Debt collectors switch to crime mode

May 11, 2009
An unidentified HCMC youth is helped to the police station to report being assaulted by gangs hired by his creditor.

Seventeen-year-old Nguyen Thanh Thien Chuong of Quang Nam Province was arrested in February for attacking a resident with a knife.

He had been hired to recover a VND120 million (US$6,800) debt.

Many young people are finding jobs with a thriving debt-collection industry that has sprung up nationwide, deploying gangs to assault, kidnap and otherwise intimidate debtors into repaying money borrowed from private lenders and usurious interest rates.

The loan sharks feed off people in urgent need of money willing to pay exorbitant rates because the money is available immediately, avoiding the lengthy procedures involved in obtaining credit from formal institutions like banks.

When the debtors fail to pay up for whatever reason, the sharks use debt-collector gangs for fees of between 10- 50 percent of the money retrieved.

This March, Nguyen Thi Hanh of Binh Duong Province had managed to repay little more than one-third of the VND5.6 million ($317) that she owed Ngo Thi Ly.

So Ly arranged for people to push Hanh off her motorbike and steal the bike.

My Le, running a karaoke parlor served by sex workers in HCMC, once borrowed VND100 million ($5,663) from a man called Cuong at a monthly 60-percent interest rate. She couldn’t afford the interest after one year and fled home to Hanoi, scared of Cuong’s “punishment.”

HCMC People’s Court last year sentenced Thai Quoc Khanh to two years in prison for breaking into the house of his debtor Tran Tuan Hao with knives and threatening to kill all his family members if the latter failed to return VND140 million ($7,929).

Hao had lost the money to Khong Trong Quy while betting on a football match.

Not deterred

The police action and court cases have failed to dissuade debt collectors from using illegal coercive measures.

A gang in Binh Duong last December was sent to the cell phone shop of Ho Thi Thu Kim to smash the furniture, take nine phones and 20 SIM cards as repayment of part of her debt.

The gang, including the armed Le Truong An, 21 years of age, even challenged the police when they arrived at the scene.

Sometimes the lenders themselves participate in the “mission” to get their money back, as in two cases that HCMC police busted in February.

Le Thi Thuong and seven others kidnapped a debtor who owed her VND95 million ($5,380) and beat her unconscious before asking her family for VND100 million; while Tran Quoc Huong and his men abducted his debtor’s houseworkers to demand VND150 million.

Another woman in HCMC only identified as D. found last year she had created her own Frankenstein by hiring the debt-collector thugs.

D. hired Le Van Thinh and his men to take back the VND400 million ($22,655) she had inherited, which her sister was keeping as she was young and unemployed.

The gang, promised 40 percent of the money, threatened to kill the family of the sister.

Scared, D. asked the gang to quit, promising them some money, but they turned around and threatened her life as well.

She first begged the gang to leave her alone, then gave them VND70 million ($3,964), promising another VND90 million. When she could not pay that on time, D. tried to commit suicide. She was hospitalized but Thinh’s men threatened her there as well.

More than ten days later, Thinh was arrested by the police.

Corporate collectors

When money is lent based on a contract and the borrower is brought to court for failure to pay it back, the court typically orders assets of the latter to be used to settle the debt.

But this is very difficult to do because many people, especially businesspeople, are shrewd enough not to register assets, including their homes, under their own or families’ names.

And even when the court can help, it is likely to prolong the process and lenders have little patience for that.

This situation has seen the establishment of several companies offering debt collection services.

“While ordinary people fear losing their life the most, businesspeople are scared of losing their prestige,” says Thanh, who runs a website offering to collect debt.

“Just take advantage of that fear and you will get the money back.”

The HCMC resident says he goes by the principle, “If you owe money, you have to pay it back. That’s the rule.”

A successful method he has been using is to send letters demanding the repayment to partners of the indebted company, who soon pays up, fearful of losing both clients and its reputation.

On the other hand, Mai of another debt recovering company told Thanh Nien she had hired a dirty-faced man to hang around the debtor company and beg the company’s customers for money. The man did that for several days before the company paid up the debt.

Thanh Nien has found out that a Hanoi company in the same business had hung banners in front of the indebted company to shame it into repayment.

Another company in Hanoi, Phuong Dong, used violence to try and recover VND500 million ($28,319) in 2006 and 2007.

The company’s director Le Binh Minh last month received a 12-year jail term for “robbing” and “illegally arresting someone” while 32 employees got sentences ranging from one to ten and a half years.

Lawyer Bui Quoc Tuan of HCMC says recovering debts for others has become a “hot job” as there are more and more lenders finding it hard to get their money back.

A court official in the city, who wished to remain unnamed, said legal action does not typically favor lenders in most cases, and they opt for alternate methods of collection.

Reported by Dam Huy

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