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TIPS FOR CREDITORS TO SETTLE BAD DEBTS

By Amicable Solutions/ Non-Litigation Measures

If no settlement can be achieved from the aforementioned measure, the creditor can give several options (rescheduling, reconditioning and or restructuring) for the debtor to:

– Extend the term for repaying the loan

– Reduce the penalty, interest or principal amount of the debt

– Give additional debt and additional repayment time – Convert the debt into share ownership (if there are business potentials)

By direct communication, negotiation, and conciliation with the debtor to discuss the obstacles (by summoning, visiting or sending correspondence). Another measure that can be taken by the debtor concurrently with the aforementioned efforts is by making announcement at mass media to urge the debtor to pay the debt (an effort to attack the credibility of the debtor).

Alternatively, the creditor can sell the receivables to other parties by cessie or subrogation. The creditor can also take over the goods collateralized by the debtor to settle the debt upon approval of the debtor (among banks, there is a term called taken-over assets (AYDA) or taken-over collateral (BJDA).

Through Litigation/Judicial Settlement

To apply for execution of collateral through the district court (if the debt is collateralized) (Legal grounds: Law No. 4/1996 concerning Security Interest

– Article 6, Law No. 42/1999 concerning Fiduciary – Article 29

To lodge a civil lawsuit to the district court to apply for compensation for losses and sequestration of the properties of the debtor as the guarantee
for meeting the demand (legal grounds: Articles 1365 and 1131 of the Civil Code)

The creditor can submit the issue to arbitration as a measure to settle the issue so long as such measure is specifically provided for in an agreement. The Submission to arbitration shall then be followed by voluntary settlement by the debtor; otherwise, the creditor can lodge an application for the execution of the arbitral award to the district court;

Otherwise, the creditor can lodge a petition or bankruptcy or an application for rescheduling of debt repayment to the local commercial court by observing the provision for submission in accordance with the legislation.

There is also another measure that can be taken by the creditor at the same time with the efforts mentioned above to urge the debtor to pay its debt, namely by lodging a report on alleged crime of fraud or embezzlement or other crimes to the police or other investigating agency (in the event of fictitious collateralization of assets, manipulation of data, false statement or if the act of the debtor violates the criminal law).

-TSH-