Household debts hit ‘dangerous’ levels
PUBLISHED : 20 Aug 2023 at 04:00
A total of 53,030 civil and 353 criminal cases have been settled without a court’s involvement since a law facilitating out-of-court settlements took effect on May 23, 2019, the government said on Saturday.
The settled civil cases were estimated to have saved people about 6.88 billion baht in court fees, deputy government spokeswoman Rachada Dhnadirek said. People would have to pay fees if their cases were taken to court.
Out-of-court settlements in criminal cases, meanwhile, helped the state save up to 27 billion baht.
In the 2022 fiscal year alone — from Oct 1, 2021, until Sept 30, 2022 — 44,735 out of all 45,958 dispute cases, worth 6.46 billion baht in total, were settled through negotiations, she said, adding out-of-court settlements in these cases saved about 5.8 billion baht in associated costs.
Among those included were outstanding debts owed to the Student Loan Fund, car hire purchases, credit cards and personal loans, she said.
According to the Bank of Thailand (BoT), household debts in the first quarter of this year increased by 766 billion baht, bringing total household debt to 15.96 trillion baht, or 90.6% of GDP.
The Bank for International Settlements says a household debt rate of 80% of the GDP is considered dangerous to the economy.
This high household debt problem will likely become even more difficult to curb when the new government, which includes parties looking to implement populist policies, takes office, analysts say.
Overall, the vast majority of household debts are loans to purchase vehicles and homes. According to the BoT, about 60% of debtors owe debts of more than 100,000 baht, while 14% have debts of about 1 million baht.
The quality of these household debts is rated as “not very good”, as two-thirds of them stem from spending on tourism and unnecessary goods, including electronic gadgets, the BoT said.
And while personal savings ran low in recent years, especially during the Covid-19 pandemic, household debts did not fall, partly because of various debt-repayment suspensions offered to debtors to help cushion the economic impact of the pandemic, the BoT said.
The number of debtors rose from 30% of the population in 2017 to 37% last year, the BoT said.
About 30% of debtors failed to repay their personal loans or credit card debts, it said. Each had more than four credit card accounts on average, and the combined credit ceiling for the cards was 10-25 times their monthly salaries, opposed to the five-12 times allowed under the international standard for offering credit lines.