Does Thai Law Side with Debtors more than Creditors?

The answer is yes. Thai law is structurally designed to protect debtors, and sometimes to a degree that feels unfair to creditors. Most Thais intuitively understand this by now, yet the emotional element of lending money hasn’t changed. It’s hard to refuse a loved one who is struggling, especially when we know no one sets out to fall into debt. Removing the stigma around debt matters; after all, there’s both “good” and “bad” debt. However, it is just as important to understand the legal rights of both debtors and creditors and to recognize the risks of lending money when we still expect repayment. If we can’t genuinely give the money as a gift, then we owe it ourselves and our relationships to follow proper legal steps. Doing so does not make us unkind; it prevents personal conflicts and protects everyone involved. The recent public dispute between high-profile Thai celebrities is a good reminder of how quickly a simple loan can escalate into a legal and reputational mess. 

Before You Lend: What Every Creditor Must Understand

Lending money in Thailand is far riskier than most people assume. Once money is transferred without proper documentation, the legal burden shifts almost entirely onto the creditor. In most cases, it becomes extremely difficult to enforce repayment unless the creditor followed the correct legal steps from the start.

To protect yourself, you should secure the following:

1. A written loan agreement signed by the borrower

2. Clear evidence of the transaction

3. A defined repayment structure

This article covers the key rules every lender in Thailand must know.

Golden Rules for Lending Money in Thailand:

1. Documentation & Evidence Requirements:

   • Under Section 653 of the Thai Civil and Commercial Code (CCC), any loan exceeding 2000 THB requires a written agreement with the borrower’s signature to be legally enforceable in court. 

     • However, electronic-based evidence is admissible. Under the Electronic Transaction Act B.E. 2544 (2001), emails and screenshots of chat messages are admissible evidence in court. 

   • Verify identity & Credibility before lending by assessing the borrower’s debt-to-income (DTI) ratio, employment history, credit report/credit score, government-issued documents like passport, and proof of permanent physical address such as bank statements and utility bills.

   • No registration or filing with any authority is required for private, unsecured personal loans. 

     
     

2. Collateral & Title Deeds: Not What Many People Think

   • Many lenders still believe holding a title deed means they can seize the property if the debtor defaults. This is incorrect unless the loan is formally registered at the Land Office.

     • Under Supreme Court Cases 1612/ 2512, 2318/2543, 18952/2555, 6664/2556, a creditor can hold on to a land title deed as a form of retention or a pledge, but it is not legally considered collateral unless formally registered. Consequently, the creditor cannot seize the land to repay the debt, and other creditors can still claim the property. 

     • At the same time, the debtor cannot sue the creditor for the return of the title deed. Some may even attempt to file a false police report claiming it was lost, although doing so can amount to criminal offences such as falsely reporting a crime to an official and forgery, all of which carry severe penalties. Not to mention, Thailand’s safeguard mechanisms for issuing a replacement title deed are intentionally rigorous, making it difficult, but not impossible to obtain a new one through dishonest means. 

       
       

3. Licensing Requirements for Lenders

You do not need a license merely to enforce a private loan agreement in court. However, most financial service licenses are available only to Thailand-incorporated entities or Thai branches of foreign banks. 

• Commercial Banking Activities 

  • If a lender engages in “commercial banking business activities” under the Financial Institution Business Act B.E. 2551 (2008) (e.g. accepting deposits that are subject to withdrawal or purchasing, selling negotiable instruments or foreign currency), they  must obtain a commercial banking license.

• Consumer Finance Business

  • If the ordinary course of business is granting loans to individuals without providing other banking services, a consumer finance business license must be obtained from the Ministry of Finance (MOF) through the Bank of Thailand (BOT) or the Fiscal Policy Office (FPO), except for hire-purchase and leasing of vehicles and machinery.  

• Foreign Business Restrictions

  • The Ministerial Regulation (No.3) issued on 9 June 2017 removed several financial businesses from the list of restricted list under the Foreign Business Act B.E. 2542 (1999), allowing foreigners to operate a commercial banking business, act as a banking or collecting agent without needing a foreign business license (FBL). 

  • Other roles such as arranger, facility agent or security agent may still require FBL.

4. Interest Rates: The Most Common Pitfall

• Maximum Legal Interest Rate

  • The interest rate for private loans may not exceed 15% per year (Section 654 of the CCC).

  • Charging more is a criminal offense under Section 4 of the Act Prohibiting the Charging of Excessive Interest Rates B.E. 2560 (2017), which is punishable by up to two years of imprisonment or up to THB 200,000 fine, or both. This is a public offense and cannot be compromised.

