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Can A Farang Loan Money To A Thai National And Have Legal Recourse If Loan Defaults


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#1 patongster

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Posted 2008-09-30 14:47:58

I have a question for anyone who has, or knows if it is possible to loan money to a Thai National, do up a loan contract, and have legal recourse if the loan is defaulted on.

#2 Soutpeel

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Posted 2008-09-30 14:55:51

I have a question for anyone who has, or knows if it is possible to loan money to a Thai National, do up a loan contract, and have legal recourse if the loan is defaulted on.


Yes you can, but expect to be in for the long haul trying to get your cash back, best is dont loan to anyone...

#3 soundman

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Posted 2008-09-30 15:03:21

or make sure whatever you use as collaterol is physically in your posession such as chanote, jatukams etc :o

#4 DavidBrook

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Posted 2008-09-30 22:18:01

A valuable insight into the psychology of a Thai. Listen up because this is invariably the case.

Thais do not treat loans and gifts differently if the money is obtained from a foreigner. They figure you can afford to lose it more than they can, so get some whistling practice...

They wont feel any embarrassment about defaulting either - for a Thai, possession is 10 tenths of the law and owing money is not a concern if they figure you won't break their legs or kill them (as their own countrymen might well do).

Work within this simple rule and you won't get disillusioned. And remember that should you get ripped off by a Thai, you are not allowed to say they have no integrity or that they are dishonest or anything. 'Tis agin the rules to say that. Definitely. They get all upset and don't understand your attitude.

D

Edited by DavidBrook, 2008-09-30 22:19:47.


#5 torrenova

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Posted 2008-10-01 03:59:02

Don't do it and even if your missus wants to do it don't as they will think / know the cash came from you. You won't get it back from most of them and they will just smile and walk on by.

#6 GungaDin

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Posted 2008-10-01 04:06:08

A valuable insight into the psychology of a Thai. Listen up because this is invariably the case.

Thais do not treat loans and gifts differently if the money is obtained from a foreigner. They figure you can afford to lose it more than they can, so get some whistling practice...

They wont feel any embarrassment about defaulting either - for a Thai, possession is 10 tenths of the law and owing money is not a concern if they figure you won't break their legs or kill them (as their own countrymen might well do).

Work within this simple rule and you won't get disillusioned. And remember that should you get ripped off by a Thai, you are not allowed to say they have no integrity or that they are dishonest or anything. 'Tis agin the rules to say that. Definitely. They get all upset and don't understand your attitude.

D


Unfortunately, true. :o

#7 innovator

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Posted 2008-10-01 06:43:51

I will send you a Buffalo t-shirt and bumper sticker to wear around town after you give the loan money out. Then, at least you won't have to post your stories and complaints online about not getting your money back because everyone will already know that you are a Buffalo if you agree to loan the money out.

#8 patongster

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Posted 2008-10-01 07:24:30

or make sure whatever you use as collaterol is physically in your posession such as chanote, jatukams etc :o


ok lets say I can secure the chanote, does that give me more of a safety net?

#9 soundman

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Posted 2008-10-01 08:28:57

or make sure whatever you use as collaterol is physically in your posession such as chanote, jatukams etc :o


ok lets say I can secure the chanote, does that give me more of a safety net?


Absolutley.

Whilst excerciseing claim to chanote is a protracted and sometimes difficult process, while the chanote is in your hands, the other party cannot do anything with it, such as sell it, or use it for another loan.

If he does the dodgy and reports it missing to the police to get another copy drawn up & the original surfaces along with the loan agreement, he will do gaol time for fraud.

I am currently holding a number of chanote's as security for loans, and on a couple of them I am hoping the borrower defaults because they are great pieces of land.

By default, I mean not making a repayment for a number of years where I can then pressure the borrower into settling his debt with the land.

Most Thai's have no idea of compound interest calculations - when I point out that 20,000B compounded at 18% PA, calculated monthly at 1.5% per month, for twenty five years roughly equates to about 2,000,000 Baht, they simply do not believe me.

Cheers,


Soundman. :D

#10 eljeque

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Posted 2008-10-01 16:48:20

There is also the system "Ky-faq" poor spelling, in which property is sold to the lender, and the borrower has rights to buy it back at a future date, if the borrower meets the contractual obligations. If th borrower does not meet the contractual obligations, then the property becomes the property of the lender.

As you are a foreigner, the borrower must have a condo (fully pai for) to use as collateral, and then you could register the Ky-faq at the land office. You , as a foreigner cannot do this with a house.

You could also take his fully-paid-for vehicle into your name, and then allow him to borrow the money, making sure that he has full insurance coverage.

As the others have stated, avoid the situation to sleep better.

