The National Legislative Assembly (NLA) will extend a new law to regulate debt collectors after a woman set herself on fire because she was unable to repay overdue loans.
Sangvean Raksaphet, 52, suddenly set herself on fire on Wednesday while discussing crippling debt at a consumer protection office. She is in ICU care and her creditors have forgiven her 1.5-million baht debt.
The NLA on Aug 29 passed the bill in its first reading by a vote of 168, with four abstentions. The bill currently covers debtors in formal lending agreements, but NLA member Somchai Sawaengkarn said it will now be extended to cover those who owe cash under informal arrangements.
A 25-member committee has been set up to scrutinise the legislation. The NLA will expand the scope of the bill once it is deliberated by the committee.
The bill sets down rules on how debts should be collected. It is intended to address complaints about the use of force and intimidation by debt collectors. It also seeks to stop borrowers from being charged interest on loans of up to 20% a day.
Mr Somchai, who is spokesman for the bill scrutiny committee, said assembly members will make sure the legislation is fair to both lenders and debtors.
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The legislation will stop lenders from charging excessive interest rates, but defaulting borrowers will also face legal action, he said.
Under the bill, those who run debt-collection businesses must register their companies. A committee will be set up to regulate debt collection and dish out criminal and administrative penalties against violators of the legislation.
Pol Lt Col Wichai Suwanprasert, secretary of the Justice Ministry’s debtor service centre, said informal lending is prevalent in northeastern provinces including Ubon Ratchathani, Khon Kaen and Chaiyaphum.
He warned excessive loan interest is leaving borrowers with unmanageable levels of debt.
Debt collectors, known as “safety-helmet gangs”, frequently threaten or use violence against borrowers, the officer said, adding that villagers are often unaware of the implications when they make loan agreements involving collateral and land mortgages.
Pol Lt Col Wichai stressed the need to educate locals so they can avoid being taken advantage of by lenders.
Ponlert Phanthanakul, acting director of Vajira Hospital, said Sangvean Raksaphet, 52, who set herself on fire near Government House on Wednesday, had suffered burns covering 40% of her body. She sustained third-degree burns to her chest. She is now under close observation and doctors are working to prevent the wounds from becoming infected, Mr Ponlert said.
The 1.5-million-baht debt owed by Ms Sangvean was written off Thursday.
Lop Buri governor Thanakhom Jongjira negotiated with her creditor Thidarat Thep-arak. Ms Thidarat said she will make a formal agreement to write off the debt when Ms Sangvean recovers and agreed to let the woman grow rice on a land plot earlier seized as collateral.
Mr Thanakhom said Ms Sangvean had borrowed money from Ms Thidarat to pay for fertiliser used in the paddy field that she also rented from her.
The governor said Ms Sangvean had defaulted on her debt in June. Provincial authorities had already helped her to negotiate with Ms Thidarat to reduce her combined outstanding balance to 1.5 million baht.
The authorities had also earlier convinced Ms Thidarat to return title deeds for two land plots to Ms Sangvean, so that she could use them to borrow from the Government Savings Bank (GSB) and repay a separate 400,000-baht debt. The GSB lent Ms Sangvean 350,000 baht, which she used to repay the other creditor.
That led to a legal dispute between Ms Sangvean and Ms Thidarat. Ms Sangvean then turned to the complaint centre at Government House, the Lop Buri governor said.
Ms Sangvean’s sister, Janja Thong-aram, 41, said her sibling had discussed her problems with the Bangkok complaint centre several times, but had received no help.
Her debt issues began five years ago when she started to borrow small amounts. The accumulated debt then rose to 250,000 baht, so Ms Sangvean worked as a debt collector in a bid to repay her own debt, Ms Janja said.
“Due to the economic slowdown, she has not been able to collect debts lately. In the past two years, she wanted to earn money from growing rice, but her plan failed. The creditor then charged her a total of 3.5 million baht. The sum was negotiated down to 1.5 million baht,” Ms Janja said.
Ms Sangvean was extremely stressed about the 1.5-million-baht sum because it was much higher than the original loan amount, and her anxiety pushed her over the edge, Ms Janja said.