Debt Clinic opens 3 channels to join the debt relief project

The situation of household debt in Thailand is still at a high level, most of which is credit card and cash card debt, which not only affects the way of life but also affects the future purchase of a house or renting a house as well.

The Bank of Thailand (BOT) has therefore opened a “Debt Clinic” channel to help retail debtors who are in debt from credit cards, cash cards, and unsecured personal loans to have an opportunity to solve their debt problems, along with promoting learning about planning and creating good financial discipline for debtors and interested people to prevent economic and social problems in the country in the long term.

In addition, the BOT will help act as a coordinator to forward information on debt restructuring requests to financial service providers, including member financial institutions and Sukhumvit Asset Management Company Limited or SAM.

Get to know the “Debt Clinic” project

The “Debt Clinic” project has been launched since 2017 and has continuously driven the resolution of household debt. Currently, the Debt Clinic project is in its third phase and has expanded its scope to resolve credit card debts with a single creditor and credit card debts that are in the court process and have already been judged.

How does a debt clinic help pay off debt?
The main steps of a debt clinic are 2 points, which help debtors pay off debt more effectively than paying off debt by themselves.

1. Help coordinate with creditors
   SAM acts as a mediator who helps negotiate and coordinate between creditors and debtors, enabling the resolution of credit card debt problems that may have multiple creditors. Normally, when there are multiple creditors, it is difficult to negotiate successfully.
   This project will help consolidate debts completely so that debtors will not be pursued by multiple creditors. They will also receive advice on solving problems and restructuring debts.
2. Help extend the repayment period, a low monthly repayment amount
   The debtor will receive a special debt restructuring offer, which is to pay only the principal with a repayment period of up to 10 years. Normally, if negotiating with the original creditor, they may be asked to repay within a short period, such as 6 months.
   Not rushing and giving a long enough repayment period means that the monthly repayment amount will not be high, with low interest rates of only 4-7% (compared to credit cards that have interest rates as high as 18% and cash cards at 28%). For example, if you have a debt of 50,000-100,000 baht, the monthly repayment amount will be only around 600 and 1,200 baht, and when the repayment is complete according to the contract, all outstanding interest will be waived.

Check the list of non-bank financial institutions participating in the project.

Currently, the Debt Clinic Project has 35 non-bank financial institutions and state-owned specialized financial institutions as members, making the project one of the largest “networks to help people solve credit card debt” in the country, consisting of:

17 commercial banks

1. Bangkok Bank
2. Bank of Ayudhya
3. Kasikorn Bank
4. CIMB (Thai) Bank
5. Thanachart Bank
6. TISCO Bank
7. Thai Credit Retail Bank
8. Siam Commercial Bank
9. UOB Bank
10. Land and Houses Bank
11. Bank of China (Thailand)
12. ICBC
13. Government Savings Bank

18 non-bank operators

1. G Capital Public Company Limited: G Capital
2. J Fintech Company Limited: J Money
3. General Card Services Company Limited: Central The 1 Credit Card
4. Summit Capital Leasing Company Limited: Summit Capital
5. Citicorp Leasing Company Limited: Citicorp Loan
6. Tesco Card Services Company Limited: Tesco Card
7. Nakornluang Capital Public Company Limited: Nakornluang Capital
8. Krungsri Ayudhya Card Company Limited: Krungsri Ayudhya Credit Card
9. Promis (Thailand) Company Limited: Promis
10. Muang Thai Capital Public Company Limited: Muang Thai Capital
11. Makkale Group Public Company Limited: Makkale Group
12. Saksiam Leasing Public Company Limited: Saksiam Leasing
13. Ayudhya Capital Services Co., Ltd.: Krungsri First Choice
14. AEON Thana Sinsap (Thailand) Public Company Limited: AEON Card
15. Easy Buy Public Company Limited: Umay Plus
16. Asia Sermkij Leasing Public Company Limited: Asia Sermkij Leasing
17. ITTP Public Company Limited: ITTP Loan
18. Ira & Aiful Public Company Limited: A Money

