Applying the law in handling bad debts: challenges and solutions

Bad debt is the situation that the borrower cannot repay the debt on time or unable to repay the debt under the signed contract’s terms. Non-performing loans have caused many challenges for credit institutions and banks. To solve this problem, it is necessary to apply legal regulations to handle bad debts. Regulations play a key role in defining the rights and obligations of stakeholders and in managing and handling bad debts. Regulations also provide a mechanism to protect and encourage involved parties to seek cooperative solutions to minimize losses caused by bad debts. This paper analyzes the challenges in applying regulations on handling bad debts and proposes some solutions to minimize losses in the bad debt handling process.