Thailand’s household-debt storm taking deadly toll on guarantors

[webfact]

 

Thailand’s household debt has ballooned to almost 16 trillion baht, with more and more Thais at risk of defaulting on their loan repayments. The pressure then falls on guarantors, who are often family members or friends of the debtors. And that pressure is taking a deadly toll.  

 

Earlier this month a police captain killed himself after a bank pressed him to take responsibility for repayment of his friend’s 800,000-baht loan.

 

This was not the first time that a pressured loan guarantor has committed suicide.

 

Late last year, another woman lost her husband in similar circumstances. The 69-year-old retired official of the Royal Irrigation Department fatally shot himself after being told he had to pay his friend’s debt as the guarantor.

“He was under so much stress and had been complaining about his friend and his status as guarantor,” his wife lamented.

 

In other cases, the stress fell on the guarantor’s family members. In December 2021, a 32-year-old woman tied her hands and those of her nine-year-old daughter together and was getting ready to jump off a Bangkok bridge.

 

The mother was distressed because her partner had fallen into serious financial trouble after his friend defaulted on a house loan. As a guarantor, the woman’s husband was forced to pay the loan.

 

Fortunately, a passing motorcyclist noticed the mother and daughter, and several good Samaritans gathered to persuade them to abandon their suicide plan.

 

Full story: https://www.thaipbsworld.com/thailands-household-debt-storm-taking-deadly-toll-on-guarantors/

 

-- © Copyright Thai PBS 2023-07-25

 

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[ThailandRyan]

The guarantor route is the way many Thais go in order to buy a new car and do not have the money to show they qualify.  A friends wife had to do the as the friend would not pay for the car outright and a loan from Krungsri Auto was needed.  The local School director, the friend of the woman's father signed as the guarantor.  The FIL could not sign as he had two cars and a tractor on loan payments.  Of course my friend made the monthly payments so no issues, but just think of those who are not so lucky to have a foreign payment maker in the house.  You may ask, why did not the foreign husband sig as the guarantor and the answer was he is a retiree on a retirement extension of stay and has no WP so the bank would not loan the money for the car with him as the guarantor.

 

Those who take the loan default and the guarantor is on the hook and as you can see the stress is too much.  

 

If you can not qualify for aa loan then the banks really should not be making the loans.

[Pumpuynarak]

Don't ever guarantor anyone unless they or you are on a guaranteed affordable income (pension springs to mind) but i know thats easily said the reality is very different. I was asked by our bank to guarantor wifey's house purchase, no problem my pension easily covered the monthly repayments. Wifey had no income to meet the repayments, go figure lol

Edited July 25, 2023 by Pumpuynarak

[Pumpuynarak]

10 minutes ago, ThailandRyan said:

The guarantor route is the way many Thais go in order to buy a new car and do not have the money to show they qualify.  A friends wife had to do the as the friend would not pay for the car outright and a loan from Krungsri Auto was needed.  The local School director, the friend of the woman's father signed as the guarantor.  The FIL could not sign as he had two cars and a tractor on loan payments.  Of course my friend made the monthly payments so no issues, but just think of those who are not so lucky to have a foreign payment maker in the house.  You may ask, why did not the foreign husband sig as the guarantor and the answer was he is a retiree on a retirement extension of stay and has no WP so the bank would not loan the money for the car with him as the guarantor.

 

Those who take the loan default and the guarantor is on the hook and as you can see the stress is too much.  

 

If you can not qualify for aa loan then the banks really should not be making the loans.

SCB offered wifey the house mortgage with me as guarantor and she had no income. I imagine as the loan to value was very small at 1.5Mill the property value in the event of default would cover easily providing they could sell it. 

 

With pensioners acting as guarantor the problem is the pensioner dying before the loan is repaid.  I had to take out life assurance to cover the loan.

Edited July 25, 2023 by Pumpuynarak

[Peterphuket]

Of course, the 'mai pen rai' attitude goes wrong once.

Nothing new under the sun....

[khunpa]

I paid of my wife’s sisters credit card loan of THB 90,000 and THB 30,000 she had borrowed from her employer, who basically treated her like a slave due to the money owed.

 

First thing I told her after helping her was not to borrow anymore money. Of course she did not listen at went out and borrowed again. So now she is back in the same situation. 
 

