Debts to illegal online lenders: to pay or not to pay? – Opinion

Yosea Iskandar (Jakarta Post)

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Jakarta ●
Tue, October 26, 2021

The recent police raids on the offices of illegal digital lenders, also known as illegal pinjol, show the firm position of the government against such operations. Much has been done to stamp out the crime, which targets victims online, including shutting down thousands of unregistered digital loan accounts and imposing a moratorium on fintech loan licenses.

A senior government official also said that due to the illegal nature of the illegal pinjol business model, existing money lending agreements with their borrowers can be cancelled. Departing from the usual advice to encourage borrowers to pay off debt quickly or try to negotiate a restructuring, he further suggested that borrowers should not repay their loans at illegal pinjol.

Unfortunately, not everyone can tell the difference between illegal and legal lenders. A lack of understanding can lead a borrower to make poor judgment and stop paying installments to a legitimate lender. It will cost the borrower more interest and penalties. Both parties will then have to spend more time and effort to resolve the dispute arising from the borrower’s unilateral action. Without clear guidelines and additional details, the suggestion to stop payments can pose a challenge to online lending activity.

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