Dealing with Debts

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Debts

Debt is an amount of money that one one party borrows from another. This is usually with an arrangement subject to terms about the amount and timing of repayments of principal and interest.

You must take a debt with a clear intention of paying it back.  Debtors are legally responsible for paying the debts they legitimately owe.

 
If I do not pay off my debts, am I going to go to jail?

They cannot send you to jail or even arrest you for owing a debt, regardless of the amount involved. However, you could face court action over unpaid debts.

 

Can a creditor take legal action against a debtor without a written contract?

A loan for a sum exceeding 2,000 Baht in capital is not enforceable by action without a written evidence of the loan signed by the borrower.

No repayment of a loan of money evidenced by writing is proven unless there is a written evidence signed by the lender, or the document evidencing the loan was already surrendered to the borrower or cancelled.

 

Can a creditor force entry into my property?

A creditor has no right to forcibly enter into your property. They do not have the right to take control or to seize anything as repayment of the debt you owed.

To collect an unsecured debt, the general rule is that most creditors must first file a lawsuit against the debtor and win the court judgment.

 

Will I be responsible for my fiancée’s debts after marriage?

Any personal debts incurred by your fiancée before or during marriage shall first be settled out of her personal assets. However, if her personal assets are not enough to settle the debt in full, it shall be satisfied out of her part of your joint assets.

 

What will happen if my relative has stopped paying for the loan that I signed as a guarantor?

As soon as the debtor is in default, the creditor can demand settlement from the guarantor. The creditor must send a letter of notice to the guarantor within 60 days commencing from the date of default.  Otherwise, the creditor cannot request a guarantor to settle the debtor’s debts unless the guarantor receives the notice.

When the creditor demands settlement of the debt from the guarantor, the guarantor may require that the debtor be first called upon to settle unless the debtor was adjudged bankrupt, or his whereabouts in Thailand is unknown.

If the guarantor can prove that the debtor has the means to perform and that execution would not be difficult, the creditor must first make execution against the property of the debtor.

 

Will I be liable to pay for my dead parents’ debts?

In most cases, you are not liable for another person’s debt when they die. This is unless you are a guarantor or co-borrower on the account.  They must use any assets left to cover the debts left by the deceased before distributing anything to the heirs.  Creditors may claim repayment of the loan against the guarantor only within 1 year after the death of the borrower.

 

What is the maximum interest rate a creditor can legally charge?

Interest shall not exceed 15% per year. When they specify a fixed higher interest rate in the contract, it shall be reduced to 15% per year.

Interest shall not bear interest. The parties to a loan of money may, however, agree that the interest due for not less than one year shall be added to the capital, and that the whole shall bear interest. Any such agreement need to put in writing and signed by both parties.

If both parties agree in a contract that interest is payable without specifying the rate, the court will order, as prescribed by the law that the parties agree to the rate of 7.5% per year.