Headquarters of a debt collection company in Tan Phu District
Debt collection companies are charging 20-30 percent of outstanding debts to secure their repayment, with bad debts earning up to a 50 percent commission.
A businessman who is chairman of the board of directors of a company in District 1 was shocked when he was visited by debt collectors demanding repayment of VND150m he owed his company's deputy director, who was a close friend.
A woman from Tan Phu District was visited by debt collectors for repayment after she missed a deadline.
Many debt collectors are reportedly turning away new clients because they are already too busy.
“We won't be taking any new contracts until after the Tet holiday as we don’t have enough staff to do the jobs,” said a man named Hung, who works for a debt collection company in District 4.
Lawyer Nguyen Duc Chanh, director of the Duc Chanh Law Firm and a member of the HCM City Association of Lawyers, said most people opted to use the debt collection services because going through the courts was time consuming and slow, and the outcome was not certain.
Major Hoang Tuan Nam, from the municipal police said borrowers were often threatened by debt collectors to pay up, either physically, by harassment on their cell phones by calls or text messages, or having shrimp paste smeared on their front doors.
But while such activity was illegal, relevant authorities have yet to work out how to effectively address it.
HCM City Police fined two of the city's 18 major debt collection agencies a total of VND22m for illegal activities in 2014.
Nam said police were cracking down on illegal debt collection methods. "Anyone threatened or terrorised by debt collectors should make a report to police in their area."