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Debt Collection in Thailand

Debt Collection in Thailand

Businesses in Thailand are established under a contract, that in some cases may not be respected by a party with which a company has signed a deal. As such, the company will have to proceed to collect its debts through various methods, in accordance with the local legislation, but also based on how the debtor will respond to the claims. Foreign investors or local businessmen who are involved in a debt collection situation can address their case to our team of Thai lawyers, who can offer assistance on the methods which can be applied in this situation. 

We offer assistance to clients seeking to recover debts amicably or in the court of law. With a vast experience in corporate law, our lawyers in Thailand can represent clients before the court.

If you wish to know how long you can remain in the country if you have a debt to settle, our immigration lawyers in Thailand can answer your questions.

The Thai legislation on debt collection

There are two ways of collecting a debt in Thailand – the amicable procedure and the court procedure. However, under the Civil Lawcourt debt recovery can happen under one of the following circumstances:

  1.           for a loan of maximum 2,000 baths, the claimant must bring a witness who will attest to the fact that a contract was made for that amount;
  2.           for amounts of money above the 2,000 baht threshold, the contract must have been concluded in writing and it must be presented in court;
  3.           the debt collection procedure, no matter its form, must not imply any compound interest accruing from the interested acknowledged by the judge;
  4.           there is also the possibility to recover a debt in a foreign currency at the current exchange rate;
  5.           a pecuniary debt can also be repaid in goods or real estate property, as long as the creditor agrees.

It should also be noted that natural persons and companies can request for a debt to be recovered in court.

 Quick Facts  
 Applicable legislation

– Civil Law,

– Commercial Law,

– new Debt Collection Act 

 Types of debts that can be chased

– commercial contracts,

– loans,

– mortgages,

– credit card-related debts

 Minimum amount to be recovered (if any)

No, however, the documents required differ for amounts below and above 2,000 Baht. 

 Availability of procedures for natural persons (YES/NO) Yes, natural persons can be subject to debt recovery in Thailand. 
 Possibility to recover debts from companies (YES/NO)

Yes 

 Availability of amicable procedures (YES/NO)

 Yes, amicable procedures can be used to collect debts.

 Availability of court proceedings (YES/NO)

Yes, court proceedings are available in debt collection in Thailand. 

 Debt collection stages

– making contact with the debtor directly by the creditor,

– sending out dunning letters,

– amicable procedure,

– court proceedings (if necessary) 

 Mandatory amicable procedures (YES/NO)

Yes, amicable debt recovery must be attempted 

 Documents required for debt recovery in Thailand

– the contract indicating the object of the debt or a witness statement (depending on the amount);

– evidence filed by each party when reaching court proceedings 

 Possibility to use the services of Thai debt collection agencies (YES/NO)

Yes 

 Special requirements applicable to debt recovery agencies (if any)

– agencies have the obligation to contact debtors within established time hours;

– the subject of the discussion must not be divulged

 Possibility to use the services of a Thai law firm (YES/NO)

 Yes, using the services of Thai debt collection lawyers is recommended.

 Duration of debt recovery procedures (approx.)

 6 months to one year

Support in debt collection in Thailand (YES/NO)   Yes, we offer debt recovery support in Thailand.

Our Thai lawyers can offer more information on the provisions of the Civil Code with respect to the procedure of recovering a debt. We can also assist during the amicable and court debt recovery procedures, as requested by clients.

Besides these, clients can rely on our team for advice on immigration to Thailand

The new Debt Collection Law in Thailand

For many years, debt recovery in Thailand has been associated with some unfair practices, leaving both creditors and debtors with financial issues. While the first category failed to recover the due amounts, the second one failed to pay them because of the intervention of unaccredited third parties. This is how a Debt Collection Law was set into effect.

The new act provides for uniform and fair collection procedures. Here are some its highlights:

  • it is applicable to all debt collectors, including both private creditors and institutional organizations like banks;
  • it will also tighten regulations on how debt collectors operate;
  • debtors will benefit from more rights and protection.

Another important aspect to consider is that Thai companies that are indebted are not covered by the law, as it only applies to individual debtors.

The new law also defines a ‘’debt collector’’ as a creditor who loans money to a debtor. What is more important is that the act now covers both legal and illegal debts.

If you are a debtor or creditor and you are affected by this law, feel free to contact our Thai attorneys. They will be able to explain the contents of the law and how it will impact you, depending on your case.

The terms debtor and creditor under the new law

Even if the debt collector is the creditor, according to the new statute, the term also covers other authorized parties that can act on behalf of the creditor, namely;

  • a representative of the party seeking to collect the debt, who can also be a Thai lawyer;
  • a debt collection agency, and its appointed representative.

A debt collection agency is any enterprise contracted to directly or indirectly collect a debt. However, lawyers who recover debts on behalf of clients are not regarded as companies for this purpose.

When it comes to the debtor, one is any natural person who is required to repay a debt. A guarantor is also included in this definition. This means that if the principal party cannot pay the outstanding amount of money, the guarantor can be executed in his/her stead.

We remind you that our lawyers are also at your disposal if you are interested in applying for a residence permit in Thailand.

Should I use the services of a specialized agency or a Thai law firm?

After the new law was passed, one of the most frequent questions for creditors was whether they should go for a Thai debt collection agency or law firm. The answer is that it depends on one’s needs and the particularities of the case.