Lesson learnt: Don’t help a Thai in debt. They just don’t get it.

 

 

[Jimjim1]

24 minutes ago, khunpa said:

Lesson learnt: Don’t help a Thai in debt. They just don’t get it.

And they do not respect you for doing it

[hotchilli]

2 hours ago, Pumpuynarak said:

Don't ever guarantor anyone unless they or you are on a guaranteed affordable income (pension springs to mind) but i know thats easily said the reality is very different. I was asked by our bank to guarantor wifey's house purchase, no problem my pension easily covered the monthly repayments. Wifey had no income to meet the repayments, go figure lol

Nothings guaranteed... sign for nothing, owe nothing

[vivananahuahin]

En 6 days holiday to solve the problem, Ax²+bx+c=0, amazing 

[renaissanc]

We buy fish for our 20 cats from a couple. We lent them 10,000 Baht with the fish as the "guarantor". They could not pay back the loan so they are giving us 500 Baht of fish each week for free until the debt has been paid. 5,000 Baht is left. 

[spidermike007]

Long ago, the Bank of Thailand Governor Sethaput Suthiwartnarueput described a fragile and uneven economic recovery with the country trying desperately to move beyond the disaster inflicted on the economy in 2020. Talk about an understatement. How and why was this disaster inflicted upon the economy? I would go one step further, and include the Prayuth decimation as one of the causes of the economic stagnation we are seeing now. This was not entirely circumstantial, and the revisionist history is already beginning, it would appear. So many things could have been done, to ensure a softer landing, when covid was not a factor anymore. The highly selective economic shutdowns which favored cronies, at the expense of the average Thai were punitive and extremely damaging, resulting in higher suicides, homelessness, crushed lives, countless lost businesses, and a further spread of the disease. 

The destruction of the tourism industry (which some might argue was a purification campaign in disguise, meant to get rid of nightlife and the sex industry) went on far longer that it should have, leading to far fewer tourists returning here, as the nation has largely been forgotten. The restrictions were way too much, for far too long. Very, very cowardly, and very, very damaging. How long will that damage last? No question, millions of Thais are still hurting.

I know taking responsibility for one's actions is not exactly a strong suit here. But, Prayuth, Phiphat, Prawit, and Anutin are directly responsibility for much of the economic woes we are seeing now, and should be held responsible, and called out on this. The numbers do not even begin to reflect the amount of damage done to the cash economy, which is never counted in unemployment numbers, lost GDP, lost businesses, etc. Covid was one small factor. Irresponsible actions, an extraordinary lack of leadership, choosing a vaccine with the lowest efficacy available, refusing help from the international community with the vaccines, until it was too late, and showing extreme cowardice by keeping the door to tourism closed for far too long, and then opening with draconian restrictions, were huge mistakes, and someone needs to be held responsible.

 

 

[Mike Teavee]

44 minutes ago, khunpa said:

I paid of my wife’s sisters credit card loan of THB 90,000 and THB 30,000 she had borrowed from her employer, who basically treated her like a slave due to the money owed.

 

First thing I told her after helping her was not to borrow anymore money. Of course she did not listen at went out and borrowed again. So now she is back in the same situation. 
 

Lesson learnt: Don’t help a Thai in debt. They just don’t get it.

 

 

I paid my GF’s 100K loan off when I found out that she had paid 8K pm for 1 year & still owed 96K.
 

Worked out well as she paid me the 8K pm & gave up Birthday/Xmas presents to clear the debt in 9 months. 
 

Since then she’s cut up all but 1 of her credit cards (had about 9 of them maxed out which was why she needed the loan) which she keeps in case of an emergency.

Edited July 25, 2023 by Mike Teavee

[Pumpuynarak]

32 minutes ago, hotchilli said:

Nothings guaranteed... sign for nothing, owe nothing

Now i would tend to totally agree with you but what happens when you take a loan out on a property that is in your wifey's name but obviously its your home too. The reason i was keen for wifey to have the loan (i did'nt need it, i could have paid for the property in full 4Mill) was if the relationship went tits up which no doubt if it was going to it would tend to be in the early years i could walk away and save the 1.5Mill or what was left of the mortgage.

 

I also made sure we never bought any property until we were legally married then at least i had a chance albeit small of getting 50% of any sale value.

