The Boundary Between Civil Disputes and Criminal Offenses in Loan Transactions

Luật sư: Nguyễn Bá Tùng

Cập nhật: 00:17, Chủ Nhật 27/09/2026

Distinguish between a civil dispute and criminal offenses (fraud or abuse of trust to appropriate property) when a borrower fails to repay a loan.

Loan of property is one of the most common civil transactions in daily social life. This transaction is often established under various forms such as contracts, loan agreements, letters of commitment, or through the specific conduct and verbal agreements of the parties. When the obligation to pay the principal and interest is not performed on time or in full, a civil dispute between the lender and the borrower will arise.

However, in practice, the boundary between a pure civil breach of obligation and acts showing signs of criminal offenses is often easily blurred, leading to lenders frequently filing criminal accusations or borrowers intentionally evading debt repayment obligations. Clearly determining when the act of delaying or failing to repay a debt remains a civil dispute and when it constitutes signs of a criminal offense is of great significance in applying the law correctly and protecting the legitimate rights and interests of all parties.

1. Property loan relations are civil relations:

Pursuant to Article 463 of the 2015 Civil Code, a “Contract for loan of property” is understood as an agreement between parties whereby the lender delivers property to the borrower. In practice, the subject matter of a property loan contract is usually money, gold, or similar assets. Upon maturity, the borrower is obliged to return property of the same type in the correct quantity and quality, and is only required to pay interest if agreed upon or provided by law.

Regarding the borrower's debt repayment obligation, pursuant to Article 466 of the 2015 Civil Code, the borrower has an obligation to fully return the property upon maturity as agreed by the parties. Depending on whether the loan is interest-bearing or interest-free, the loan term, and related payment obligations, the borrower is obligated to make corresponding debt repayments. If the borrower fails to perform the obligation on time, pays incompletely, or delays debt repayment, in principle, this is primarily an issue arising from a civil obligation relationship and is considered and resolved based on the agreement between the parties and the provisions of civil law.

In essence, at the time of establishing the loan relationship, if the parties genuinely agree on transferring property for the borrower to use for a certain period with an obligation to return it upon maturity, this constitutes a civil relationship of property loan. The borrower may use the loan amount for living expenses, investment, or manufacturing and business activities; meanwhile, the lender may lend to earn interest as agreed or out of familiarity and mutual trust between the parties. The borrower's subsequent inability to pay, partial payment, or delayed payment is not sufficient ground to establish that the borrower has committed an act of property appropriation.

2. When can a loan dispute escalate into a criminal matter?

To determine whether a property loan relationship merely remains a civil dispute or has shown signs of a criminal offense, it is necessary to examine the entire process: from the time of establishing the loan transaction, the delivery and receipt of property, the purpose of using the borrowed property, the factual developments, and particularly the subjective intent of the borrower at each relevant point in time, rather than solely assessing the consequence that the borrower is insolvent and the lender suffers irrecoverable financial loss. This serves as an essential basis for distinguishing between cases where the borrower genuinely encounters financial hardship and those where acts showing signs of intent to appropriate property emerge.

Under the provisions of the 2015 Penal Code regarding offenses against property ownership, two crimes are most commonly raised in connection with loan disputes:

“Crime of obtaining property by fraud”; and

“Crime of abuse of trust to appropriate property”.

2.1. Cases showing signs of the Crime of obtaining property by fraud (Article 174 of the 2015 Penal Code)

The crucial point to consider regarding fraudulent conduct under this offense is whether the perpetrator uses deceitful tricks and false information to induce the other party to trust and deliver property; and whether the intent to appropriate existed prior to or right at the time of performing the act. As a result, the property owner voluntarily transfers their property to the offender, who then appropriates it upon receipt.

In a loan relationship, to assess whether conduct exhibits signs of the Crime of obtaining property by fraud under Article 174 of the Penal Code, it is necessary to clarify:

Whether the borrower provided false information, used forged documents, or employed other deceitful tricks to build trust and induce the lender to hand over money.

Whether at the time of borrowing and receiving the money, the borrower already had a preconceived intention to appropriate the property.

The causal link between the deceitful conduct and the lender’s handover of property.

If it can be proven that the borrower used deceitful tricks right from the inception of entering into the contract and receiving the funds to win the lender's trust and obtain the property for subsequent appropriation, such conduct may be subject to criminal prosecution under this charge.

Conversely, if the parties merely entered into a normal loan transaction, the borrower actually received the funds with the initial intent to fulfill repayment obligations, but subsequently encountered objective financial difficulties leading to insolvency, the sole failure to repay debt does not constitute sufficient grounds to conclude that an act of obtaining property by fraud was committed.

2.2. Cases showing signs of the Crime of abuse of trust to appropriate property (Article 175 of the 2015 Penal Code)

Unlike fraud, in the Crime of abuse of trust to appropriate property, the property is initially delivered voluntarily by the owner to the recipient on the basis of legitimate trust and confidence. Only after lawfully receiving the property does the recipient form the intent to appropriate and carry out acts to evade the return obligation. Therefore, the key distinction between these two offenses lies in the timing of the formation of the intent to appropriate and the method of obtaining the property.

Therefore, it is necessary to comprehensively review the circumstances arising subsequent to the time the borrower received the property, particularly the signs under Article 175 of the Penal Code:

The borrower commits acts of fleeing to appropriate the property;

Using deceitful tricks after receiving the property to appropriate it;

Having the actual condition and capability but deliberately refusing to repay;

Using the borrowed property for unlawful purposes (such as gambling, smuggling, etc.) leading to insolvency.

Consequently, identifying this offense must be grounded in the specific conduct and subjective intent of the recipient after receiving the property, and cannot solely rely on the fact that the loan is overdue.

3. Some easily confused situations in civil property loan disputes:

3.1. Borrowing money but becoming insolvent

Example: A borrows money from B for business purposes. After receiving the funds, A invests them, but risks lead to business losses, financial depletion, and eventual inability to settle debts on time.

In this situation, a clear distinction must be made between debt repayment capacity and the subjective intent to appropriate property. The borrower's loss of solvency does not automatically equate to having an intent to appropriate the property from the outset. This is purely a risk in civil transactions.

3.2. Borrowing money and losing contact / no longer residing at the old address

Example: After B finishes transferring the borrowed money to A, B can no longer contact A or visits A's residence only to find that A has moved elsewhere.

In this case, it is necessary to clarify the reason, timing, and purpose of the relocation or loss of contact:

Whether this is an act of deliberately fleeing to evade debt repayment obligations or merely a relocation due to job change or personal reasons;

Whether there are acts of concealing information or deliberately blocking all communication channels.

A comprehensive assessment of all circumstances prior to, during, and after the receipt of property is required to determine the borrower's subjective intent.

CONCLUSION:

From the above analyses, distinguishing between a civil dispute and acts showing signs of a crime in property loan relationships cannot rely solely on the consequence of non-repayment, the lender's financial loss, or the large debt amount, but must fundamentally be based on:

The method of receiving property (was there deceit from the start, or was it based on lawful trust?);

The timing of the emergence of the intent to appropriate (before, during, or after receiving the money?);

Actual conduct after receiving the property (how the money was used, whether there was fleeing, dispersal of assets, or having financial means but deliberately defaulting?).

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