This explains why consumer lenders have reported bad debt increases.

Diverse products and simple procedures all have led to a consumer credit boom in Vietnam but analysts warned that the ‘credit boom’ will lead to a ‘bad debt boom’, especially in the context of the current situation. The Covid-19 pandemic has caused millions of workers to lose their jobs and fall into debt.

Nguyen Hieu, a teacher at a primary school in Thanh Hoa province, said since students were off because of Covid-19, his income has decreased dramatically. Debt collectors call and send messages urging to pay debts.

“We informed the creditor about our situation now. When the epidemic is contained and we can return to work, we will pay both principal and interest,” he said.

Nguyen Tri Hieu, a respected banking expert, said the rapid bad debt increase was foreseeable. Since borrowers lost jobs in Covid-19, they cannot earn money to pay debts. Credit institutions need to extend the repayment deadline.

“Commercial banks and credit funds need to extend the repayment by 3-6 months. Borrowers need to inform immediately credit institutions and finance companies about their financial situation and ask for grace periods,” he said.

If borrowers fall into insolvency, creditors should negotiate with each other to find solutions, such as reducing debts, setting up new repayment roadmaps after grace periods, or cutting lending interest rates.

If borrowers fall into insolvency, creditors should negotiate with each other to find solutions, such as reducing debts, setting up new repayment roadmaps after grace periods, or cutting lending interest rates.

Creditors, warned of the bad debt increase, have been taking strong measures to collect debts. Some of them have used criminal underworld measures.

Nguyen Hung, 44, in Hanoi, borrowed money to buy a smartphone. He had made payments on schedule until recently, when he had financial problems and could not pay the debts.

Unable to contact Hung to collect debt back, the creditor, a finance company, applied the ‘law of the jungle’.

The company sent a debt-chasing letter to his family and a copy to his sister. Later, the company’s officers repeatedly called and threatened that they will ‘act rudely’ if necessary to collect debts.

“I will pay the debts when I have money. However, what I am afraid of the most is that the creditor will persecute my family members,” he said.

Go Vap District police have confirmed that they are investigating a case of a man jumping into a river to commit suicide.

Le Thanh Tam, born in 1978, was believed to have committed suicide because he could not pay debts to FE Credit, and he suffered from persecution from certain people.

Mai Lan

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