the original contract is void, the bank is still entitled to request the debtor to transfer money, and then the debtor may initiate a lawsuit to reclaim payment from the mortgagor The law needs to clarify that any modification of the original contract after notification of the mortgage contract between the mortgagor and the debtor that affects the mortgagee's rights is ineffective 49 CONCLUSION Regulations on the disposal of the right to claim debts have been studied by many authors at different levels It is not a new topic, however, the prevailing regulations are still scattered and unspecific, making it difficult to handle for subjects participating in this type of mortgage transaction This is a major barrier that making commercial banks hesitate to accept the debt claim as collateral The introduction of Decree 21 has resolved some shortcomings of Decree 163, such as recognizing the settlement when the mortgagor is an individual deceases, the obligation to notify about the debt claim mortgage Decree 21 has also removed a number of inappropriate contents of Decree 163, such as the transfer of the right to claim debts after mortgaging to the bank Although Decree 21 has made great advancements compared to Decree 163, Decree 21 still possesses many shortcomings To solve these inadequacies, building a comprehensive legal framework for a mortgage of the right to claim debts is essential The law should gather all issues related to the mortgage of the right to claim debts into one legal document, which stipulates the definition, characteristics of the debt claim, notification obligation, compulsory registration of security transactions, valuation methods, the priority of payment, and disposal method in each specific case 50 BIBLIOGRAPHY DOCUMENTS IN VIETNAMESE A Legal instruments Civil Code (Law 91/2015/QH13) date 24/11/2015 Civil Code (Law 33/2005/QH11) date 14/6/2005 Law on Enterprises (Law 59/2020/QH14) date 17/6/2020 Law on promulgation of legal documents (Law 80/2015/QH13) date 22/6/2015 The Law Amending and Supplementing a Number of Articles of the Law on Enforcement of Civil Judgments (Law 64/2014/QH13) date 25/11/2014 Law on Bankruptcy (Law 51/2014/QH13) date 30/6/2014 Law on Enforcement of Civil Judgments (Law 26/2008/QH12) date 14/11/2008 Commercial Law (Law 36/2005/QH11) date 14/6/2005 Decree 21/2021/ND-CP issued by Government on March 19, 2021 on the implementation of the Civil Code to secure the performance of obligations 10 Decree 11/2012/ND-CP issued by Government on February 22, 2012, on amending and supplementing a number of articles of the Government’s Decree No 163/2006/ND-CP of December 29, 2006, on secured transactions 11 Decree 163/2006/ND-CP issued by Government on December 29, 2006 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legislation, Chapter III], Social Science Publisher 17 Nguyen Van Cu, Tran Thi Hue (2017), Bình luận khoa học luật dân năm 2015 nước cộng hòa xã hội chủ nghĩa Việt Nam [Trans: Scientific commentary of the Civil Code 2015], People Police Publishing House 18 Truong Thanh Duc (2017), Chín biện pháp bảo đảm nghĩa vụ hợp đồng [Trans: Nine measures to secure contractual obligations], National Political Publishing House C Textbooks 19 Ho Chi Minh City University of Law (2017), Giáo trình pháp luật hợp đồng bồi thường thiệt hại hợp đồng [Trans: Textbook Law on Contracts and Compensation for non-contractual damage], Hong Duc Publisher 20 Ho Chi Minh City University of Law (2019), Giáo trình luật ngân hàng [Trans: Textbook Law on Banking], Hong Duc Publisher 21 Ho Chi Minh City University of Law (2019), Giáo trình pháp luật tài sản, quyền sở hữu thừa kế [Trans: Textbook Law on Property, Ownership and Inheritance] Hong Duc Publisher 22 University of Economics and Law (2020), Giáo trình pháp luật bảo đảm nghĩa vụ [Trans: Textbook on the Law of obligation security], Ho Chi Minh City National University Publisher D Theses 23 Nguyen Thanh Luan (2014), Pháp luật xử lý tài sản đảm bảo quyền đòi nợ hoạt động cho vay ngân hàng thương mại [Trans: Regulations on the disposal of collateral being the right to claim debts in lending activities at commercial banks], Master Thesis, Ho Chi Minh City University of Law 24 Pham Thi Huynh Nhu (2014), Thế chấp quyền đòi nợ bảo đảm nghĩa vụ tốn hợp đồng tín dụng [Trans: Mortgage of the right to claim debts to ensure payment obligations in the credit contract], Bachelor Thesis, Ho Chi Minh City University of Law 25 Vo Thi Dai (2011), Pháp luật chấp quyền đòi nợ hoạt động cho vay ngân hàng thương mại [Trans: Regulations on the mortgage of the right to claim debts in lending transactions of commercial banks], Bachelor thesis, Ho Chi Minh City University of Law 26 Phan Thi Ngoc Huyen (2010), Pháp luật xử lý tài sản bảo đảm tiền vay bất động sản [Trans: Regulations on loan collateral disposal being immovables at commercial banks], Bachelor Thesis, Ho Chi Minh City University of Law E Journals 27 Le Trong Dung (2021), "Quyền đòi nợ theo pháp luật Việt Nam vấn đề cần hoàn thiện'' [Trans: The right to claim debts under Vietnamese law and shortcomings need to be improved], State And Law Journal, no.4 (396) 28 Le Trong Dung (2020), "Điều kiện để quyền đòi nợ làm tài sản chấp theo pháp luật Việt Nam'' [Trans: Conditions for the right to claim debt as collateral under Vietnamese law], Procuracy's Journal, 20/2020 29 Le Trong Dung (2020), "Một số vấn đề cần lưu ý sử dụng quyền đòi nợ làm tài sản chấp" [Trans: Some noteworthy issues when using debt claim as collateral], Banking Journal 2020, no.17 30 Phan Tran Minh Hung (2016), "Bàn chấp quyền đòi nợ'' [Trans: Discuss of mortgage of the right to claim debts], Economy and Forecast Journal, 03/2016, no 05 F Websites 31 "Vai trò đăng ký giao dịch bảo đảm thể rõ nét Nghị định số 83/2010/NĐ-CP'' 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Therefore, the topic "Regulations on the disposal of collateral which is the right to claim debts at commercial banks" is selected to be the author’s graduation thesis Literature review Disposal of collateral. .. also to the state 24 CHAPTER 2: Vietnamese legislation on the disposal of the collateral being the right to claim debts at commercial banks 2.1 Vietnamese legislation on the disposal of the collateral. .. collateral disposal which is the right to claim debts 1.3.2.1 Principles for disposal of collateral which is the right to claim debts Collateral disposal is not only related to the lawful rights