#11 coventry

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Posted 2008-10-01 20:13:25

Eljeque has it spot on. I'm sure the words he's looking for are' Kai Fark' agreement. I've fell foul of the devious Thais and only learned with hind sight. Don't trust any of them. You're a farang and they don't care two shits. Do not go and see a lawyer. They have no money so go <deleted> yourself at the end of the day. A lawyer will do nothing unless you have a written contract.

Edited by coventry, 2008-10-01 20:18:10.


#12 mgjackson69

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Posted 2008-10-02 09:43:30

Most Thai's have no idea of compound interest calculations - when I point out that 20,000B compounded at 18% PA, calculated monthly at 1.5% per month, for twenty five years roughly equates to about 2,000,000 Baht, they simply do not believe me.

Cheers,


Soundman. :o

Absolutely correct...to many Thais (and many farang as well, my younger brother being one), the thought process is like this...

"OK, I am borrowing 2400 to be paid back in 24 equal installments, one each month. So each payment will be 100, and when I make 24 payments of 100 it will be paid off."

Outside a formal business arrangement, and especially if dealing with family, a loan to a Thai is not a loan...it is a gift.

#13 soundman

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Posted 2008-10-02 12:22:55

I think the lesson to learn is that if you want to be re-paid, you have to be physically holding on to something that the borrower will want back, and if he/she doesn't want it back, you can easily convert it to cash to cover the money owed.

If they don't have anything of value for security, don't lend them the money. Odds on you will never be repaid.

Personal finance in a nutshell. :o

#14 monty

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Posted 2008-10-02 13:07:21

or make sure whatever you use as collaterol is physically in your posession such as chanote, jatukams etc :o


ok lets say I can secure the chanote, does that give me more of a safety net?


Absolutley.

Whilst excerciseing claim to chanote is a protracted and sometimes difficult process, while the chanote is in your hands, the other party cannot do anything with it, such as sell it, or use it for another loan.

If he does the dodgy and reports it missing to the police to get another copy drawn up & the original surfaces along with the loan agreement, he will do gaol time for fraud.

I am currently holding a number of chanote's as security for loans, and on a couple of them I am hoping the borrower defaults because they are great pieces of land.

By default, I mean not making a repayment for a number of years where I can then pressure the borrower into settling his debt with the land.

Most Thai's have no idea of compound interest calculations - when I point out that 20,000B compounded at 18% PA, calculated monthly at 1.5% per month, for twenty five years roughly equates to about 2,000,000 Baht, they simply do not believe me.

Cheers,


Soundman. :D


Have you already put that into practice?
You'll need a bloody brilliant lawyer!

Only a judge can order the land department to transfer the chanote into your name when the borrower defaults.

However those judges are extremely favorable towards their own countrymen. A good friend of mine is going through such a procedure and had to accept a nominal repayment at 1000 Baht monthly installments after the borrower claimed he was close to being penniless. This is on a 5,000,000 Baht loan :D

To make it worse the borrower is a rather successful business person getting chauffeur driven in multi million Baht cars. Everything is however company owned with his sisters, brothers and maids being the shareholders and him getting a small salary.

The lender has already lost his first appeal and is already out of a serious chunk of cash for legal fees. He is getting close to writing of the 5 million and the land!

If you are up against a smart, well connected Thai with enough resources for legal assistance you do not stand a single chance.
If the borrower is some lowly uneducated person ownling some valuable land then you do stand a chance...

#15 barky

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Posted 2008-10-02 13:23:11

A valuable insight into the psychology of a Thai. Listen up because this is invariably the case.

Thais do not treat loans and gifts differently if the money is obtained from a foreigner. They figure you can afford to lose it more than they can, so get some whistling practice...

They wont feel any embarrassment about defaulting either - for a Thai, possession is 10 tenths of the law and owing money is not a concern if they figure you won't break their legs or kill them (as their own countrymen might well do).

Work within this simple rule and you won't get disillusioned. And remember that should you get ripped off by a Thai, you are not allowed to say they have no integrity or that they are dishonest or anything. 'Tis agin the rules to say that. Definitely. They get all upset and don't understand your attitude.

D


Listen I've got a far simpler rule: "Do not lend Thais money under any circumstance unless you are prepared to right it off immediately as a gift!"

#16 GungaDin

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Posted 2008-10-02 13:40:27

[/quote]

Listen I've got a far simpler rule: "Do not lend Thais money under any circumstance unless you are prepared to right it off immediately as a gift!"
[/quote]

That is rule Number 1. :o

#17 thaihome

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Posted 2008-10-02 15:26:37

Listen I've got a far simpler rule: "Do not lend Thais money under any circumstance unless you are prepared to right it off immediately as a gift!"


That is rule Number 1. :o


Are you in the habit of lending money to people in your own country?
TH

#18 GungaDin

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Posted 2008-10-02 15:28:23

Listen I've got a far simpler rule: "Do not lend Thais money under any circumstance unless you are prepared to right it off immediately as a gift!"


