Thailand's first debt-collection law will take effect early this year despite criticism it gives debtors so much protection it makes lenders cringe.
Borrowing is easy these days but repaying? Not so much. (Photo by Thanarak Khunton)
Lawmakers passed the legislation in its third and final reading on Dec 19 and the law will be enforced soon, said Kritsada Jinavijarana, head of the Finance Ministry's Fiscal Policy Office, on Friday.
The law defines "debt collectors" as creditors, regardless of whether the debts are legitimate or not, as well the persons or entities authorised by them to collect debts on their behalf.
Under the law, a debt collector may not contact another person about the debt except the debtor himself. The exception is when he needs to get the debtor's contact information.
In recovering the debt, the collector may not act in a harassing or threatening manner such as abusing him physically or verbally, insulting him or exposing the indebtedness to unrelated people to humiliate him.
As well, the collector may not be too zealous in his effort such as phoning the debtor several times a day, causing disturbances and annoyances to the debtor.
He also may not use deceptive methods such as misrepresenting himself or pretending to work for law enforcement or by the orders of the court, executors, police, government agency, lawyers or law firms. He also may not lead the debtor to believe if he fails to repay the debt, his assets or salary will be seized, or threaten to do so without legal authority.
The collector may not recall the debt in an unfair manner such as charging extra fees unless it was made clear at the time of borrowing, publicising the debt by demanding repayments using postcards, unsealed letters or by fax, using language, symbols or business names on the envelopes when contacting the debtor that indicate it is a debt collection.
He may contact the debtor only at the place the debtor had specified. He may choose to contact him at other addresses or numbers only after reasonable attempts have been made and failed.
He may contact the debtor only between 8am to 8pm on weekdays and 8am to 6pm on weekends and holidays unless other times have been mutually agreed in writing earlier.
Violation of the law will result in two types of penalties. The administrative penalty is a fine of not more than 100,000 baht and the criminal punishment involves revocation of registration and imprisonment of no more than five years or a fine up to 500,000 baht, or both.
Debt-collection oversight committees will also be set up at the national and provincial levels to monitor the business.
The law also prohibits government officials from operating a debt-collection business or collecting debts which are not their own. It also requires that all debt-collection businesses be registered.