Thai woman’s 307,000 baht debt sparks social media advice

A woman’s struggle with debt totalling 307,000 baht recently gained significant attention on social media. Earning 22,000 baht per month, she allocates 6,000 baht for rent and 3,000 baht for motorcycle loan payments.

The debt, arising from six unsecured loans including credit cards and personal loans, spans multiple financial institutions. Details on monthly instalments, interest rates, or the status of her debt remain unspecified.

Her plea for advice on managing her debt burden prompted an outpouring of suggestions on social media. For individuals facing similar financial challenges, there are several tools available to help manage and escape the debt cycle.

Supervised by the Bank of Thailand, the Debt Clinic programme offers a restructuring solution for unsecured loans. Managed by Sukhumvit Asset Management (SAM), the programme targets borrowers with non-performing loans (NPLs) from credit cards, cash cards, and personal loans.

The Debt Clinic provides interest rate adjustments ranging from 3-5% annually, depending on the repayment plan, with a maximum repayment period of 10 years. The programme is available to retail NPL borrowers up to 70 years old with total debt not exceeding 2 million baht.

SAM’s president, Nartnaree Rattapat, explained that the clinic helps credit cardholders and personal loan borrowers classified as NPLs by tailoring restructuring programmes to their monthly repayment capacity. Borrowers can assess affordability and select a repayment plan via the Debt Clinic website, with options for short-term (up to four years), medium-term (four to seven years), and long-term (seven to ten years) repayment schedules, said Nartnaree.

“Borrowers interested in joining the Debt Clinic can review debt instalment schedules on the website, which outline repayment periods from short to long term.”

The clinic aims to alleviate the financial strain of unsecured loan NPLs by offering special interest rates and flexible repayment plans.

For example, the 25 year old woman, after accounting for her rent and motorcycle payments, has 13,000 baht left from her 22,000 baht monthly income. By reducing her living expenses, she could increase her disposable income, making her eligible for a debt restructuring programme with a total debt ceiling of 500,000 baht. Under a medium-term plan with a 4% annual interest rate, she would pay 6,900 baht monthly, while a long-term plan with a 5% annual interest rate would require 5,300 baht per month.

Persistent debt scheme

Another option is the central bank’s persistent debt (PD) scheme, designed for long-term borrowers. The scheme has two categories: general PD and severe PD, both for instalment loans classified as performing loans. General PD borrowers have been in debt for three consecutive years, while severe PD borrowers have been in debt for five consecutive years, with minimum monthly income requirements of 20,000 baht and 10,000 baht for bank and non-bank debtors, respectively.

An assistant governor for the supervision group at the central bank, Suwannee Jatsadasak, noted that the PD scheme offers a reduced interest rate of 15% per year, lower than the 25% ceiling rate under personal loan regulations.

She said that participants in the PD programme benefit from lower interest rates, reducing monthly repayments and helping them exit the debt cycle faster.

The PD programme is available at 37 participating banks and non-bank institutions, focusing on unsecured loan products. Thailand’s household debt-to-GDP ratio is around 91%, amounting to 16.3 trillion baht, with unsecured loans comprising 28%.

Consolidation Programmes

Various financial institutions offer debt consolidation programmes, also known as debt balance transfers, as a form of refinancing. These programmes allow borrowers to combine multiple debts into a single loan, benefiting from lower interest rates and improved monthly liquidity.

Banks often run promotional campaigns with special interest rates to attract borrowers to their debt refinancing programmes. Conditions vary across institutions, including applicant qualifications, minimum income requirements, loan types, interest rates, credit limits, and repayment periods.

For instance, TMBThanachart Bank (TTB) offers a debt consolidation programme called TTB welfare loan, with interest rates starting at 7.99% per year and a credit line of up to five times the customer’s monthly income. They also provide a debt solution platform, “Pichit Nee,” offering financial literacy resources and promotional campaigns.

Thakorn Piyapan, TTB President, stated that the Pichit Nee platform aims to promote good financial health among Thais, assisting them in managing financial plans and enhancing discipline.

Krungthai Bank (KTB) provides a debt consolidation scheme for government officials, covering both secured and unsecured loans, with special fixed interest rates. CIMB Thai Bank, Kiatnakin Phatra Financial Group, and Thai Credit Bank offer personal loan consolidation programmes with competitive interest rates.

Borrowers are advised to carefully review the conditions of each debt consolidation programme to effectively reduce their financial burden.

These restructuring and refinancing options provide critical support for individuals struggling with debt, offering pathways to regain financial stability and manage personal finances effectively, reported Bangkok Post.