Legal Literacy - Non-performing unsecured loans? Understand how to handle and execute them according to the Indonesian Civil Code

National Development and the Role of Banking

Sustainable national development to realize a just and prosperous society based on Pancasila and the 1945 Constitution requires harmony, alignment, and balance in the Trilogy of Development. In this context, economic development is closely related to the business activities of citizens, including small and medium enterprises (SMEs). Banking plays an important role in providing credit to support these businesses.

Unsecured Loans and Payment Obstacles

Unsecured loans are an attractive alternative for debtors, but the payment process is not always smooth. Banks experience obstacles and hindrances in the payment process of unsecured loans, which are caused by various factors. Therefore, effective handling of non-performing unsecured loans is necessary.

The execution of non-performing loans against unsecured loan agreements in banking is regulated in articles 1131 and 1132 of the Indonesian Civil Code. Article 1131 states that all debts, whether movable or immovable, existing or new, must be borne by the owner.

Article 1132 explains that all of the debtor's assets can be pledged by all persons responsible for the assets (creditors). The proceeds from the sale of these items will be distributed according to the size of each receivable, unless there is a reason for the receivable to be prioritized.

Non-Performing Loan Resolution Channels

Banks can evaluate the economic value of the assets and valuables of defaulting debtors. Non-performing loan execution can be carried out through two channels:

Administrative Channel:

  • Rescheduling: rescheduling of credit payments.
  • Reconditioning: improvement of credit terms.
  • Restructuring: credit restructuring.
  • Judicial institutions: referring to articles 1131 and 1132 of the Indonesian Civil Code.
  • Arbitration: dispute resolution through arbitration institutions.
  • Alternative dispute resolution bodies: dispute resolution through independent institutions outside the court.

Conclusion

The execution of non-performing unsecured loans in banking has a clear legal basis and can be carried out through various channels. Proper and effective handling is needed to minimize bank losses and help debtors fulfill their obligations.

Note:

  • This article is only a general overview and is not intended as legal advice.
  • It is advisable to consult with a legal expert to obtain appropriate information and solutions related to specific cases.