Just trying to cover my a** as much as i could but i'm really pleased to say we've been together 17 years this October and what a great time we've had, long may it continue.

PS - Your pension is guaranteed, well at least mine is and wifey gets 50% of it when i pop me clogs.

Edited July 25, 2023 by Pumpuynarak

[BritScot]

3 hours ago, ThailandRyan said:

The guarantor route is the way many Thais go in order to buy a new car and do not have the money to show they qualify.  A friends wife had to do the as the friend would not pay for the car outright and a loan from Krungsri Auto was needed.  The local School director, the friend of the woman's father signed as the guarantor.  The FIL could not sign as he had two cars and a tractor on loan payments.  Of course my friend made the monthly payments so no issues, but just think of those who are not so lucky to have a foreign payment maker in the house.  You may ask, why did not the foreign husband sig as the guarantor and the answer was he is a retiree on a retirement extension of stay and has no WP so the bank would not loan the money for the car with him as the guarantor.

 

Those who take the loan default and the guarantor is on the hook and as you can see the stress is too much.  

 

If you can not qualify for aa loan then the banks really should not be making the loans.

Think you have recieved bad financial advice but a very good excuse.  I was an expat on retierment visa and purchased over the years one pickup, one suv and 3 big bikes all on finance. I could walk into tisco bank and walk out with a vehicle loan never once a problem. 

[BritScot]

6 minutes ago, Pumpuynarak said:

Now i would tend to totally agree with you but what happens when you take a loan out on a property that is in your wifey's name but obviously its your home too. The reason i was keen for wifey to have the loan (i did'nt need it, i could have paid for the property in full 4Mill) was if the relationship went tits up which no doubt if it was going to it would tend to be in the early years i could walk away and save the 1.5Mill or what was left of the mortgage.

 

I also made sure we never bought any property until we were legally married then at least i had a chance albeit small of getting 50% of any sale value.

Just trying to cover my a** as much as i could but i'm really pleased to say we've been together 17 years this October and what a great time we've had, long may it continue.

Never invest more than you can easily walk away from. Nice to see someone thinking the right way. I built a bungalow and the budget was 10 years worth of rent @ 10,000baht per month my thinking was we had a child and the house would be his home if for some reason I had to walk away. Well we did walk away from Thailand after 8 years we still have our house and the investment was less than would have paid in rent (house was under budget as I designed and project managed plus bought every thing myself) 18 years married very happy living in the uk with our second home in thailand. Again never ever invest in Thailand any more than you can afford to walk away from!

[HappyExpat57]

I'm curious as to how bad a threat is it for someone to off themselves. I mean, even having your kneecaps broken would be better than suicide.

[n00dle]

10 minutes ago, HappyExpat57 said:

I'm curious as to how bad a threat is it for someone to off themselves. I mean, even having your kneecaps broken would be better than suicide.

Would it now? 

How can you even speculate? 

Why would you even speculate, especially if you are financially stable?

[loong]

Years ago, my GF at the time co-signed a loan for a friend who was buying a pick-up. I told her that she should not do it as when the friend defaults, she will be responsible for paying back the loan. She didn't believe me as she had no idea what she was signing.

The problem is that many people are very naïve about debt and are incapable of doing very simple mathematics. The amount of people that struggle to survive on their income will borrow money that they cannot possibly repay. It is very simple to work out that if every month, at the end of the month, all of the person's earning have been spent on necessities, there will be nothing left to service a loan. Yet they will take out a loan and seem to believe that the additional x thousands of Baht that they need to repay each month will magically appear from somewhere!

[BangkokHank]

1 hour ago, Jimjim1 said:

And they do not respect you for doing it

Right, and they will expect you to do it again.

[michaellee]

1 hour ago, Jimjim1 said:

And they do not respect you for doing it

And they do not appreciate your help and forget your kindness in a heartbeat. 

[HappyExpat57]

25 minutes ago, n00dle said:

Would it now? 

How can you even speculate? 

Why would you even speculate, especially if you are financially stable?

I've been a homeless street person, I know what it's like to be as financially destitute with my teeth rotting in my head as one can be, so don't lay that garbage on me.

[StayinThailand2much]

Sometimes I'm just glad that banks here neither will lend me 1 satang, nor that they will accept me as a guarantor for loans...

