When talking about Debt collection, people often think about the deceptive and unethical practices involved in the process of collecting debts. In Thailand, prior to 2015, debt collectors would often resort to extreme measures to ensure that debts are collected from the debtor, without fear of legal consequences. These methods include but are not limited to deceiving the debtor by using false facts or pretenses, verbally and physically assaulting the debtor, and blackmailing the debtor.
In order to mitigate unethical debt collection practices and provide protection to the debtors, the National Legislative Assembly passed the Debt Collection Act, which came into force on 2nd September 2015. This Act established fair and standardized collection rules and applies to not only individual creditors, but also institutional lenders such as banks. It is, however, essential to note that this Act only applies to individual debtors and not debtor companies.
The Debt Collection Act defines "debt collector" as a creditor who makes a loan to a debtor. The debt can be legal or illegal. In other words, illicit lenders are also subject to the Act. Under this Act, an authorized representative of a creditor, i.e. an attorney, a debt collection agency and its authorized representative are also categorized as "debt collectors".
A "debt collection business" is any business hired to collect a debt either directly or indirectly. Lawyers who collect debts on behalf of their clients are not considered a "debt collection business" under this Act.
A "debtor" means any natural person who is obligated to pay a debt. This term also includes individual debt guarantors.
Under this Act, debtors now have increased protection rights. For example, debt collectors are only allowed to communicate with the debtor directly or to a person authorized by the debtor. Debt collectors may only contact third parties to acquire information about the debtor or learn the debtor's location. The debt collector is also limited to identifying himself and inquiring about the debtor's whereabouts. The debt collector is also prohibited from revealing that the debtor owes a debt unless the third party is the debtor's spouse, parent, or child. Additionally, the debt collector is prohibited from using any language, symbol, or business name of the debt collector on any correspondence that may imply that the communication is related to debt collection.
They cannot contact debtors by postcard, open letter, fax or any other "non-discreet" method that may indicate that the communication is related to debt collection.
Even if the communication is discreet, the debt collector may only specify the debtor collector's name. However, if the name indicates their business as a debt collector, this method is also prohibited.
Moreover, even if the communication made discreetly, the collector may only specify the collector's business name — as long as it does not imply that the business is debt collection
The debt collector may only contact the debtor at a place chosen by the debtor between the hours of 8 am and 8 pm on weekdays (Monday - Friday), and 8 am and 6 pm on weekends and holidays. Section 9(3) of the Act states that "during the period when debt collection is permitted (8 am-8 pm on weekdays and 8 am-6 pm on weekends and holidays), request for the repayment of debt shall be made as many times as appropriate, and the Committee may also specify and announce the number of times.". Section 16(1) of the Act states that "The Committee shall have powers and duties in the supervision of the collection of debts of the debt collector. Such powers and duties shall include to issue Notifications or Orders for the execution of this Act.". Subject to the aforementioned provisions, the most recent addition to the Debt Collection Act was published in the Government Gazette on 23rd August 2019, and states that debt collectors may only request the debtor to make repayment once a day. If the debt collector demands the repayment of debt more than once a day, debt collection committee can order the debt collector to stop such act. If he/she refuses to stop, the administrative penalty may be up to THB 100,000.
Attorneys acting on behalf of debt collectors must state their names, agency, creditors' names, and the amount of debt owed to the creditor. If the collector wishes to collect the debt in person or demands performance, he must present a valid power of attorney (POA) to the debtor. When the debtor pays the debt to the collector, the collector must give the debtor evidence of payment.
When attempting to collect a debt, debt collectors are prohibited from doing the following:
- Threaten the debtor with violence or any action that may injure the body, property or reputation of the debtor;
- Notify and disclose any of the debtor's debts to third parties who are not related to the collection;
- Use profanity or language that insults the hearer or reader;
- Use false information to deceive a debtor — for example, by falsely claiming to have a court order or be a state official or lawyer; or by falsely threatening to seize the debtor's assets or salary;
- Collect any fees or expenses over the official limit set by the Committee Governing Debt Collection, appointed under the Act;
- Convince a debtor to pay by cheque if the collector is aware that the debtor cannot afford to repay the debt.
Violation of this Act is a criminal offence which is punishable by a fine of up to THB 500,000 or a term of 5 years imprisonment or both.
Individual directors, managers and representatives of corporate debt collectors can also be held criminally liable. If a juristic person violates this Act, and the offence falls within the scope of the duties of the director, manager or representative, these individuals can be punished for the same offence as that committed by that juristic person.
While the most effective way for debtors to minimize the risk of dealing with unethical collectors is to only borrow from respected and reputable lenders, the Debt Collection Act provides additional measures of protection for those who do not have this option.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.