That is rule Number 1. :o


Are you in the habit of lending money to people in your own country?
TH


Yes, Dick.

#19 soundman

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Posted 2008-10-02 15:40:33

Have you already put that into practice?
You'll need a bloody brilliant lawyer!

Only a judge can order the land department to transfer the chanote into your name when the borrower defaults.

No, I personally have not reached the stage of hauling someone up in front a court yet, however I have observed one of my uncles doing it many times.

I did mention that it is a long and difficult process to get the judiciary to rule that the land be liquidated or transfered, however this is not the goal on most loans where you hold the chanote as security. While you are holding the chanote, the land owner can't do anything with regards to the title of the land (such as take out another mortgage or sell it) unless you give the chanote back to him. If he gets a copy printed up while the current chanote is in existance he will get himself in deep shit.

However those judges are extremely favorable towards their own countrymen. A good friend of mine is going through such a procedure and had to accept a nominal repayment at 1000 Baht monthly installments after the borrower claimed he was close to being penniless. This is on a 5,000,000 Baht loan :D


This is always a problem. The borrower will always plead poor to the judge & from what I have been led to believe the judiciary will try and exhaust all other avenues before ordering the land liqudated. Almost certainly on the first hearing the judge will just send it back to the "aiyagahn" or clerk of courts and tell him to negotiate and suggest a settlement between the two parties and once a settlement has been reached to come back before the court in ninety days time and lay the details of the negotiations out before him to rubber stamp.

To make it worse the borrower is a rather successful business person getting chauffeur driven in multi million Baht cars. Everything is however company owned with his sisters, brothers and maids being the shareholders and him getting a small salary.


This scenario is a dime a dozen in Thailand. Unfortunate, however a fact of life. :o

Sounds like a couple of the property developers in your neck of the woods monty. :D

Cheers,


Soundman.

#20 soundman

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Posted 2008-10-02 22:26:09

However those judges are extremely favorable towards their own countrymen. A good friend of mine is going through such a procedure and had to accept a nominal repayment at 1000 Baht monthly installments after the borrower claimed he was close to being penniless. This is on a 5,000,000 Baht loan :o

To make it worse the borrower is a rather successful business person getting chauffeur driven in multi million Baht cars. Everything is however company owned with his sisters, brothers and maids being the shareholders and him getting a small salary.

The lender has already lost his first appeal and is already out of a serious chunk of cash for legal fees. He is getting close to writing of the 5 million and the land!

Up until now we have been talking about smaller amounts of money, nothing really serious like 5 mil baht.

After some reflection on this particular issue, I have to ask some question's about your friend's decisions.

Wouldn't the alarm bells start ringing when someone wants to borrow 5 mil. baht at more than three times the interest rate banks are charging?

Wouldn't the person lending the money want to make sure the security is in the actual name of the person borrowing the money and that piece of security had no other liens against it? Eg. Would anyone "really" take a vehicle as security against a loan if that vehicle was allready under finance?

Did your friend perform a credit bureau search at nakhon leuang bank, of the person, & any business's he is involved with, wanting to lend the money?

Surely he would be asking himself questions as to why this "apparently" successful businessman had to come and grovel before a foreigner to borrow such a large sum of money.

It really sounds like an "emotional" decision was made to lend the 5 mil Baht rather than a rock solid business decision.

If I had 5 mil to lend out, and someone was stupid enough to want to borrow it from me, I would be highly suspicious about their motives (why can't they get the money from a cheaper & more establisshed organisation) & would perform very diligent investigation into the the proposals before it even got off the floor.

Cheers,


Soundman. :D

#21 imaneggspurt

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Posted 2008-10-02 22:28:07

Be careful, the word loan when translated to thai is gift !

#22 imaneggspurt

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Posted 2008-10-02 22:31:10

Maybe slightly off topic but you re in a country where the police want 300.000 baht for a lady to get her stolen/recovered car out of the police compound, she did nothing more than lend it to someone...give this a LOT of thought,.

#23 soundman

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Posted 2008-10-02 22:43:57

Be careful, the word loan when translated to thai is gift !

That is why it is advisable for those living in Thailand to be able to differentiate between "kor yeum ngern" and "goo ngern"

If somebody can't differentiate between the two, or other Thai words for that matter, the Thai's will tell you any old balony to give themselves (individually) an upper hand.

"Yes we knew we were lending the money with interest, however, in our culture, if we don't have the money to pay someone back, we don't have to!" :o



Soundman. :D

#24 stephaniee

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Posted 2008-10-03 11:33:21

:o :D :D lending $ to peple who cant pay back is the business model washington mutual subscribed too

#25 Shotime

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Posted 2008-10-03 12:25:17

:o :D :D lending $ to peple who cant pay back is the business model washington mutual subscribed too


This isn't the first time they've bailed out those criminals.

As far as the loan, you can read him his rights.





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