Debt, loans and getting paid
Lending money in Thailand — or trying to collect it — runs into specific statutory rules that many people learn about only after the money is gone.
Lending money: the ground rules
- Loans over a modest threshold need written evidence signed by the borrower to be enforceable in court. A transfer slip alone makes life hard; a signed loan agreement makes it easy.
- Interest on private loans is capped at 15% per year under the Civil and Commercial Code. Charge more without being a licensed lender and the interest clause is void — and unlicensed high-interest lending is a criminal offence.
- Licensed banks, credit cards and regulated personal-loan companies operate under separate Bank of Thailand ceilings.
- The Debt Collection Act bans harassment: collectors face limits on contact hours, disclosure to third parties, and threatening conduct.
Suing over a debt
- A demand letter from a lawyer often gets results by itself — it signals you are organised enough to sue.
- Debt claims are filed like any civil case (see procedure); many end in court-mediated instalment settlements.
- Watch prescription (limitation) periods: they vary by claim type — some trade debts prescribe in as little as 2 years, ordinary loan claims last considerably longer. Take advice early rather than sitting on a claim.
Enforcing a judgment
A judgment is enforced through the Legal Execution Department: seizure and auction of the debtor’s assets, garnishment of bank accounts and salary above protected amounts, and — for insolvent debtors above statutory thresholds — bankruptcy proceedings. Judgments are enforceable for years, but a debtor with no traceable assets still pays nothing: assess collectability before you spend on litigation.
If you are the debtor
- Ignoring service leads to default judgment — engage, and use court mediation to negotiate instalments.
- Debt collectors breaking the Debt Collection Act can be reported.
- Genuine inability to pay is a negotiation position, not a crime; hiding assets after judgment, however, can be.
Cheques and guarantees
A bounced cheque is not automatically a crime, but issuing one knowing there are insufficient funds, with intent to avoid payment, can expose the issuer to criminal liability as well as civil debt — an unusual overlap that makes cheque disputes move faster than ordinary loan claims. Guarantors should read what they are signing carefully: a straight guarantee generally makes you liable only after the main debtor defaults, while agreeing to stand as a joint debtor removes much of that protection and can make you liable from day one.
Business debt
Debts owed by a company follow the same civil-claim path described above, with one added complication: if the company is genuinely insolvent, individual creditors racing to sue can end up behind a formal bankruptcy or rehabilitation process that pools and ranks creditors together. See business & companies for how company debt and shareholder liability generally work.
Smaller amounts
Where the sum owed is modest, Thailand’s simplified small-case court procedure is usually faster and cheaper than a full civil suit — see small claims.
Secured lending: mortgages and pledges
Lenders who want more certainty than a signed IOU can take security. A mortgage over land or a condo must be registered at the Land Office to bind third parties and gives the lender a preferential claim over that specific asset if the borrower defaults — see property & land. A pledge of movable property (jewellery, vehicles, share certificates) works by handing over possession of the item itself, and pawnshops operate under their own licensing and interest-rate rules separate from the general 15% cap on unsecured private loans. Whichever form security takes, it does not replace the need for clear written terms about default, cure periods and what happens to any surplus after a sale.
Informal savings circles
Rotating savings groups — informal circles where members contribute regularly and take turns receiving the pooled sum — are common and generally lawful, but disputes arise when the organiser disappears with contributions or a member stops paying mid-cycle. These disputes are treated as ordinary debt or, in serious cases, fraud claims; the same rule about needing written evidence of what was promised applies just as much to an informal circle as to a one-to-one loan.