A senior official at the Justice Ministry has proposed that the consignment sale law in loan agreements be abolished because it often leads to people losing their homes.
Dusadee: Receiving many complaints
Currently, people who seek loans under the agreements have to "sell" their land to lenders, but they can reclaim their rights to the land if they are able to pay back all money they borrow.
The regulation enables the seller and the lender to strike the consignment sale agreement at the Land Department.
Many debtors, however, end up losing their property because they cannot settle their debts.
Deputy permanent secretary-general for justice Dusadee Arayawuth yesterday said he had received many complaints from debtors who lost their properties because of consignment sale deals, which gives an advantage to lenders in taking over the assets of debtors because short repayment periods are imposed.
"Therefore, many relevant agencies agree that this regulation should be abolished," Pol Col Dusadee Arayawuth said.
Heading the ministry's Legal Aid Center for Debtors and Victims of Injustice, he also found that people who suffer most from such agreements largely live in the North and the Northeast while creditors are usually people who have an in-depth knowledge of the law.
The debtors have between three and six months to make repayments which is too short a period of time and they usually end up losing their assets, Pol Col Dusadee said.
A better solution to the problem is needed, he said.
Yaowalak Laoduangdi, one of the debtors, said she and her family of 12 lost their house and a plot of land in Khon Kaen after she failed to repay her debts.
Her case proceeded to court during which she hoped her creditors would agree to enter debt reconciliation, but that never happened.
"Many villagers in Isan [the North East] lose plots of land to creditors who are not local people," Ms Yaowalak said.
We don't have a knowledge of the law. We sign the agreement without understanding what's in it," she said.
Pol Col Dusadee said locals should also learn to manage their finances properly to avoid being trapped in a cycle of debt.