Vietnam codifies asset seizure rights to resolve bad debts

Vietnam's Law No. 96/2025/QH15, effective from October 15, 2025, officially codifies the right of credit institutions to seize secured assets to resolve bad debts. This legal framework transitions from the previous pilot mechanism under Resolution 42/2017/QH14 into a permanent part of the Law on Credit Institutions.

Unlike the previous pilot program, which was limited to loans originated before August 15, 2017, the new law expands the scope to include all bad debts involving secured assets. This allows for the processing of overdue loans from the past decade through asset seizure rather than lengthy litigation processes.

The law also introduces protections for borrowers. Specific mechanisms are included to support individuals when the seized collateral serves as their only residence or their primary/sole means of labor. By allowing banks to proactively manage asset seizure, the law aims to reduce the workload on courts, procuracies, and enforcement agencies while improving credit portfolio quality.