Can creditors sell assets to avoid debt of 5 billion VND?

I am the owner of a business and lost money so I owe a partner 5 billion VND but I cannot repay the debt.

Currently, in addition to business, I own a plot of land and a car. Concerned that my partner will sue in court to request me to pay the debt, I am planning to sell or transfer all of these assets before they file the lawsuit.

As far as I know, the partner is currently only requesting debt repayment and there has been no decision from the competent authority to freeze or distrain my assets.

I want to ask: In this case, do I have the right to sell the land and car to avoid these assets being confiscated?

If I sell out before my partner files a lawsuit, will I still be responsible for paying the 5 billion VND debt?

What legal consequences can selling assets with the purpose of avoiding debt repayment obligations lead to?

Reader Thu Ha

Consulting lawyer:

In this case, the fact that the partner has not yet filed a lawsuit in court does not mean that the debtor has the right to disperse assets to avoid the obligation to repay the debt.

If the sale of a plot of land or car is just a sham transaction, such as a transfer to a relative or acquaintance without actually paying, in order to hide or disperse assets so that the creditor cannot recover the debt, this transaction may be declared invalid by the court according to Clause 2, Article 124 of the 2015 Civil Code, because the transaction was established to avoid obligations to a third person.

Please note that the act of dispersing assets to avoid debt repayment obligations not only leads to civil liability but also carries the risk of criminal liability, depending on the time, purpose and specific behavior.

According to Article 175 of the 2015 Penal Code (amended and supplemented in 2017), a person who receives another person's property through a contractual relationship and then commits an act of appropriation according to legal cases can be prosecuted for the crime of Abuse of Trust to appropriate property. With the value of appropriated property being 500 million VND or more, the penalty can be up to 20 years in prison.

Simply operating at a loss, being insolvent and selling assets does not automatically constitute a crime. Competent authorities must prove signs of appropriation according to the provisions of Article 175 (such as having assets but refusing to pay debts, selling assets to disperse and not use for the purpose of repaying debts...).

In addition, if after a legally effective judgment or court decision has been issued, the person who must execute the judgment has the conditions to execute it but deliberately does not comply and disperses assets to avoid execution of the judgment, he or she may be prosecuted for failure to comply with the sentence according to Article 380 of the 2015 Penal Code. The act of dispersing assets is a circumstance that can subject the offender to imprisonment from 2 to 5 years according to Clause 2 of this Article.

Conclusion: Selling land and cars does not help the debtor "escape" the debt of 5 billion VND. If there is a purpose to disperse assets to avoid debt, the transaction may be invalid; More seriously, depending on the behavior and time of execution, dispersing assets to avoid debt repayment obligations can be criminally prosecuted.