Debt Collection in Thailand
The Debt Collection Act & Addressing Unethical Practice.
Debt collection In Thailand, has long been plagued by unethical and deceptive practices, with instances of debt collectors using false information and unscrupulous tactics to coerce debtors into settling payments.
To counteract issues with regards to debt collection in Thailand, the National Legislative Assembly took decisive action by passing the Debt Collection Act, aimed at eliminating unethical practices and promoting fair treatment for debtors.
The Debt Collection Act establishes comprehensive and standardized laws applicable to all debt collectors, including individual creditors and institutional lenders. Its primary focus is to regulate the manner in which debt is collected while providing increased rights and protection to debtors. It is important to note that this law extends its provisions to individual debtors but does not offer the same protections to debtor companies.
According to the law, a debt collector is defined as an entity that provides a debtor with a loan, whether legally or illegally. This means that even loan sharks are subject to the regulations laid out in the Debt Collection Act.
The law identifies various entities as debt collectors, including the debt collection agency, its authorized representative, and a creditor’s authorized representative. Any business hired to collect a debt, whether directly or indirectly, is also considered a debt collection business.
However, it’s worth mentioning that a lawyer collecting debts on behalf of a client is not regarded as a debt collector under this law. Additionally, any individual who is obligated to settle a debt, including an individual debt guarantor, is considered a debtor in the eyes of the law.
The Act strictly dictates that debt collectors can only communicate with the debtor directly or with an entity designated as the debtor’s authorized representative.
Communication with third parties is allowed, but solely for the purpose of gathering information about the debtor and their whereabouts. The debt collector is further restricted from disclosing the debtor’s owed debt to third parties, except in cases where the third party is the debtor’s child, parent, or spouse. In such instances, the debt collector must enter into a confidentiality agreement with the third party and refrain from using any symbols, language, business names, or marks that would indicate the communication is related to debt collection.
The Debt Collection Act also regulates the timings for debt collection in Thailand and communication. Debt collectors are permitted to contact debtors between 8:00 and 20:00 on Monday, Tuesday, Wednesday, and Friday, and between 8:00 and 18:00 on holidays. The law respects the debtor’s right to designate the place and manner in which the collector can contact them legally.
To ensure transparency and fair dealings, debt collectors’ attorneys must disclose their names, the names of their creditors, their agency, and the amount of the debt. Additionally, if they demand payment or seek to collect the debt in person, they are required to show the debtor their power of attorney. Furthermore, debtors must be provided with proof of payment, such as a receipt, once their debt is settled.
The Debt Collection Act explicitly prohibits various unethical practices when attempting to collect a debt. Debt collectors are not allowed to threaten debtors with violence or any act that would cause harm to the debtor’s body, reputation, or property. The use of profane or abusive language intended to insult the debtor is strictly forbidden. Importantly, collectors are not permitted to disclose or notify third parties about the debtor’s debt unless those third parties are involved in the debt collection process. The law also strictly forbids debt collectors from providing false information to deceive debtors, such as falsely claiming to possess a court order issued by a lawyer or state official.
Furthermore, debt collectors are not allowed to disclose the purpose of communication as debt collection, and they cannot use fax, postcards, open letters, or any other non-discreet methods that indicate the communication is related to debt collection. Even in discreet communications, the collector is only permitted to indicate their business name as long as it does not explicitly reveal that they are a debt collector.
Debt collectors are further restricted from collecting expenses or fees that exceed the official limits set by the Committee Governing Debt Collection under the Debt Collection Act. Moreover, they are prohibited from convincing debtors to pay their debt by check if the collectors are aware that the debtors cannot afford to make such payments.
Non-compliance with the Debt Collection Act is considered a criminal offense, and individuals aware of such violations are required to report them to the police station or the district office. Debt collectors found guilty of threatening or causing injury to a debtor may face a fine of up to 500,000 Baht and imprisonment for up to five years. Importantly, the managers, representatives, and directors of a debt collection company can also be held accountable for the actions of their collectors. In cases where the offenses fall under their scope, these individuals may face the same level of punishment as the juristic person.
While borrowers are encouraged to choose reputable lenders to minimize the risks associated with unscrupulous practices, the Debt Collection Act provides essential protection to debtors who may not have such options. By establishing stringent regulations and enforcing penalties for violations, the Act aims to curb unethical debt collection in Thailand practices and promote fair treatment for all parties involved in debt collection transactions.
If you are owed a debt, then Isaan Lawyers can assist. We have a range of services available for debt collection in Thailand including our Pre Dispute Resolution Service which could negate the requirement for Court action.
Read more about our Pre Dispute Resolution Service here pre-dispute process – Isaan Lawyers – Attorneys and Lawyers in Thailand
Should matters remain unresolved Court applications and Enforcement of Court Judgements can be made.
This article is for reference purposes only. Legal advice should be sought for any matter from suitably experienced lawyers such as Isaan Lawyers.
If you are in Pattaya you can also contact www.anglosiamlegal.com for assistance.