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Recovering your debt in Thailand can be easily done through this method.
Debitura is an expert in debt recovery solutions in Thailand. We offer a range of services such as accounts receivables management, debt collection notices, pre-legal and legal debt collection, and enforcement court proceedings, all managed by our team of experienced professionals. Our in-depth understanding of Thailand's debt collection laws allows us to provide effective and efficient debt recovery solutions for businesses.
We provide unwavering assistance from beginning to end.
Tailored debt recovery strategy.
We have over 500 professionals who specialize in international debt collection.
We achieve a 87% success rate at the most affordable cost.
The ultimate guide about debt collection in Thailand
If you have money that someone else owes you from Thailand, you are in the right place. We have helped many other businesses get their money back from people who owe them. It can be very difficult to get your money back from someone in another country, but it is easier when you use a collection agency that knows the laws and customs of that country.
At Debitura, we always try to help you get your money back while still being fair to the person who owes you money. Our PR efforts are firm but fair- ensuring that your reputation is always our top priority! If you want to learn more about how to collect debt in Thailand yourself, keep reading this guide. But if you would rather work with a law firm that specializes in debt recovery in Thailand, we can help you with that too.
Debitura helps you collect your debt in Thailand and many other countries. You can start by uploading your claim today. We will review your case and provide you with 3 free quotes from local debt collection lawyers within 24 hours. We use a people-oriented approach combined with the latest tech-driven solutions to get results and provide better contact management. This comprehensive method gets the results you need while preserving customer relationships. In addition, our network of debt collectors, attorneys, suppliers and vendors are cherished relationships that allows us to get the job done. We value each of these relationships, no matter how small or large.
Begin your debt collection process in Thailand today at no cost. Sign up for a free profile and upload your case in just two minutes.
During the initial 3 months, we utilize our reliable pre-legal recovery method to collect your claim. We operate on a 100% no-cure-no-pay basis.
In case your claim remains unpaid during the pre-legal phase, we offer you three quotes from our nearby debt collection attorneys.
You get access to our online portal where you can track your case in real-time
Introduction to collecting debt in Thailand
If you have trouble getting paid by your Thai customers, we can help. The person who owes money is called the debtor, and the person who is owed money is called the creditor. If the creditor collects the debt himself, this is called first-party collection. If the creditor hires someone else to collect the debt, this is called third-party collections.
- In Thailand, companies usually make their payments on time, but there are not very many rules about what happens if a company doesn't pay on time.
- Although domestic courts are independent, people may not think the law is being followed if there are procedural delays or it is expensive to use the courts. It can also be hard to make people obey court decisions. It is better to try to solve problems without going to court.
- It is often very difficult to get money from people who cannot pay their debts, especially when the debt is not secured.
Days Sales Outstanding (DSO)
Thai companies usually make payments within 30days, but there may be delays of 10 to 20 days if the transaction is not secure.
Common payment types in Thailand
Some common ways to pay for a home are:
Bank transfers are a type of payment that is fast and secure. This type of payment is supported by a lot of banks all around the world. When Thai businesses export goods, they often use D/P (Document against Payment) or D/A (Document against Acceptance) mechanisms. This means that the customer pays for the goods only after they have received them. Another way to do this is to get an export credit insurance policy, which helps reduce the risk of customers not being able to pay for the goods.
Allianz Trade has a network of risk offices around the world. These offices keep an eye on the financial well-being of our customers and give them a credit limit, which is the maximum amount they can spend. If something goes wrong, we will pay up to that limit. Alternatively, we often use standby letters of credit when customers are making export shipments. A bank guarantees that the customer will be able to make the payments, and if the customer does not fulfil their contractual commitment, we will pay the amount that is owed. Also, people are using letters of credit more and more. This is when someone guarantees that they will have a certain amount of money available to another person through a bank. But first, the parties have to agree on what the terms are going to be.
Bank guarantees are available, but they are expensive. You may be able to negotiate the down payment.
The main types of corporate structures are sole proprietorships, partnerships, limited liability companies (LLCs), and corporations
Liability for business debts is determined by legal structures, described as follows:
- If you have a small business and you are the only person who works there, it is called a Sole Proprietorship. This means that you are responsible for any money the business owes. If two or more people own the business together, it is called a Partnership. The people in the Partnership are responsible for each other's actions. Partnerships can also be registered as Limited Liability Entities. This means that the people in the Partnership are not responsible for each other's actions.
