What is Loan of Money?
Debt Collections Thailand
Debt is a tricky situation to tamper with – whether it is for personal or business purposes. Having a contract to record and document the terms agreed upon can spare a creditor like you from a lot of headache and can also help you get your money back with the least amount of problems.
Loan of Money is a type of contract where a creditor – the person lending the money – allows a debtor to borrow a certain amount of money to be paid at a later time. It states the amount owed, the terms agreed upon and additional sections that can help comprehensively document all the aspects of the transaction. Below, we ran down everything you need to know about Loan of Money to help you through the murky transaction that is money lending.
Who is responsible for the contract?
It is the creditor’s responsibility to cover all costs in the creation of the contract and it must be accomplished in full awareness of the debtor. Below are the following pre-requisites in creating and legalizing a Loan of Money:
- The creditor is responsible for producing the document and covering all costs that is necessary in accomplishing it.
- For a loaned amount that does not exceed 2,000 baht, a witness must be able to testify in court in order to determine the validity of the agreement – if only an oral agreement was established.
- For a loaned amount that exceeds 2,000 baht, written evidence must be presented to court in order to determine the validity of the contract.
What are the evidences a creditor must present in court?
In an event where you decide to take matters to higher court, below are some of the evidences that a creditor must produce:
- A written contract documenting all aspects of the transaction.
- Documentation to prove that the creditor has already exhausted all efforts to reclaim the loaned amount before taking legal actions.
- A copy of the demand letter received and acknowledged by a debtor or an authorized personnel.
Ultimately, taking legal actions is the last resort for any creditor. It must be known that filing a case should only be done if all efforts have been exhausted to negotiate payment terms with the debtor. As a general rule, mediation is necessary before resorting to filing a law suit and the evidences presented above is also crucial in the said process.
What are interest rates?
In creating a Loan of Money, you might come across the term interest rate – this is additional amount placed on top of the loaned amount and must be paid along with the loaned amount. There are creditors who establish an interest rate with every loaned amount but in an event where no interest rate was established in the agreement, Thailand law prescribes a rate of 7.5% every year.
These are the important components of a Loan of Money that is crucial for any creditor. Documenting your agreement with a debtor can help you get what you are rightfully owed while being fully protected by law.
Whether it is a business-incurred loan or a personal loan, it is crucial that a creditor knows the importance of creating a contract to document all aspects of the transaction. While an oral agreement can still be considered in court, having a contract in place will help strengthen your case – in most cases, it will also help you get your money back without having to file a case.
Debt Collections Thailand has legal experts who can help you prepare all legal documents necessary in reclaiming the money you are owed. Get in touch with us today so we can further discuss what you need.