6 June 2024
Close up of asian woman with calculator counting money. Woman calculating the spending at home.

Though Thailand has laws to protect debtors, many Thais do not know how to handle demands for repayment. Some of them endure verbal or even physical abuse when they fall behind with their payments. Others go as far as faking death to avoid their creditors, as a teenage girl did recently.

“When you are in debt, you don’t have to go on the run. You don’t have to fake your death or suffer physical assaults. You are protected under Thai law even if you owe money to others,” said well-known lawyer Ronnarong Kaewpetch, who leads a network that campaigns for social justice.

What does the law say?

Introduced in 2015, the Debt Collection Act limits the times when moneylenders or their representatives can contact their debtors. For instance, if they want to follow up on repayments, they can only do so between 8am and 8pm during weekdays and between 8am and 6pm on weekends. Also, they are only allowed to contact their debtors once a day, unless they are friends or relatives of the debtor.

The definition of contact in the case of lenders and borrowers covers any channel of communication, including messaging services, phone calls or physical visits. If a moneylender or their representative shows up in person to demand payment, they can only go to the address provided by the borrower. They cannot seek repayment at other addresses, such as the borrower’s workplace or relatives’ home.

Under the law, demands for repayment can only be made to the debtor, not to people they may know, because this may damage the debtor’s reputation. At most, moneylenders or their representatives can only inform the debtor’s parents, spouse, children or other people at the contact address – and only if they are asked about the reason for their visit.

The law also makes it illegal for lenders to confiscate debtors’ assets or abuse them either physically or verbally.

Borrowers behind on their debts can also safely ignore any threats by lenders to file police complaints or get them sent to jail, because failure to pay is not a criminal offense. Moneylenders can only resort to civil courts to push for repayment, and assets can only be seized if the court verdict is in the lender’s favor.

The law also prohibits any threats, and even covers messages written on envelopes that are visible to people other than the debtor.

Creditors who violate the law face a fine and/or a jail term. The punishment for a threat or physical assault, for instance, is up to five years in jail and/or a maximum fine of 500,000 baht.

Any threat or letter written to the debtor identifying the debt on envelopes is also an offense and can land the creditor in jail for up to a year with a 100,000 baht fine.

Debtors who feel they are being attacked or that the creditor is being unfair can call the Financial Consumer Protection Centre’s 1213 hotline.

What recourse do creditors have?

All is not lost for creditors, however, as they too are protected under the law. If they have clear evidence of having lent money, they can exercise their right under the law to get the money back with interest within legal limits.

If the loan is above 2,000 baht, then a creditor should have a contract prepared and signed by them and the borrower in front of witnesses from both sides. The contract should mention the full names of both lenders and borrowers, the date of signing, the repayment timeframe, and the interest rate involved.

Thai courts now also recognize loans granted via social media accounts. So, if a borrower breaks a written promise of repayment, the lender can turn to court to demand the money back.

By Thai PBS World