- The most favored legal entities are Private Limited Companies because they don't need much money to get started. The shareholders' liability is also limited, which means they are not responsible for any debts the company may have. Public Limited Companies are usually used for larger structures that want to sell shares. In these entities, the shareholders' liability is again limited, this time to the unpaid value of their shares.
- Foreign companies may do business in Thailand through Representative Offices. However, these offices are not allowed to make money and can only act as a liaison or market researcher. Doing business through Branch Offices is fairly common even though such branches are not separate entities from the parent company and offer no liability limitations. The most popular option is to set up subsidiaries in the form of Private Limited Companies. Joint Ventures are usually a matter of contract and may not require incorporating a company.
The debt collection process in Thailand
The debt collection process in Thailand is usually done in more than one step.
The image below explains the process we use to collect debt in Thailand:
1 Upload your claim:
If you want someone else to help you get your money back, you will need to find a debt collection partner. You can upload your claim to their website. Debitura will help you by giving you 3 quotes from local partners in the Asia country where your case is located. This service is free - there is no catch.
2 Amicable collection:
The collection process begins with sending reminders to the person who owes you money. These reminders are sent through email, SMS, letter, and other ways in the specific country. The goal is to get the debtor to pay or acknowledge the debt and start a payment plan. Debitura offers a no-cure-no-pay solution for amicable collection. This means that you only have to pay a small success fee if we recover your debt. Amicable collections with Debitura are 100% risk-free!
If you have not received payment from the debtor after trying to work things out, it is time to look at what to do next. We will look at how much money you are owed, the chance of getting paid and other factors to help you decide what step to take next. There are three common next steps:
If your claim is less than 2,000-5,000 euros, it is often not worth it to take any more legal action. In this case, we recommend "debt surveillance." This means that we will keep trying to contact the person you owe money to and try to reach a friendly agreement.
B: Legal collections:
We suggest you begin a legal procedure if you have a big claim. The steps you need to take will vary depending on what you are claiming for and how big the claim is. Usually, the entire process will take around one year and a half.
C: Debt enforcement:
If the person you are owed money from has said that they owe you money or if there is a court order, you can go to the bailiff's court to get your money.
Here at Debitura, we can help you with all three steps of the process in Thailand.
Amicable collection in Thailand
At Debitura, we offer a process for Amicable collections that is 100% risk-free and very efficient. To get started, simply submit your claim, and we will begin within 24 hours.
We will contact your debtor in Thailand by email, text message, regular mail, phone calls, and social media.
The purpose of this is to:
A) Get the debtor to pay the full amount all at once.
B) Get the debtor to agree that they owe the money and start a plan to pay it back in smaller amounts over time.
If the person you are trying to get money from has said that they do not owe you money, you cannot try to resolve this peacefully. You must go directly to legal collections.
Late payment interest
If you do not pay on time, you may have to pay extra money. This is called interest. The interest rate is the extra money you have to pay. It is usually a percentage of what you owe. In a contract, the interest rate can be up to 15%. If there is no contract or the contract does not say how much interest to charge, then the legal rate of 7.5% will apply.
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Legal collection in Thailand
If the other person has not paid you during the first phase or if they dispute your claim, we will give you 3 free quotes from our local debt collection attorneys. In the legal phase, our local attorney will talk to your debtor and try to negotiate a payment. Our partners can also go to court and get a payment order from the legal system in Thailand. This payment order can be used to enforce your claim through enforcement court.
There are no requirements to start legal action, but it is a good idea to begin with a registered Demand Letter. This letter will remind the debtor of their obligation to pay the principal, late payment interest, and possibly offer to negotiate. In practice, most cases are settled through negotiation without going to court.
Before you start a legal case, it is worth considering getting an arbitral award or a foreign decision. Even if it is difficult to enforce, it could be more efficient than going to court in your own country.
Usually, when someone tries to collect a debt and fails, they will start a legal action. This means that the person who owes the money (the debtor) will get a notice from the court saying that they have to go to court.
