LEGAL PROBLEMS IN THE ENFORCEMENT OF TIME-BARRED DEBT BY FINANCIAL INSTITUTIONS

Abstract

The objectives of this research are as follows: 1) Study the laws concerning the statute of limitations on debts within the financial institution system; 2) Analyze the issues related to legal actions filed by financial institutions for time-barred debts; and 3) Propose solutions to the legal and procedural problems regarding such lawsuits. The study adopts a qualitative research approach using documentary research methodology. The research findings indicate that: 1) The laws related to the statute of limitations on debts in the financial institution system include the Civil and Commercial Code concerning prescription, the Financial Institution Business Act B.E. 2551, and Ministerial Regulation No. 186 B.E. 2534, issued under the Revenue Code concerning the write-off of bad debts from debtor accounts. 2) The analysis of the procedural problems in civil cases involving time-barred debts shows that the current litigation process still adheres to the adversarial system, which requires parties to raise the issue themselves. The court is not authorized to raise the issue of prescription on its own initiative due to the restriction under Section 193/29 of the Civil and Commercial Code. 3) To resolve legal issues regarding lawsuits on time-barred debts, it is proposed that Section 193/29 of the Civil and Commercial Code be amended. The first paragraph should remain unchanged, while a second paragraph should be added as follows: “However, in the case of debt claims arising from credit granted to business operators, where the right of claim is subject to a five-year limitation under Section 193/33 or a two-year limitation under Section 193/34, the court shall have the authority to raise the issue of prescription and dismiss the case on its own motion.” Additionally, to address procedural issues in lawsuits on time-barred debts filed by financial institutions, there should be regulation of private businesses that purchase bad debts, requiring them to pursue debt collection and initiate legal action within the prescribed limitation periods under Sections 193/33 and 193/34. Moreover, debt collection follow-up activities must be reported periodically as part of the accounting cycle.