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Wednesday, February 1, 2023

Debt collection in Thailand – The rights of a debtor and creditor

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How to collect or pay a debt in Thailand, how Thai law protects debtors and what rights a creditor has

Despite the fact that Thailand has laws protecting debtors, many Thais, and especially foreign tourists, do not know how to deal with demands to repay debts. Some are verbally or even physically abused when payments are delayed. Others go so far as to fake their deaths in order to avoid creditors.

To clarify the situation, Thai Public Broadcasting put together advice for debtors and creditors.

“When you’re in debt, you don’t need to run. You don’t need to fake your death or be physically abused. Thai law protects you even if you owe money to other people,” says well-known lawyer Ronnarong Kaupetch, who heads an organization fighting for social justice.

Debt collection law in Thailand

Thailand’s debt collection law, passed in 2015, limits the amount of time moneylenders or their representatives can contact their debtors. For example, if they want to follow up on debt repayments, they can only do so from 8 a.m. to 8 p.m. on weekdays and from 8 a.m. to 6 p.m. on weekends. They are also 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 the lender or his representative wants to meet the debtor in person to demand payment, they can only come to the address given by the borrower. They cannot demand repayment at other addresses, such as the borrower’s place of work or at the home of relatives.

According to the law, the demand for debt repayment in Thailand can be presented only to the debtor, but not to acquaintances, as it may damage the reputation of the debtor. As a last resort, the moneylender or his representative can inform the parents, spouse, children or other persons at the contact address of the debtor, and only if they are asked about the reason for the visit.

The law also prohibits creditors from seizing debtors’ property or physically or verbally abusing them.

Borrowers who default on a debt can safely ignore any threats by creditors to file a police report or send them to jail, since failure to pay a debt in Thailand is not a criminal offense. Creditors can go to the civil courts to get the debt repaid, and property can only be confiscated if the court verdict is in favor of the creditor.

The law also prohibits any threats, this even applies to messages written on envelopes that are not only visible to the debtor. Creditors who violate the law face fines and/or imprisonment. For example, the penalty for a threat or physical assault is up to five years in prison and/or a maximum fine of 500,000 baht.

Any threat or letter written to a debtor stating a debt on envelopes is also an offense and can lead the creditor to jail for up to one year with a fine of 100 thousand baht. Debtors who believe they are being attacked or that a creditor is behaving unfairly can call the Financial Consumer Protection Center’s hotline 1213.

Legal protection for creditors in Thailand

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

If the loan amount exceeds 2,000 baht, the lender must prepare a contract and sign it with the borrower in the presence of witnesses on both sides. The contract must include the full names of the lender and the borrower, the date signed, the repayment terms, and the interest rate.

Thai courts now also recognize loans made through social media accounts. Thus, if the borrower violates a written promise to repay, the lender can go to court to demand the money back.

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