The debtor has 15 days to bring a defence. If the defendant does not submit its answer or if either party fails to appear before the court on the first day of witness examination, a default judgment can be awarded. However, if the defeated party has proper excuses as accepted by the law, it can apply for reconsideration. At the first hearing, the court will ask the parties if they want to try to solve their disagreement through mediation. If mediation fails, the court will proceed with examining witnesses.
Thai courts usually award remedies in the form of damages, performance or forbearance, but punitive damages would only be awarded in very specific circumstances as prescribed by law.
Thailand has a system of law that has been influenced by common law. The Thai court system is complex and is made up of the Court of Justice system, the Administrative Court system, and the Constitutional Court of Thailand.
The Court of Justice is responsible for civil and criminal cases. The Court of First Instance, the Court of Appeals, and the Supreme Court are all part of the three-tier system. The district level courts can hear small claims that are worth approx. EUR 8,000. Provincial Courts would hear claims that are worth more than this amount. There are also courts that only deal with specific kinds of cases. For example, the Juvenile and Family Court deals with kids and families, the Central Labour Court deals with work issues, the Central Tax Court deals with taxes, and the Central Intellectual Property and International Trade Court deals with patents and trademarks. People can appeal cases directly to the Supreme Court from any of these specialized courts. If people have a problem with an administrative body or public agency, they can go to the Administrative Courts. And if they're not happy with the decision there, they can appeal to the Supreme Administrative Court.
The amount of money you will need to pay a lawyer depends on how big and complicated your case is. To get the best price, ask different lawyers for their prices so you can compare them. You can do this easily by using Debitura.
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legal debt collection
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Debt enforcement in Thailand
If the person you are trying to get money from has acknowledged your claim in writing, or if there is a court order, you can ask the bailiff's court in Thailand to help you get your money.
The cost and process of this will be different depending on your case. You can upload your case to Debitura to get 3 specific quotes based on your claim within 24 hours.
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Insolvency proceedings in Thailand
If the person you lent money to can't pay you back, you can start a process called insolvency. This means selling their things to pay you back.
- In Thailand, insolvency proceedings are court-based and can be initiated by the debtor or creditors.
- To begin restructuring debt, the debtor must owe a minimum of approx. EUR 265,000.
- A moratorium is put in place to stay all enforcement proceedings against the debtor while a planner is appointed to prepare a reorganization plan.
- The official receiver also plays a role in considering applications for repayment of debt and calling meetings of creditors.
- If the reorganization is not successful and the court finds that the debtor should be declared bankrupt, the court may issue a receivership order and cancelthe reorganization.
Our analysis concludes that the risk of running a business in Thailand is medium-low. Based on this medium-low score, we recommend being careful providing credit and considering charging upfront payment or using credit insurance when trading if you don't know the customer in Thailand well. If possible, provide a short credit period or even better upfront payment. The medium-low risk score is based on the following factors:
The economic risk in Thailand
Our conclusion based on the economic risk factors, is that the economic risk in Thailand is low (2 out of 6). An economic risk of 2 out of 6 is low in Asia.
GDP and economic growth are critical drivers for economic risk.
The GDP of Thailand is 505,98 bn. USD (2021), growing by 1,57% per year.
In terms of the size of its economy, Thailand ranks #25 out of 183 countries and has a large economy.
Having a view at the growth rate, it is ranked #148 out of 183 countries and is therefore considered a slow-growing economy.
GDP per capita is 7233 USD, ranking Thailand number #80 out of 183 countries. The result of this is purchasing power of citizens in Thailand is pretty average compared to all the countries in the world.
You get a more detailed idea of GDP and economic growth in Thailand in the table below:
Another huge impact for the economic risk score is the inflation rate and the interest rates. You get a more detailed idea of monetary KPIs in Thailand in the table below:
The inflation in Thailand was 1,2% in 2021 which is considered a very low inflation rate.
The interest rate for businesses is 3,06%.
The business environment risk in Thailand
Our analysis shows that the business environment risk in Thailand is medium (3 out of 6), which is a relatively low risk score in Asia.
Economic freedom and rights determine the business environment risk in a country. The critical facts for Thailand in the table below:
In the above table, you can see, the property rights index is 60 in Thailand, which is considered quite low in Asia.
The business freedom index is based on 10 indicators, using data from the World Bank’s Doing Business study. The Index is 85 in Thailand, a quite good score for a country in Asia.
