After The Constitutional Court Decision, Leasing Can Still Pull Vehicles From Bad Debtors

Motor vehicle illustration. (Photo: Usnplash)

JAKARTA - Leasing companies (multi) can still withdraw vehicles from debtors without going through the district court (PN) after the Constitutional Court (MK) ruling on Fiduciary. The Constitutional Court's decision clarifies Article 15 of Law (UU) No. 42 of 1999 concerning Default or Default between Debtors and Creditors.

"So, leasing can still pull vehicles from bad debtors who have previously been warned. With a note, the procedure has been carried out, "said Suwandi Wiratno, Chairman of the Indonesian Financial Services Association (APPI) at the Infobanktalknews Media Discussion in Jakarta, Monday, February 10.

According to Suwandi, currently there are conflicting opinions in the community after the Constitutional Court decision no. 18 / PUU-XVII / 2019 dated January 6, 2020 regarding Fiduciary. "It is as if fiduciary rights holders - leasing companies - may not carry out the execution by themselves, but must submit a request for execution to the district court," explained Suwandi.

In fact, he continued, this is not the case. Leasing companies can still withdraw vehicles from bad debtors without trial. "The Constitutional Court's decision cannot be read in bits and pieces. There is wide room to execute the bad debtor's guarantee, "he said.

In the Constitutional Court decision, it is stated that the leasing company can still carry out the execution without going through the court on the condition that the debtor acknowledges that there is default. As long as the fiduciary right or debtor has acknowledged the existence of "default" (default) and voluntarily surrendered the object which is the object of the fiduciary agreement, it becomes the full authority for the fiduciary recipient (creditor) to carry out the execution by himself (parate executie).

The Constitutional Court's decision also stated that regarding the expectation between the debtor and creditor, there must be an agreement beforehand to determine what kind of condition causes default. So, there is a previous agreement, how much is the loan, how much interest must be paid, including the period. Also the deadline for installment payments, what if you don't pay the installments, and how much is the fine.

Naughty Debtor

Even though after the Constitutional Court's decision on Fiduciary was still able to withdraw vehicles, the leasing party would be more careful in executing their fiduciary rights. Leasing also seems to be more selective in providing financing. Increasing down payment (DP) and tightening risk management are two possibilities that will be taken.

"This is done in order to avoid the traps of the Sontoloyo debtor, namely debtors who do not want to pay their debts, but still want to control their vehicles that have not been paid off," said Eko B. Suprianto, Chairman of the Infobank Institute.

So far, the leasing company business model has only relied on down payments, with the guarantee of a Motor Vehicle Ownership Book (BPKB) on behalf of the debtor. Imagine, only with a down payment of 10 percent or less, someone can already bring a vehicle, even though the BPKB is as collateral on behalf of the debtor. If there is default, the creditor will execute it as a fiduciary.

The problem arises when the debtor does not pay installments and is stuck. And, in practice, sometimes it involves a third party to tow the vehicle until excess occurs. However, sometimes this bad debtor is difficult to contact and is not cooperative and maintains his vehicle, even though he has neglected to pay his obligations. There is also a bad debtor asking for protection from "NGOs" so that they are not chased by third parties.

So far, leasing companies have classified four categories of bad debtors: (1) existing customers, units (motorbikes / cars) available; (2) the customer exists, the unit (motorbike / car) does not exist; (3) the customer does not exist, the unit (motorbike / car) is available; (4) there is no customer, the unit (motorbike / car) does not exist.

So, for categories 2, 3, and 4, of course, they cannot go through the court, even though these debtors are stuck and have not paid off, then cause losses to the leasing. This could be because a unit is lost, sold or pawned.

Even if forced to go through the court, in the short term the Constitutional Court should write to all courts related to fiduciary cases to issue a ruling as soon as possible.

“It doesn't go into overdrive, it's just a matter of motorbikes, which have sometimes been stripped down. Or, if necessary, amend the Fiduciary Law to suit these changed conditions. Or, it's better to be included in the omnibus law in the financial sector, ”Eko explained.

Support to the multi-finance industry is needed so that the business climate is full of certainty and is market friendly for the growth and development of the multi-finance industry which will have a positive impact on the economy.

"Remember, the multi industry does not stand alone. There are banking, automotive industry as well as supporting industrial sub-sectors which are not only a matter of Rp. 443 trillion which is the portfolio of the automotive sector, "said Eko.

Eko hopes that the financial industry, including finance companies, do not struggle alone. OJK as a regulator must provide support for the development of this multi. "At least, don't always blame the multi if there is a dispute between bad debtors and leasing," he said.

According to Eko, if there is a slowdown in the multi-finance industry, the automotive sector will also be affected and in the end it will disrupt economic growth. The automotive-related industries will be affected. The effect could also be on the banking sector, which has been providing credit.

The distribution of multi-finance company financing until June 2019 reached IDR 463.38 trillion or grew by around 4.47 percent from June 2018 which reached IDR 443.54 trillion.

As much as 22 percent of this was distributed to two-wheeled motorized vehicles and 41.6 percent for four-wheeled vehicles. The rest is channeled for other consumer goods, productive goods, infrastructure, services, and trade receivables.

For assets, the total assets of multi-finance companies in Indonesia grew by 2.77 percent in June 2019 (year on year / yoy). Total assets in June 2018 were recorded at IDR 499.3 trillion, while in June 2019 it was IDR 513.2 trillion. Non performing financing (NPF) of multi-finance companies is still maintained, namely in the range of 2.75-2.89 percent.