Examining Debt Collection Practices in Indonesia through the Lens of Human Rights

Notifications flood the phone screen from unknown numbers. What starts as reminders quickly turns into pressure: full names are mentioned, addresses hinted at, and threats extend to loved ones. Slowly, the boundary between private and public space collapses, transforming a personal debt into a terror that permeates every aspect of life. This phenomenon is not unfamiliar in Indonesia, where debt collection practices tinged with intimidation—from repeated calls and the dissemination of personal data to public humiliation—still frequently occur.

Data reinforces this picture. The Indonesian Consumer Foundation recorded that in 2025, the financial services sector received the most complaints, with 325 out of 1,011 reports, many related to collection methods. Meanwhile, the Financial Services Authority received 3,858 complaints in just half a year, many concerning collections by third parties that do not comply with regulations. From a legal perspective, default is a breach of contract in the civil realm, so its resolution should proceed through legal mechanisms, not pressure or intimidation outside of that.

However, practices in the field often deviate. Collection no longer serves merely as a reminder or an opportunity for negotiation but becomes pressure targeting the debtor’s sense of security, reputation, and social relations. As a result, the relationship between creditor and debtor becomes increasingly unequal, as if the obligation to pay justifies any means of collection.

Yet, while debt remains a responsibility that must be fulfilled, there are legal and humanitarian boundaries that must not be crossed. Criticism of these practices is not intended to justify default but to assert that collection must remain within a fair and humane corridor.

Default is not a criminal act

From the perspective of civil law, default is not intended as an entry point for pressure, let alone violence. Default is simply the failure to fulfil an obligation arising from an agreement.

Its consequences are regulated in the Civil Code, particularly Articles 1238 and 1243, in the form of performance fulfilment, compensation, or contract cancellation. Resolution is placed within legitimate legal mechanisms, not through punishment outside of that. This principle also affirms that Indonesian law does not recognise the criminalisation of failure to pay debt.

These provisions align with international human rights standards in the International Covenant on Civil and Political Rights, particularly Article 11, which prohibits imprisonment of a person solely for inability to fulfil a contractual obligation. Indonesia has acceded to these provisions through Law No. 12 of 2005, making them part of the national legal system.

However, debt collection practices in the field often stray from the legal corridor. Threats, intimidation, dissemination of personal data, and roadside seizures potentially enter the criminal realm, such as extortion or defamation under the Criminal Code.

In the financial services sector, protection is already available through Financial Services Authority Regulation No. 22 of 2023, which requires collections to be conducted in good faith without violence or actions that humiliate consumers.

In financing with collateral, Law No. 42 of 1999 on Fiduciary Security and Constitutional Court Decision No. 18/PUU-XVII/2019 affirm that execution cannot be carried out unilaterally without due legal procedures.

When collection practices exceed these limits, what is violated is not only positive law but also fundamental rights guaranteed under Law No. 39 of 1999 on Human Rights. The creditor’s right to collect is recognised, but the method of collection must be subject to the law, so as not to turn into an abuse of power that damages human dignity.

Unequal power relations

The issue of debt collection cannot be separated from the relationship between creditor and debtor, which is formally considered equal through contract. However, in practice, this equality is often illusory.

Debtors are frequently in a desperate position due to economic needs, limited literacy, or emergencies, while creditors—especially in the financial services sector—possess far greater resources, information, and legal instruments. This condition reflects an inequality of bargaining power, so that “agreements” do not always arise from genuine freedom.

This imbalance becomes even clearer when read through the lens of power relations. Power does not always appear in the form of direct coercion but works subtly through control and pressure. In collection practices, this is evident in patterns of repeated communication, social threats, and the creation of fear that psychologically oppresses. Debtor compliance is often formed not from legal awareness but from continuous pressure that is normalised.

From the consumer protection perspective, this situation indicates structural vulnerability, where debtors are in a vulnerable position against unfair practices. Therefore, modern law no longer relies solely on the principle of freedom of contract but also emphasises protection for the weaker party.

Without control over this power imbalance, collection risks shifting from rights fulfilment to a form of domination built on fear, not legitimate compliance.

Arranging human rights-based collection

The issue of debt collection cannot be resolved merely at the field practice level. Comprehensive improvements are needed—from upstream to downstream. From the design stage of