Edited July 25, 2023 by StayinThailand2much

[Cake Monster]

Why would anybody act as a Guarantor for somebody that cannot meet the Bank criteria for a Loan, is beyond my comprehension

If the borrower does not meet the Bank criteria, then sure as eggs are eggs they will not meet the Guarantors

Because many Guarantors are Family, or trusted friends, they will not pursue the Loan default and choose to pay to save the embarrassment ( face ) bought upon them

Some, not all, deliberately choose to go the Guarantor route as they know they are almost certain they will not be chased by the guarantor on the default

[Ginner]

4 hours ago, ThailandRyan said:

The guarantor route is the way many Thais go in order to buy a new car and do not have the money to show they qualify.  A friends wife had to do the as the friend would not pay for the car outright and a loan from Krungsri Auto was needed.  The local School director, the friend of the woman's father signed as the guarantor.  The FIL could not sign as he had two cars and a tractor on loan payments.  Of course my friend made the monthly payments so no issues, but just think of those who are not so lucky to have a foreign payment maker in the house.  You may ask, why did not the foreign husband sig as the guarantor and the answer was he is a retiree on a retirement extension of stay and has no WP so the bank would not loan the money for the car with him as the guarantor.

 

Those who take the loan default and the guarantor is on the hook and as you can see the stress is too much.  

 

If you can not qualify for aa loan then the banks really should not be making the loans.

It is the greed of the Banks that hand out the loans. The banks should be made to take responsibility for their flippant attitude, the person offering the loan usually gets their hands greased, too. 

[Ginner]

4 minutes ago, Cake Monster said:

Why would anybody act as a Guarantor for somebody that cannot meet the Bank criteria for a Loan, is beyond my comprehension

If the borrower does not meet the Bank criteria, then sure as eggs are eggs they will not meet the Guarantors

Because many Guarantors are Family, or trusted friends, they will not pursue the Loan default and choose to pay to save the embarrassment ( face ) bought upon them

Some, not all, deliberately choose to go the Guarantor route as they know they are almost certain they will not be chased by the guarantor on the default

A lot of people guarantor loans, for a price. Plus the people offering the loan get their hands greased as well.

[Enzian]

I'm close to a situation where a Thai woman borrowed money from a government agriculture bank to buy about 3 acres of land (which has potential for development), but the bank would not accept the purchased property as security. They insisted the security be her parents' twice as large parcel, partly because they view every loan as being essentially to an extended family unit, and so they will make only one loan current to any such identified unit. Her parents and siblings (considered heirs) had to all agree, and they did. Then she proceeded not to pay on the loan for 6 years! But the bank did not foreclose, they just kept tacking on principle til the face of the loan was 33% more than it had started. Now she's making sufficient payments again, and the bank is happy, but the family as well as she remain on the hook. Anything can happen. A strange country.

[Guderian]

4 hours ago, ThailandRyan said:

You may ask, why did not the foreign husband sig as the guarantor and the answer was he is a retiree on a retirement extension of stay and has no WP so the bank would not loan the money for the car with him as the guarantor.

Aha! So there actually are some positive aspects to the hoop-jumping we have to go through every year for the retirement extensions, lol.

[The Theory]

5 hours ago, webfact said:

Thailand’s household debt has ballooned to almost 16 trillion baht, with more and more Thais at risk of defaulting on their loan repayments

Is this the reason Thai baht getting stronger in the region?!! ????????????

[d2b2]

3 hours ago, khunpa said:

I paid of my wife’s sisters credit card loan of THB 90,000 and THB 30,000 she had borrowed from her employer, who basically treated her like a slave due to the money owed.

 

First thing I told her after helping her was not to borrow anymore money. Of course she did not listen at went out and borrowed again. So now she is back in the same situation. 
 

Lesson learnt: Don’t help a Thai in debt. They just don’t get it.

 

 

That problem is not exclusive to Thailand.

A big part of the problem is a failure of the education system to provide any meaningful financial or ethics education. 
maybe the lottery can fix everything

[ozimoron]

1 hour ago, HappyExpat57 said:

I'm curious as to how bad a threat is it for someone to off themselves. I mean, even having your kneecaps broken would be better than suicide.

My girlfriend's father went guarantee for a loan on a pickup. The guy committed suicide and wrecked the vehicle in the process leaving him with 200k in debt. The family have pressured her for years over the debt apparently. Loose credit policies are to blame.