Debt Collections in Indonesia: Choosing A Debt Collector Services or A Professional Lawyer

Jakarta, Indonesia – We cannot deny that debt collection is a concern for all parties involved. Regardless of the conflicting interests of the Creditor and Debtor, both of them want the same thing, i.e. timely and smooth settlement of debts. 

Recently, it became hot news in Indonesia, in which about 30 debts collectors paid a visit to a celebgram Shinta Clara in Jakarta. They were from a debt collection service company who came to her apartment in the South Jakarta area on 23 February 2023. These debt collectors paid Shinta Clara a visit, and they forcibly took her car key while saying swearwords due to her late payment for her installments to pay the car leasing company. A policeman came to try to mediate between the two parties but instead the police received insults and disrespectful treatment from these debt collectors.

The video of the incident and then become viral on social media so that the Head of the Jakarta Police (KAPOLDA) ordered his members to immediately arrest these debt collectors involved in the incident.

These debt collectors as referred to above may be subject to Article 362 of the Indonesian Criminal Code (Criminal Code) for the acts of debt collectors who forcibly confiscated or took the debtor’s belongings are against the law, hence they may be subject to a theft, with an imprisonment for a maximum of 5 (five) years and a penalty of IDR 900,000,000.00 (nine hundred million Rupiah). If the company and these debt collectors did it forcibly, then they may be subject to Article 365 paragraph (1) of the Criminal Code with an imprisonment of 9 (nine) years. 

These unscrupulous debt collectors as referred to above may also be subject to Article 335 of the Criminal Code for unpleasant acts in the form of forcibly taking the debtor’s belongings or other acts such as violence or threats.

In Indonesia, this is not the first time to occur during a collection by a debt collector company. A group of people from a debt collector service company or debt collectors scold debtors and end up forcibly taking their assets as collaterals for their debts. Such acts are not only detrimental to debtors or consumers, but also to debt collection service company entrepreneurs, and even to the lending company/or creditors themselves. 

In Indonesia, there are no specific rules governing debt collection service companies. However, rules regarding the procedures for debt collection already exist in Indonesia, namely in the Civil Code and several other Indonesian regulations. 

Debt is a form of arrangement in which a person is obliged to give something or do something as stated in Article 1234 of the Civil Code. As for the arrangement, of course it arises based on an agreement, either in the form of a credit agreement or a debt agreement, which is in accordance with Article 1338 of the Civil Code stipulating that “all agreements made legally apply as laws to those who make them.”

With reference to these provisions, a debtor and a creditor who are bound in a debt or credit agreement must comply with the provisions of the agreement, particularly regarding the debt payment schedule.

If the debtor is negligent in making payments under the agreement, the debtor is in default or negligent in fulfilling his/her obligations. In the event that the debtor is in default, the creditor should first send a warning letter or reprimand (somasi) to the debtor in accordance with the provisions of Article 1238 of the Civil Code, which reads “The debtor is declared negligent by an order, or by a similar deed, or based on the power of the agreement itself, namely, if this agreement causes the debtor to be considered negligent with the lapse of the specified time”. Given a warning letter or reprimand served, the debtor has been declared negligent in fulfilling his/her obligations.

In accordance with the provisions of the Civil Code, one of the legal consequences that arise if the debtor is in default is that the creditor has the right to demand fulfillment of the debtor’s obligations, including by paying for compensation costs, as referred to in Article 1239 of the Civil Code.

With reference to these provisions, the debt collection process can be carried out by sending a warning letter or reprimand to the debtor first.

In addition, debt collection procedures are also stipulated in several regulations in Indonesia which are more specific, among others: 

Regulation of the Financial Services Authority Number 6/POJK.07/2022 on Consumer and Community Protection in the Financial Services Sector (“OJK Reg 6/2022”) stipulates that the use of force, including spreading violence and forcibly taking creditor’s assets, in debt collection is a form of abuse of the authority of financial service business practitioners as referred to in Article 7 of OJK Reg 6/2022.

OJK Reg 6/2022 has mandated that debt collection by financial service business practitioners be carried out in accordance with the code of ethics and provisions of the applicable laws and regulations, so that debt collection should not be carried out by spreading violence and forcibly taking creditor’s assets. Before meeting a debtor, a debt collector in the collection process first reminds him/her that the debt is due. 

