Price floor for debt repayment doubled

A legal amendment is set to increase the threshold for which a debtor’s monthly wages can be garnished from 10,000 baht to 20,000.

The amendment to the Civil Procedure Code will come into effect on Sept 4, said Ruenvadee Suwanmongkol, director-general of the Legal Execution Department (LED).

Currently, lenders can seize up to 30% of a debtor’s monthly salary for those earning at least 10,000 baht a month. As the cost of living has now risen, the salary level needs to be raised to 20,000 baht, said Ms Ruenvadee.

Under the amendment, conditions for asset seizures are also laid out. For example, lenders cannot seize clothes, bedding or personal belongings worth less than 20,000 baht each, she said.

Lenders are also barred from seizing items debtors use professionally if they are worth less than 100,000 baht in total, on top of family heirlooms, said the LED director-general.

“Money which cannot be frozen or seized include legal-based allowances, such as those for the disabled and elderly,” said Ms Ruenvadee.

She said most debtors are employees in companies and state enterprises who earn about 20,000 a month and shoulder credit card debt.

She said the amendment was not intended to shield those earning less than 20,000 baht a month from repaying their debts. If they fail to pay, their interest payments will snowball and if their debts then reach one million baht, they may have to file for bankruptcy.

She said debtors and their lenders should negotiate how to come to a debt repayment agreement, adding if no compromise is reached, they could petition a court to seek other mechanisms to help settle it.

“This law has not been rolled out to wipe out debt, but to help debtors make a living. I reaffirm that the debts need to be repaid, otherwise the interest payments will be overwhelming,” said Ms Ruenvadee.

She brushed aside concerns the legislation will push people below the threshold from borrowing money from loan sharks, insisting they can still seek loans from financial institutes, but may be asked to put down collateral or use guarantors to secure them.

“As for this issue, financial institutes have already prepared measures to deal with it,” said Ms Ruenvadee.

Meanwhile, she said more than 95.5 billion baht worth of seized assets have been auctioned off by the agency over the past three quarters. Ms Ruenvadee said the agency had set a 100 billion baht goal for the end of this fiscal year, adding that target will likely be exceeded.