• If the Agreement Does Not Specify the Exact Rate

  • If the agreement merely states that the debtor consents to “high legal interest rate” or “legal interest rate,” the court will apply 3% per year  (Section 7 of the CCC; Supreme Court Cases 3708/2528 and 497/2506). 

• If the Agreement States No Interest Rate 

  • Then no interest can be collected. 

• If the Creditor Charges Above the Legal Limit

  • The creditor forfeits all rights to charge ANY interest (Supreme Court Precedents: 136/2507, 1452/2511, 5781/2533, 567/2536, 3524/2545, 178/2549, 100/2562, 3375/2549, 5298/2551, 13835/2553, 1492/2563, 1313/2564)

• Using an Agent to Evade Interest Rate Limits

  • If the investment involves the use of a representative to give out loans with interest rate above 15% per year, the entire loan is void under Section 150 of the CCC and Supreme Court Case 7058/2558.

  • If the creditor merely knows that the debtor will sub-lend the funds for an interest rate above 15%, the principal but not the interest is enforceable (Supreme Court Case 2071/2564).

• Default and Compound Interest

  • Under Section 203 of the CCC, if no repayment period stated, the lender can demand the repayment at any given moment.

  • Under Section 204 paragraph 1 of the CCC, if the creditor notified the repayment deadline and the debtor misses it, the debtor is in default. If the repayment period was set and the fixed repayment period has passed, then the debtor is in default without the need to be notified (paragraph 2).

  • Under Section 224, the default interest rate is 5 % per year after 11 April 2021.

  • Under Section 224/1, the default interest can only be applied to the defaulted installment amount, not the total remaining principal.

  • Under Section 655 of CCC, compound interest is prohibited unless parties agree in writing that unpaid interest that has accrued for at least one year can be added to the principal to form a new capital that will also bear interest (but this rule is not applicable to current account calculations).

    
    

5. Fulfilling the Formal Requirement of a Loan Agreement

• A loan is legally complete once the lender disburses the money and the borrower receives it. To prevent disputes, the loan agreement should clearly specify: 

  • The payment method, including how the principal and interest rate will be repaid

  • The repayment schedule

  • Any late-payment consequences

• The borrower should always receive a copy of the signed loan agreement.

• Stamp Duty Requirements

  • Under Section 118 of the Thai Revenue Code, if an instrument is not properly duty stamped, its original or duplicate cannot be used as evidence in any civil case. 

  • For every 2000 THB of the loan amount, the duty is one baht.

• Proving that the Loan Has Been Repaid

  • Under Section 653 paragraph 2 of the CCC, repayment can be proven in one of three ways: 

    • (1) original loan agreement is returned, (2) the agreement is cancelled, or (3) the creditor signs a written confirmation of repayment. 

      
      

6. Debt Collection Rules in Thailand

Debt collection in Thailand is governed by Debt Collection Act B.E. 2558 (2015) (“DCA 2015”). It applies to institutional lenders (banks), individual creditors, lawyers, and authorized representatives. The DCA 2015 is strict, debtor-protective, and heavily regulates how creditors may contact debtors.

• Who you can contact

  • Under Section 8 of the DCA 2015, a debt collector cannot contact anyone other than the debtor, except:

    • To enquire or confirm the debtor’s place of contact

    •  If the debtor has specifically designated someone

  • Debt collectors may not disclose the debtor’s indebtedness unless the debtor’s spouse, parents or child asks. 

• When and How You Can Contact a Debtor

  • Debt collectors must avoid using any message, sign, symbol or business name on the correspondence in a manner that reveals the purpose is debt collection (except for collection of debt in writing for the exercise of the right to the court proceedings).

  • Under Section 9 of the DCA 2015, contact may be made at the debtor’s domicile, residence or workplace if the debtor has not identified a place of contact in advance or the debtor’s designated place cannot be reached. 

  • Permitted Contact Hours

    • Weekdays: 8:00 AM - 8:00 PM 

    • Public holidays: 8:00 AM - 6:00 PM

  •  One Contact Per Day

    • Unless the debt collector is a friend or relative

    • If a debtor reads an online message, it counts as one contact already.