When it comes to agencies, it is best to work with one that respects all requirements of the law and that follows the right procedures. However, the act states that these can contact debtors only between 8 a.m. and 8 p.m., Monday through Friday, and 8 a.m. to 6 p.m. on holidays. Additionally, the debtor may only be contacted at a location they have designated. Also, debt collectors are not allowed to convey the purpose of their correspondence. They are also banned from getting in touch with debtors via fax, open letter, postcard, or any other means that indicate the purpose of debt recovery.

When it comes to working with a law firm in Thailand, the main advantage is that attorneys will be updated with the new provisions of the Debt Collection Law and act accordingly. Furthermore, the legal procedure will be carried out duly.

Payments in Thailand 

According to local legislation, the payments incurred by a debtor in Thailand are to be paid within a period of 30 days since the contract became effective. Commercial law states that a payment can be delayed up to 20 days, but the debtor will have to pay interest on late payments, which can account for up to 15% of the value of the contract. In the situation in which the contract does not stipulate a fixed interest rate, the contract will be charged with a rate of 7.5% of the transaction value.

Recover a debt in Thailand 

Thai commercial law stipulates that debt has to be collected in a period of maximum 2 years. In order to do so, the company interested in recovering a debt should provide the full documentation on the case, to attest the fact that debtor hasn’t paid his or her debts. Our lawyers in Thailand will require the written and e-mail correspondence kept between the parties, but also financial documents, such as purchase orders or invoices. 

We invite you to watch a comprehensive video about the debt collection procedure in Thailand

We remind investors that they can discuss with our immigration lawyers in Thailand if they wish to know how they can extend their stay for the duration of the debt procedures.


Phases of debt collection in Thailand

The process of recovering a debt is comprised of the following phases: 

•    pre-trial debt collection;
•    debt collection involving a Thai court.

The first phase refers to the procedure followed by the company which has to collect a debt; the procedure refers to the direct communication between the two parties. A representative of the company will send a demand letter to the debtor, requiring him to pay the value of the contract. 

If this method fails, the case will be addressed to a Thai court, which is usually held in the Court of Justice. The creditor will file a claim, which will be sent to the debtorOur team of lawyers can also represent clients involved in various litigation cases

The amicable debt collection procedure in Thailand

Both natural persons or companies can be subject to a debt collection procedure, however, most of the times Thai companies engaged in commercial contracts with other local or foreign companies.
In the case of natural persons, the amicable procedure is often employed because it takes less time to complete and is cheaper. The amicable debt recovery process is also the first step in any type of such procedure, and it implies:

  •           appointing a law firm specialized in debt collection cases to contact the debtor and bring to their attention the debt can be appointed;
  •           the contact will first be made by phone, followed by one or more dunning letters in the next 7 to 15 days;
  •           if the debtor agrees to pay the debt, a new agreement in this sense will be made – at this stage, the debt can be repaid in installments without interest;
  •           if the debtor fails to pay or does not respond to the demand letters, the creditor can ask for the debt collection procedure to be moved to court;
  •           at this stage, the debtor will be required to appoint a lawyer to represent him or her in the Thai court.

Our attorneys in Thailand can offer assistance in the amicable procedure stage of a debt collection case.

Court procedure in debt recovery in Thailand

Once the debt collection procedure turns into a court procedure, the debtor will be summoned to appear in front of the judge to defend his or her case.

The claimant will be required to submit all the evidence related to the case, which often implies witnesses (or at least one witness as mentioned above), the contract which is the subject of the dispute and if the amicable recovery was first employed, the dunning letters sent to the defendant.

It is best to request the specialized services of debt collection attorneys in Thailand during the court debt recovery procedure in order to ensure the success of your claim.

Foreign companies recovering debts in Thailand

There are cases in which local and foreign companies need to recover debts from other associates or clients. Foreign companies operating through branches or subsidiaries in Thailand can also request for a debt to be recovered from a Thai company in this country. However, it must be noted that the Thai legislation will be enforced in this case.

Thai companies can also request the collection of debts arising from commercial relations with foreign companies in the respective company’s home country, however, the law in the respective country will need to be respected.

If you need assistance in commercial debt recovery procedures, our Thai law firm is at your disposal.

Debt collection characteristics in Thailand

According to the National Bank of Thailand:

  • at the beginning of 2023, more than 58% of first-time employees aged 25 to 29 had debts;
  • more than 25% of these debts were non-performing loans;
  • unfortunately, even students aged below 25 are starting to gather debts in Thailand;
  • approximately 30% of those who have credit cards and loans have over 4 cards with credit limits surpassing 10 to 25 times their monthly incomes.

Assistance in recovering a debt offered by our Thai lawyers

With a vast knowledge of corporate and civil matters, our Thai lawyers can assist if you are facing a debt recovery procedure. We can offer assistance to those interested in the amicable or the court debt recovery procedure.

We advise clients on trying to recover any amount of money amicably, this way avoiding a lengthier and more expensive procedure in court. Then, if the case requires, the procedure can be moved to court. This usually happens if the debtor fails to respond within one month from the first request of payment.

If you need further information on debt collection in Thailand, please contact our team of lawyers, who can provide you with assistance or legal representation in front of a Thai court

We can also assist you with matters concerning immigration to Thailand.