Debt collection has a reputation for being an unethical and deceptive practice. It is not irregular to hear of instances where debt collectors tricked debtors into settling payments based on false information or resorting to unprincipled behaviors in Thailand.
The National Legislative Assembly responded to this issue by passing the Debt Collection Act in an effort to eliminate unethical practices. This law attempts to establish standardized and fair laws that apply to all debt collectors, including individual creditors and institutional lenders. However, the law does not protect debtor companies even if it applies to individual debtors.
The debt collection law regulates the manner in which debt is collected more tightly and provides debtors with increased rights and protection. This law defines a debt collector as an entity that provides a debtor with a loan. Such debt can be made either legally or illegally, meaning loan sharks are also subject to the Debt Collection Act.
The debt collection agency, its authorized representative, and a creditor’s authorized representative are all considered debt collectors. Any business that is hired to collect a debt is a debt collection business, whether they do so directly or indirectly. However, a lawyer who collects debts on behalf of a client is not considered a debt collector. Any person who is required to settle a debt is considered a debtor, including an individual debt guarantor.
Thai law dictates that debt collectors can solely communicate with the debtor themself or with another entity designated as the debtor’s authorized representative. A debt collector is only permitted to communicate with third parties for the purpose of acquiring information about the debtor and their location.
The debt collector is further limited to acquiring information about the debtor’s location and identifying themself. The debt collector is not permitted to inform a third party of the debtor’s owed debt unless the third party is the child, parent, or spouse of the debtor.
The debt collector must enter into a confidentiality agreement with such a third party, and they are prohibited from using any symbol, language, business name, or mark of the debt collector during any correspondence indicating the interaction is related to debt collection.
Debt collectors are only permitted to contact a debtor between 8:00 and 20:00 on Monday, Tuesday, Wednesday, and Friday and between 8:00 and 18:00 on holidays. The debtor designates the place the debtor is legally allowed to contact them.
Debt collectors’ attorneys are required to state their names, the names of their creditors, their agency, and the amount of the debt. A debt collector is required to show the debtor their power of attorney if they demand performance or seek to collect the debt in person. The debtor must be presented with proof of payment, such as a receipt if their debt is settled.
Debt collectors are prohibited from doing the following when attempting to collect a debt:
- Threaten the debtor with violence or any other act that results in injury to the debtor’s body, reputation, or property.
- Use profane or abusive language that is intended to insult the reader or hearer.
- Disclose and notify third parties of the debtor’s debt if they are not associated with the debt collection.
- Convey false information with the purpose of deceiving the debtor. For instance, a collector may not falsely claim to possess a court order issued by a lawyer or state official.
Moreover, debt collectors are prohibited from disclosing that the purpose of communication is to collect a debt, and collectors cannot communicate with debtors via fax, postcard, open letter, or any other non-discreet vector that indicates the purpose of the communication is to collect a debt.
The collector is only permitted to indicate their business name even if the communication is executed discreetly, provided the business name does not clearly indicate they are a debt collector.
Debt collectors are prohibited from collecting expenses or fees that exceed the official limit the Committee Governing Debt Collection set under the Debt Collection Act. Collectors may not convince debtors to pay their debt by check if they are aware the debtors cannot afford to pay the debt.
If compliance with the law is not maintained, it is considered a criminal offense, and any individual who is aware of such an offense must report it to the police station or the district office. Debt collectors who threaten a debtor or cause injury to a debtor’s body, reputation, or property will be subject to a fine of 500 000 Baht and can be sentenced to jail for five years.
The managers, representatives, and directors of a debt collection company may also be incriminated as a result of the collector’s actions. Managers, representatives, and directors of a debt collection company may also be punished to the same extent as the juristic person if that person violates the law and their offenses fall within the scope of such individuals.
Although debtors’ best course of action is to borrow from a reputable lender to lessen the risks associated with unscrupulous lenders, they will still receive a measure of protection from the Debt Collection Act should they not have such an option.