Then the provisions regarding collection are also stated in Regulation of the Financial Services Authority Number 35 /POJK.05.05/2018 on Administration of Business Financing Company (“OJK Reg 35/2018”), particularly Chapter XI has stipulated collection by financing business practitioners.

Article 47 of OJK Reg 35/2018 clearly stipulates that in the case of a default debtor, business practitioners must first send a warning letter in accordance with the financing agreement, which is in line with the provisions of Article 1238 of the Civil Code. The warning letter sent must contain at least the number of days of delay, amount of debt, interest and fines. 

Article 48 of OJK Reg 35/2018 stipulates that the collection process can be carried out through collaboration between financing institutions and third parties, but these third parties must be in the form of a legal entity, have a license from the competent authority, and have been certified in collection sector. However, please note that the financing business practitioner remains responsible for any acts of these third parties in the collection process as stated in Article 48 paragraph (4) of  OJK Reg 35/2018.

Bank Indonesia further has also issued several regulations regarding the use of collection services (debt collectors), such as in Bank Indonesia Regulation Number 22/20/PBI/2020 on Bank Indonesia Consumer Protection (“BI Reg 22/2020”). Under Article 40 of BI Reg 22/2020, the bank or banking institution that uses the services of a debt collector, then the debt collector’s acts are required to comply with the provisions of the principle of consumer protection in BI Reg 22/2020 as in Article 7 paragraph (1) of BI Reg 22/2020, one of which is equality and fair treatment. Therefore, debt collectors used by banks or banking institutions are not allowed to use force.

Other regulations issued by Bank Indonesia regarding the use of debt collector services are state in Bank Indonesia Regulation Number 23/6/PBI/2021 on Payment Service Providers (“BI Reg 23/2021”), particularly in Article 191 paragraph (1) that strictly stipulates that debt collection using Debt collector services must be carried out in accordance with Bank Indonesia regulations and the applicable laws and regulations.

In addition, Bank Indonesia has prohibited the use of threats, violence, acts that are embarrassing to consumers, and/or physical or verbal coerce on consumers by debt collectors in collecting payments as stipulated in Bank Indonesia Circular Letter Number 11/10/DASP dated 13 April 2009 on the Implementation of Card-Based Payment Instrument Activities as last amended through Bank Indonesia Circular Letter Number 18/33/DKSP of 2016 on the Fourth Amendment to Bank Indonesia Circular Letter Number 11/10/DASP dated 13 April  2009 on the Implementation of Card-Based Payment Instrument Activities (“BI Circular Letter”).

The BI Circular Letter also stipulates that debt collectors are required to use and show official identity cards and assignment letters issued by debt collector service users accompanied by a photo of the debt collector officer. The regulations issued by both the Financial Services Authority and Bank Indonesia have prohibited from using violence or threats in collecting payments.

Debt Collection in Indonesia Using Professional Lawyer Services

A relationship regarding debts is usually based on an agreement. This agreement will regulate the rights and obligations of a creditor and a debtor.

However, it should be noted that in reality, these rights and obligations do not always run smoothly as expected. There may be obstacles that accompany it and trigger conflicts between a debtor and a creditor.

Settlement of this problem must be carried out in accordance with the applicable law. Therefore, the services of a professional lawyer are needed as he/she really understands the rights and obligations of the debtor as well as the applicable law.

There are quite a few cases which resulted in the creditor or debtor bringing his/her debt case to court. Claims like this seem to be very common, although the chronology of cases varies. Broadly speaking, this debt claim is definitely triggered because there is a party who feels aggrieved.

Some of the court forums that are usually used for debt settlements and debt disputes in Indonesia, namely: 

  1. Civil Court:

If in a credit or debt agreement a court has determined to resolve the dispute, then in accordance with the provisions of Article 118 paragraph (4) of the HIR filing a claim to a civil court must be addressed to the Chairperson of the court as agreed upon in the agreement.

However, if the parties making the agreement do not stipulate this, then the provisions of Article 118 paragraph (1) of the HIR apply, namely that the filing of a claim must be addressed to the Chairperson of the court jurisdiction in which the debtor domiciles.

