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Debt collection in Thailand

A contract to lend money in Thailand is a 'consumption loan'. It is a contract whereby the lender transfers ownership of certain property to the borrower, which is 'consumed' by the borrower. The borrower, in turn, agrees to return the property 'of the same kind, quality and quantity'. Such a contract becomes complete when the property is surrendered to the lender. /en/legal-services-thailand/#:~:text=legal services in Thailand

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Debt Recovery in Thailand

Who is legally responsible for the costs of the contract?

The borrower is responsible for the contract costs, the cost of delivering the property, and repossession. What evidence is needed to enforce the money contract?"

  • For loans not exceeding 2,000 baht, a witness can testify in court about the loan contract.
  • For loans exceeding 2,000 baht, some written evidence of the loan signed by the borrower must be submitted to the court.

What evidence is needed to prove the repayment of the loan?

Written evidence signed by the lender must be submitted to the court, or a document must be shown showing that the loan was surrendered to the borrower or canceled.

What are the rules regarding interest?

The court will allow the interest rate to be at most 15% per year. Any higher rate set by the contract will almost certainly be reduced to 15% unless specific laws mandate that a higher rate can be applied. For example, those laws relate to money lending by certain financial institutions. The law also generally prohibits compound interest, except in the following cases:

  • Both parties agree that interest due for at least one year shall be added to the capital, and the entire amount shall bear interest. Any such agreement must be in writing and signed by both parties
  • The loan falls into the "commercial use" category, such as a current bank account or loans of a similar commercial nature.

What if a specific interest rate is not specified?

If an agreement to borrow money agrees that interest is payable, but the contract does not specify a rate, the court will order the parties to agree to the rate of 7.5% per year, which is set by law.

  • Either party agrees that interest due for not less than one year is added to the capital, and the entire amount bears interest. Any such agreement must be in writing and signed by both parties
  • The loan falls under the category of 'commercial use,' such as a current bank account or loans of a similar commercial nature.

Can the loan be repaid in a form other than cash?

If one assumes that the loan is for money and the lender accepts goods or other property to repay the loan, the amount refunded will be deemed by the court to be equal to the market value of such goods or property at the time and place of delivery. Similarly, if the borrower accepts the goods or property instead of the amount of money, the amount owed will be treated similarly: market value by time and place of delivery.

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Update: 13-02-2023
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