BANGKOK: -- Thai debt collectors used to go about their business with an iron bar and leave their victims in need of medical care.

Now they rely on verbal rather than physical threats, and their business is booming as Thais become increasingly enamoured with credit cards.

Consumer debt, mostly through commercial banks, stood at 153.8 billion baht (4.2 billion US dollars) in the second quarter, up 7.2 percent from the first three months of the year, and part of a steady rise that has tracked the country's recovery from the 1997 financial crisis.

The number of credit cards also keeps rising, up some 14 percent from last year, while spending on plastic is also up nearly 18 percent, according to the Kasikorn Research Center, part of the KasikornBank Group.

The Bank of Thailand's deputy governor Krik Vanikkul says the debt levels don't worry authorities and that the growth rate is considered normal.

That could change if consumers stop making payments on their debt and the number of non-performing loans begins to rise.

The overeagerness of banks to extend questionable loans was a key factor in the 1997 crisis, which began in Thailand and roiled regional economies.

Structural problems within the banks have largely been cleaned up but as consumers have grown more willing to borrow, debt collectors have found themselves increasingly in demand.

In the past, Thai debt collectors were notorious for their cruelty.

Around three years ago, a woman in northeastern Thailand had her hand cut off after she failed to make good on her debts.

"We had to do whatever it took to force them to pay, otherwise our employers would not trust us," said one debt collector who used to work undergound but has since legitimized his business.

"If they can't pay, they shouldn't have borrowed," he told AFP on condition of anonymity.

Police say those tactics are no longer tolerated.

"They don't take cruel actions like that any more, it's a crime," police spokesman Ajiravid Subarnbhesaj said of the new wave of debt collectors.

The main reason is that both debtors and collectors have become more savvy about the rules of the game, said Piya Pong-a-cha, director for debt management services at JMT Network Services which runs Thailand's first nationwide collection system.

"We can't play the 'bad guy' role any more," he said.

In the past, just the threat of legal action was enough to scare debtors into paying up, he said.

Now debtors are more aware of their rights under the law and are quick to turn to the Office of the Consumer Protection Board if they feel they have been wronged.

Piya said the most effective way to collect on debts was by offering people more options to pay down their loans through smart marketing tactics.

Despite debt collectors having largely given up the strong-arm tactics, however, they still resort to psychological pressure.

But debtors are fighting back, using websites to offer tips on how to avoid repayment and to share their experiences.

"I received 20 faxes a day for three days straight," one woman said in a posting.

Only after the company where she works threatened to sue the collection agency for harassment did the faxes stop, she said.

Other postings urge debtors to turn to the courts to arbitrate a solution.

"You could ask to pay only the principal, or half of it. If they don't take the offer, you don't have to pay," read one posting.

Some offer less practical advice, like telling debtors to find an under-the-table job so that collection agencies can't use a social security number or tax receipts to track them down.

Piya said he expected Thais to slip even further into debt in coming years thanks to fierce competition among banks and other lenders to attract new customers.

"Even if the economy slows down, I believe the amount of debt will still grow," he said.

For his company, that means bigger business.

JMT Network collected on 2.4 billion baht in bad debts in 2003, and more than double that figure last year.

The firm has already collected on 10 billion baht in the first seven months of this year, he said.

--AFP 2006-10-26