Project Participant Qualifications

1. Individuals with income, no older than 70 years old
2. Indebted to credit cards, cash cards, or unsecured personal loans from participating institutions
3. Indebted to non-performing loans (NPLs) with overdue payments of more than 120 days (according to the current month’s credit bureau report, the status must be overdue for 121-150 days or more)
4. Total debts not exceeding 2 million baht
5. Not bankrupt

Project Participation Process
Step 1 Check the project participants’ qualifications
Step 2 Fill in the application form
Step 3 Prepare the following supporting documents for project participation:

1. Application form for joining the project
2. Credit Bureau report (all pages)
3. Copy of ID card
4. Copy of name-surname change certificate (if any)
5. Income documents (separate by case)

• Example of a permanent employee: 1 month’s daily pay slip
• Freelancer: 3 months’ bank statement or income certificate (according to the attached form)

Step 4: Send documents to P.O. Box 40, Sun Towers Post Office, Bangkok 10905 (We recommend sending via Thailand Post to track delivery and prevent document loss).

Note: Credit Bureau information can be requested at Credit Bureau Centers, bank counters, ATMs, Mobile Apps, Thailand Post Offices, and Internet Banking.

How to apply to join the Debt Clinic Project
You can apply to join the Debt Clinic Project through several channels as follows:

1. Via the website www.debtclinicbysam.com
2. Via Line@ ID: debtclinicbysam
3. Contact the project office
   4th floor, The Avenue Ratchayothin shopping center, room number C401B-C401C, Ratchadaphisek Road, Lat Yao Subdistrict, Chatuchak District, Bangkok, get off at BTS Ratchayothin, Exit 1 (next to Major Cineplex Ratchayothin) 9:00 a.m. – 7:00 p.m.
   Interested persons can inquire for more information at the Call Center, Tel. 1443, every day from 9:00 a.m. – 7:00 p.m.

How to calculate overdue interest and debt repayment fairly

In addition, the BOT has issued an announcement specifying the criteria for the calculation of overdue interest and debt repayment write-offs, to help reduce the debt burden, create fairness in financial services for the public, and reduce the occurrence of non-performing debt in the financial system. These criteria will lead to significant changes in practices in the Thai financial system in 3 areas:

1. Calculating overdue interest based on the “actual default principal” only, not including the principal portion of future installments that are not yet due, is different from the previous practice where if only one installment defaults, the financial service provider can calculate overdue interest based on the entire outstanding principal, resulting in a very high overdue interest value. This new criterion will calculate overdue interest consistent with the facts and fairer to the public.

2. Defining the default interest rate at “the contract interest rate plus no more than 3%”, for example, if the contract interest rate is 8%, the financial service provider will set the default interest rate at no more than 11%, taking into account the past debt repayment history.
   Unlike the past, when financial service providers could set their default interest rates, such as the maximum interest rate in the Civil and Commercial Code of 15% or in some cases as high as 18% or 22%, which affected the debtor’s ability to repay. the debt (affordability risk). Therefore, adjusting the criteria this time will help debtors try to repay their debts, reducing the chances of default and also helping to make the financial system more balanced, reducing the number of lawsuits.

3. Determining the order of debt repayment by “deducting the installment with the longest overdue first” so that the debtor knows the clear order of debt repayment. When the debtor repays the debt, the money paid in will be used to pay the fees, interest, and principal of the installment with the longest overdue first, which is different from the old method where the money paid in will be used to deduct all fees, followed by all interest, before using the remaining money to deduct the principal.

This new criterion will increase the chance that the monthly installments that debtors pay can be deducted from the principal, reduce the occurrence of non-performing loans (NPLs), and encourage debtors to continue paying their debts. It also helps the debtor’s debt repayment history to be more consistent with the facts.

The announcement of the criteria for calculating overdue interest will be effective from April 1, 2021, except for the debt repayment sequence, which will be effective from July 1, 2021, onwards.

For overdue debts that occurred before April 1, 2021, financial service providers can use the principles in the new announcement to consider exempting or relaxing overdue interest for debtors as appropriate.

If you have any questions or are not treated fairly, you can inquire or file a complaint with the Financial Consumer Protection Center (FCPC) at 1213.