How To Get Rid Of Bad Debt In This Country ?

[BlackRain]

ok one of my employees got herself into some stupid debt. Instead of asking me for a zero interest loan, she went on her own and ask for a JCB card with those loan sharks at Quick Cash and those AEON gangsters. Why are these companies still operating is a mystery but that's another debate.

Anyway, soon after she started using the card, she realized how expensive it is to borrow money from those gangsters. Instead of resolving her debt issue, she started to ask for a raise to payback the monthly minimum of her debt as she is being strangled financially. Being the nice guy that I am, I started to investigate why she couldn't make it financially when I pay her already above average rate. This is when I discover what kind of gangsters she was dealing with:

For a loan of 15,000 THB taken in 2004, the loan has grown to 28,000 THB in 2006, mind you that she had payback already the monthly minimum of about 1.500 THB during those years, while borrowing a bit more everytime. Now the monthly minimum is about 4.000 THB and she can't make it.

After going through the statements, it turns out that she had paid more than 7.000 THB in interests fee alone over 2 years for an average loan balance of 20.000 THB with repayment done in between. That's about 30% interests over 20 months, or 21% per year (1.75% per month)

With her current situation, she will never be able to recover from her debt, and it would take years for her to pay back that 15.000 THB loan, which would be ridiculous.

Obviously I will need to bail her out and of course this is going to be expensive to do it and it will cost me more than the 15.000 THB originally borrowed if she had come to see me in the first place. But I would also like to go after those gangsters at QuickCash and AEON and I was wondering if there was any agency to help Thais resolve their debt with those kind of loan sharks by "negotiating" the early retirement of the debt. Those loan sharks love poor people, and they know very well that they will struggle to make through the payments, forcing them to borrow even more.

Anyway, anyone with experience with those kind of issues ? I remember the government planning something a few years ago but not sure if it became concrete and or it was just news propaganda.

Thank you for your feedback,

Edited January 19, 2007 by BlackRain

[TAWP]

Anything that generates a LOT if income isn't going to go away, unless someone else with no ties to it get's jelous and just happends to be in the position of power to screw them over...

[Neeranam]

Anyway, anyone with experience with those kind of issues ?

Yes - most of the women join Thai Love Links or find other ways of finding a farang.

Another way is to tell the 'sharks' to piss off. For a small amount, I've seen it work.

[h90]

How much salary does she get?

Actually the amounts are small. If you pay it, and just cut a given amount from her salary every month, it should work.

ok one of my employees got herself into some stupid debt. Instead of asking me for a zero interest loan, she went on her own and ask for a JCB card with those loan sharks at Quick Cash and those AEON gangsters. Why are these companies still operating is a mystery but that's another debate.

Anyway, soon after she started using the card, she realized how expensive it is to borrow money from those gangsters. Instead of resolving her debt issue, she started to ask for a raise to payback the monthly minimum of her debt as she is being strangled financially. Being the nice guy that I am, I started to investigate why she couldn't make it financially when I pay her already above average rate. This is when I discover what kind of gangsters she was dealing with:

For a loan of 15,000 THB taken in 2004, the loan has grown to 28,000 THB in 2006, mind you that she had payback already the monthly minimum of about 1.500 THB during those years, while borrowing a bit more everytime. Now the monthly minimum is about 4.000 THB and she can't make it.

After going through the statements, it turns out that she had paid more than 7.000 THB in interests fee alone over 2 years for an average loan balance of 20.000 THB with repayment done in between. That's about 30% interests over 20 months, or 21% per year (1.75% per month)

With her current situation, she will never be able to recover from her debt, and it would take years for her to pay back that 15.000 THB loan, which would be ridiculous.

Obviously I will need to bail her out and of course this is going to be expensive to do it and it will cost me more than the 15.000 THB originally borrowed if she had come to see me in the first place. But I would also like to go after those gangsters at QuickCash and AEON and I was wondering if there was any agency to help Thais resolve their debt with those kind of loan sharks by "negotiating" the early retirement of the debt. Those loan sharks love poor people, and they know very well that they will struggle to make through the payments, forcing them to borrow even more.

Anyway, anyone with experience with those kind of issues ? I remember the government planning something a few years ago but not sure if it became concrete and or it was just news propaganda.

Thank you for your feedback,

[ajarnski]

Well...I think 21% p/a is quite normal for an unsecured loan/credit of this type. Heck even in the U.S most cards will reach 21% p/a if you have 1 late payment or if you have bad credit. Yes, to people with money 21% p/a seems like a lot but you have to remember these poor Thais are used to being charge 20% PER MONTH!!!!

While I sympathize with people who are poor, I have no sympathy for people who can not control their spending. I grew up poor and remembered how hard it was. I remembered not having new school uniforms or money for snacks or heck...a TV, car, phone, running water, etc. But our family never went into debt to acquire any of those things.

Feeling sorry for people who is willing to go into debt for material wealth/gaining face won't help them. Granted most poor Thais I've met only think about today and have no plan for the future so that's why they want everything ...NOW!

Ski.....

[steveromagnino]

21% is nothing; Quikcash and easy buy and others all have rates as high as almost 50% for really hard to trust debt.

Incidentally, just so you know....the 'gangsters' you are referring to include firms like GE Capital; they do this business round the world, and they make their money from lending to people who cannot control their spending, and typically those people are poor/lower middle class. It is EXTREMELY unlikely that she can avoid payment, as she has a legal contract and 21% for unsecured debt is not high at all; most credit cards are around 16-19% here in Thailand.

If you employee has a credit card, then she must be earning at least 15k a month.

Therefore.... she should:

- catch the non aircon bus

- eat street food only, no soft drinks, no ice coffees, no new clothes, no excess spending

If it is 28k, my bet is she could pay it off in entirety without problem in a year; she must make more than the minimum payments; the minimum payments are not big enough.

DO NOT give her an interest free loan. This is an excellent lesson that she needs to learn; you could perhaps make a payment for the last 6 months if she proves she can handle the first 6 months; and I don't even recommend that. Some people cannot learn to budget; this is how they learn, through consequences.

This is the sort of way that some women end up in prostitution or similar. That is like a slippery slope as well; in no time they aren't doing a decent job, living in Germany with some overweight superannuatant and flogging the skin trade but gambling away all they make..... no better.

If you really want to help her; inform her that you will dock her pay check by 5k a month, and that money will go straight towards paying the debt. (and do it). If you want to be very nice, top it up by 1k a month. Alternatively, pay per a 2 month bonus, and pay it all to the loan company directly.

Anyway, I still think she sounds like a frigging moron, and should deal with her self made bed.

[Neeranam]

DO NOT give her an interest free loan. This is an excellent lesson that she needs to learn; you could perhaps make a payment for the last 6 months if she proves she can handle the first 6 months; and I don't even recommend that. Some people cannot learn to budget; this is how they learn, through consequences.

Agreed - why the **** should the OP pay?

[naka]

Tell her to flog her 3D cellphone and Prada bag to pay off the loan.

Ever considered she's taking the Piis out of you, sounds like it.

I want to go after the gangsters ... Yea, right.

Naka.

Edited January 20, 2007 by naka

[opothai]

the thais need to learn maths and the implications of compound interest,

the big firms who give out credit cards love the minimum payment brigade. BIG BUCKS

[Heng]

If you want to solve the problem, get rid of the demand: in this case, the irresponsible spending of money that one does not have.

The problem is not the advertising (although yes, that does have an effect; getting rid of it would stem the bleeding to a moderate steady terminal flow instead of the status quo massive bleeding debt), as these borrowers will sniff out anyone with any funds available and badger and beg until they have the loans they need at the worst terms possible.