Thailand's overall economic freedom index is 70 out of 100 and is based on factors such as the rule of law, regulatory efficiency, and market openness.
The political risk in Thailand
The political risk in Thailand is medium-high, with a score of 4/6. This is a pretty average political risk score in Asia.
The governance and political stability indicators are vital drivers for political risk. An overview of Thailand can be seen in the data below:
The rule of law index analyses to which extent agents have confidence in and abide by the rules of society, in particular the quality of contract enforcement, property rights, the quality of the courts, and the police's ability to enforce court orders.
When transacting business in a country, the rule of law index is critical as it describes your ability to enforce commercial contracts.
In Thailand, the rule of law index is at 0,11 points, with the score going from -2.5 (weak) to 2.5 (strong). Thailand has, therefore, a medium rule of law index, which means it should be possible to enforce your contracts. If possible, we still recommend charging payment upfront or working with credit insurance for larger deals.
Other drivers for the medium-high political risks are the very weak control of corruption, the very weak political stability index, and the very large shadow economy that is 43,12% of Thailand's GDP.
The commercial risk in Thailand
In Thailand, the commercial risk score is 2/4, which in our model is a low score. This low commercial risk score is pretty average compared to the average in Asia.
The commercial risk is impacted by a country's international trade relationships. You can see some of the key facts for Thailand in the table below:
Thailand has a foreign exchange reserve of 246.03 bn. USD.
Thailand has a negative trade balance of -0,24% of GDP. What this means is that Thailand imports more goods and services than the country exports.
The annual growth of exports of goods and services has been growing 10,42% annually - now 58,22% of GDP. Import of goods and services represents 58,46% of the GDP in Thailand.
The financing risk in Thailand
We have calculated the financing risk to be 1/4, which equals a very low risk. A very low financing risk score is low for countries in Asia.
The country's banking system, efficiency, and stability influence the financing risk. You can find the critical facts for Thailand in the table below:
In Thailand, the credit information sharing index is 7 on a scale from 0 (low) to 8 (high). The result of this is accessibility and quality of credit information available in Thailand is medium-high.
This makes it easy for you to understand the credit risk of your counterpart in Thailand. Based on this, it should be possible to to find a good local credit rating agency that can help you analyse the creditworthiness of your specific customers.
Your rights as a creditor are 7 out of 12 and, therefore, medium.
The very low financing risk for creditors also impacts the medium interest rate in the private sector of 3,06%.
Debt Collection in Thailand: Frequently Asked Questions
In Thailand, if a debtor does not pay, the creditor can collect the debt themselves (first-party collection) or hire a third party. It's difficult to collect money from people who cannot pay their debts. Thai courts can be expensive and may not follow the law as expected. It's better to resolve disputes outside of court. Thai companies usually pay within 30 days, but it could take 10-20 days longer if the transaction is not secure. If you need help collecting a debt in Thailand, Debitura offers a free service to find local partners and offers a 100% risk-free, no-cure-no-pay amicable collection solution.
The debt collection process in Thailand typically involves three steps: pre-legal collection, legal debt collection, and debt enforcement. Pre-legal collection involves sending reminders to the debtor to pay or acknowledge the debt. If unsuccessful, legal action may be taken depending on the size of the claim. This process can take up to a year and a half. If there is a court order, debt enforcement can be pursued. Debitura can assist with all three steps of the process in Thailand.
Legal options for debt collection in Thailand include civil lawsuits for disputed debts, debt enforcement through payment orders obtained from the legal system, and insolvency proceedings. It is highly recommended to hire a local lawyer for legal actions. Thai courts make awards in the form of damages, performance, or forbearance, while punitive damages are awarded in rare cases. Insolvency proceedings can be initiated by the debtor or creditors, with the appointment of a planner and a moratorium in place during the reorganization process.
Debitura's pre-legal debt collection services follow a no-cure-no-pay model with a success fee between 10-20%. Legal action fees vary based on your specific case and desired actions. Debitura can provide you with 3 quotes from top debt collection lawyers in Thailand.
The duration of debt collection in Thailand depends on the debtor and the case. If the case is resolved in the pre-legal phase, it takes about 3-6 months. However, if the debt needs to be collected through legal actions, it usually takes 12-18 months. This timeline can vary depending on the specific circumstances of the case.