For the value of debt that can be settled through this forum is above Rp500,000,000.00 (five hundred million rupiah), because for the debt with a value below up to Rp500,000,000.00 (five hundred million rupiah) it is settled through a simple claim procedure under Regulation of the Supreme Court Number 2 of 2015 on Procedures for Settlement of Simple Claims which has been amended through Regulation of the Supreme Court Number 4 of 2019 on Amendments to Regulation of the Supreme Court Number 2 of 2015 on Procedures for Settlement of Simple Claims (“SC Reg on Simple Claims”).

  1. Arbitration (BANI) 

Settlement of debts through an Arbitration forum, namely the Indonesian National Arbitration Board (BANI) can only be carried out if the parties to the agreement have clearly arranged if the chosen forum is Arbitration. This is in accordance with the provisions of Article 2 of Law Number 30 of 1999 on Arbitration and Alternative Dispute Resolution (“Arbitration Law“), which regulates the settlement of disputes between parties in an agreement expressly stating that all disputes or differences of opinion that arise or that may arise from the legal relationship will be resolved by way of arbitration or through alternative dispute resolution.

If the parties have agreed to be resolved through an arbitration settlement forum, then in accordance with the provisions of Article 3 of the Arbitration Law, the District Court is not authorized to adjudicate the dispute.

Under Article 8 of the Arbitration Law, the petition for arbitration is made in writing and contains complete information such as the name and address of the Petitioner and Petitionee; reference of the arbitration clause that applies to the agreement; the disputed agreement; the basis of the claim; the amount demanded (if any); the desired dispute resolution method; and submission of the desired number of arbitrators.

The final decision is stipulated no later than 30 days after the trial was closed. 

  1. Suspension of Payment Obligations (SOP) in the Commercial Court

Debtor’s debts that arise can also be settled through the mechanism of Suspension of Payment Obligations (SOP) at the Commercial Court which is subject to the provisions of Law Number 37 of 2004 on Bankruptcy and Suspension of Payment Obligations (“Law on Bankruptcy and SOP”).

Under Article 222 paragraph (1) of the Law on Bankruptcy and SOP, SOP petition is submitted by a creditor against a debtor who has at least 2 (two) creditors. Then under Article 222 paragraph (3) of the Law on Bankruptcy and SOP, the creditor can predict that the debtor cannot continue paying debts that are due.

Under Article 224 of the Law on Bankruptcy and SOP, SOP petition is submitted by a creditor and his/her advocate, so that SOP petition cannot be submitted alone by a creditor.

The court authorized to complete and examine a SOP petition is the commercial court that covers the jurisdiction in which the debtor domiciles, as stipulated in Article 3 of the Law on Bankruptcy and SOP.

Then, the Commercial Court that examines the SOP petition is obliged to decide on the petition within 20 (twenty) days from the date the petition was registered with the commercial court.

In debt settlement through this forum, there are no legal remedies for court decisions, so that in the case of a court decision rejecting the SOP petition, the creditor may resubmit the SOP petition against the debtor.

  1. Small Claim Civil Court

Under Article 3 paragraph (1) of the SC Reg on Small Claims, the amount of debts to be settled through this forum is a maximum of Rp500,000,000.00 (five hundred million rupiah).

Under Article 4 paragraph (2) of the SC Reg on Small Claims, this simple claim is filed at the court jurisdiction in which the debtor domiciles. However, it should be noted that under Article 4 paragraph (3) of the SC Reg on Small Claims, a creditor and a debtor must be in the same jurisdiction of the court, if the creditor has a different jurisdiction, the creditor may appoint a proxy who has the same jurisdiction as the debtor to file a small claim, as referred to in Article 4 paragraph (3a) of the SC Reg on Small Claims.

Under Article 5 paragraph (3) of the SC Reg on Small Claims, the examination and settlement process through this forum is carried out within 25 (twenty-five) days from the day of the first hearing. The legal remedies that can be filed against this decision are only objections as stated in Article 21 of the SC Reg on Small Claims.

To minimize the occurrence of legal violations in the debt collection process so that there is a large enough potential for debt collection cases to be brought to court, currently many companies in Indonesia prefer to use the services of professional lawyers rather than debt collector companies. 


1 https://www.cnbcindonesia.com/mymoney/20230222152731-72-416055/diperlakukan-kasar-oleh-debt-collector-tiru-clara-shinta, accessed on 25 March 2023.

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Ardhiyasa Suratman
Ardhiyasa Suratman
Managing Partner

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