• Lawyers Acting as Collectors Must:

  • Provide name, agency, creditor’s name and the debt amount

  • Present a power of attorney 

  • Provide a proof of payment such as receipt when debtor pays the debt 

• According to Section 11 and Section 12 of this Act, debt collectors cannot:

  • Threaten to use violence or any action that injures the body, property or reputation of the debtor;

  • Use profane verbal or other language that insults the debtor or other persons; 

  • Contact debtors by postcard, open letter, fax or any other “non-discreet” communication means that suggest debt collection; and

  • Use false information to deceive a debtor; for instance, by falsely claiming to have a court order, be a state official or lawyer, or is hired by a credit bureau or by falsely threatening to seize or confiscate the debtor’s assets or salary.

• Prohibited Conduct

  • Under Section 11 and Section 12 of this Act, debt collectors may not:

    • Threaten to use violence or any action that causes harm to the debtor’s body, property or reputation

    • Use profanity or insulting language to the debtor or other persons

    • Contact the debtor by postcard, open letter, fax or any other “non-discreet” communication means that signify debt collection; and

    • Use false information to deceive a debtor; such as:

      • Pretending to be a government officer, lawyer or a person hired by a credit bureau

      • Falsely claiming to have a court order

      • Threatening asset or salary seizure

• Prohibited Fees & Cheque Misuse

  • Under Section 13 of the DCA 2015, debt collectors cannot 

    • Charge fees or expenses above the legally permitted limit 

    • Persuade a debtor to pay by cheque if they know that the debtor cannot afford it

  • Criminal Liability for Bounced Cheques

    • Under Section 4 of the Offence Arising from the Use of Cheque Act B.E.2534 (1991), issuing a bounced cheque for a real debt while having insufficient funds, no intent of honoring or dishonestly directing the bank not to honor it is a criminal offense that can result in a fine of up to 60,000 THB or imprisonment of up to one year, or both. 

    • This is why lawyers often advise their clients to settle bounced cheques promptly.

    • However, even a bounced cheque may not help a creditor file a successful criminal complaint under the Cheque Act if:

      • there’s no written loan agreement (Supreme Court Case 862/2512);

      • the cheque was issued to pay an unenforceable debt under Thai law, such as a gambling debt (Supreme Court Case 1052/2529);

      • the cheque is undated (Supreme Court Case 729/2530); or

      • the cheque was issued as a guarantee, not for payment of a direct debt (Supreme Court Case 734/2547).

    • In addition, a creditor has only three months to file a criminal complaint after learning that the bank has refused to honor the cheque. Meanwhile, the prescription period for submitting a civil claim against the drawer is one year from the date the cheque was issued.

• Criminal Penalties for Violations

  • Under Section 39 of the DCA 2015, a collector who disposes the debtor’s indebtedness, insult the debtor, or persuade a debtor to pay by cheque when the debtor clearly cannot afford is liable to imprisonment of up to 1 year and/or a fine of up to 100,000 THB. 

  • Under Section 41, threatening violence or actions that cause injury to a debtor’s person, property or reputation can be fined up to 500,000 THB and/or imprisoned for up to 5 years.

  • Under Section 44, if the violator of this law is a juristic person, and the offense results from an order or omission of a director, manager or representative, the individuals are liable as if they committed the offense themselves.

    
    

7.Understand Creditors’ Rights

• Joint and Several Liability

  • Debtors who are “jointly and severally liable” cannot claim to owe only half of the debt. The creditor may demand the full amount from any one debtor until the debt is fully paid. 

• Suretyship: Important Changes as of 15 July 2015

  • Any clause in a suretyship contract that makes an individual surety a joint debtor with the principal debtor is void (Section 681/1 of the CCC). This means an individual surety may demand that the creditor first proceed against the principal debtor or their property. 

  • A juristic person acting as surety cannot rely on this protection. 

• Secured Loans and Liability for Shortfall since 12 February 2015

  • Traditionally, debtors could agree to be liable for any shortfall if the foreclosure value of secured property was lower than the debt amount (contrary to Section 733 of the CCC).

  • However, Section 727/1 now renders such agreements invalid when the mortgagor is securing another person’s debt or assuming liability as a surety. 

  • This restriction does not apply where a managing director or managing partner mortgages their own property as security for their company’s debt and enters into a suretyship contract. In those cases, the shortfall liability agreement remains valid.

Disclaimer & Contact

This article is provided for general information only and does not constitute legal advice. While I strive to keep my legal insights accurate and practical, changes in law or other factors may affect your decisions. For tailored advice or assistance with drafting or enforcing a loan, suretyship or mortgage agreement, please contact me at: osa.chaichit@gmail.com

By: Osaris Chaichit