1. The Legal Basis (Article 1313 & 1320)
Debt is considered a contract or agreement between two parties. According to the law, once an agreement is made, it becomes “law” for those who made it. This means you are legally obligated to fulfill the terms you agreed upon (such as the repayment schedule and any interest).
2. Can You Go to Jail for Debt?
This is a very common concern. In Indonesia, the answer is No.
Human Rights Law: According to Article 19 paragraph 2 of Law No. 39 of 1999, no one can be sentenced to imprisonment based on the inability to fulfill an obligation arising from a civil agreement.
Civil vs. Criminal: Debt is a Civil (Perdata) matter, not a Criminal (Pidana) matter. You cannot be jailed just because you cannot pay your debt.
3. When Can It Become Criminal?
While you can’t be jailed for the debt itself, you could face criminal charges if there was fraud involved at the start. For example:
Using a fake identity to get the loan.
Giving a “bad check” (a check that bounces) intentionally.
Using collateral (like a vehicle or land certificate) that doesn’t actually belong to you.
In these cases, it could be reported as Penipuan (Fraud – Article 378 KUHP) or Penggelapan (Embezzlement – Article 372 KUHP).
4. Consequences of Not Paying (Default/Wanprestasi)
If a person fails to pay, the lender (creditor) can take several legal steps:
Somasi: A formal warning letter demanding payment.
Civil Lawsuit: The lender can sue in a District Court to demand repayment plus damages or interest.
Execution of Collateral: If the debt was secured (e.g., a mortgage or car loan), the lender has the right to seize and sell the asset to cover the debt.
SLIK OJK (Credit Score): In modern banking, failure to pay will result in a bad credit record, making it very difficult to get loans or credit cards in the future.
5. Legal Solution: Restructuring
If someone is struggling to pay, the law allows for Restructuring. This is a negotiation with the lender to:
Lower the interest rate.
Extend the repayment period.
Reduce the principal amount in some cases.
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