Parties in Home Ownership Credit Agreements

Oct 13, 2025 by wbrum.org 54 views

Understanding Home Ownership Credit (KPR) Agreements

Home Ownership Credit (KPR) is a facility provided by banks to individual customers to buy or repair houses. In Indonesia, bank credit activities are regulated by Law Number 10 of 1998, which is a change to Law Number 7 of 1992 concerning Banking. This law provides a framework for banks to operate and manage their credit activities, including the provision of KPR facilities. However, in practice, banks often face problems such as default from debtors, which can result in bad loans. In this context, this article will discuss a juridical review of the settlement of bad loans on the KPR agreement, with a focus on studies at the North Sumatra Bank Kabanjahe Branch.

Parties in Home Ownership Credit Agreements

In the KPR Agreement at the North Sumatra Bank Kabanjahe Branch, there are two main parties involved, namely the debtor and creditors. The debtor is the party who borrowed funds from the bank to buy or repair the house, while the creditor is the bank that provides the loan. Each party has rights and obligations that must be obeyed in accordance with the agreement in the credit agreement. The debtor has the right to use the loan for the intended purpose, while the creditor has the right to receive the loan amount plus interest. The debtor also has the obligation to repay the loan on time, while the creditor has the obligation to provide the loan and ensure that the debtor has the ability to repay it.

Causes of Bad Credit

The causes of bad loans in KPR at the North Sumatra Bank Kabanjahe Branch can be categorized into two factors, namely:

Internal Factors

The cause of the bank system itself, including the weak administrative system and credit supervision. If the bank does not have a good mechanism in evaluating credit feasibility, the risk of bad loans becomes higher. In addition, lack of accurate information regarding debtors can also cause wrong decisions in providing credit. For example, if the bank does not conduct thorough background checks on the debtor, it may not be aware of the debtor's financial situation or credit history. This can lead to the bank providing a loan to a debtor who is not capable of repaying it.

External Factors

Outside causes that can affect the ability of debtors in paying off credit. This includes the failure of the debtor business, which can be caused by various factors such as unstable economic conditions, as well as disaster that befell their debtors or business activities, such as natural disasters or economic crises. For example, if the debtor's business is affected by a natural disaster, it may not be able to repay the loan on time. Similarly, if the debtor's business is affected by an economic crisis, it may not be able to repay the loan on time.

How to Settle Bad Credit

Settlement of bad loans in KPR at the North Sumatra Bank Kabanjahe Branch can be done through two approaches:

Credit Saving through Negotiations

In this case, banks as creditors can negotiate with debtors to find solutions together. This can involve debt restructuring, changes in payment period, or interest adjustments. This approach aims to help the debtor to continue to fulfill its obligations without having to face a complicated legal process. For example, if the debtor is experiencing financial difficulties, the bank may agree to extend the payment period or reduce the interest rate.

Settlement through Legal Institutions

If negotiations do not produce results, banks can take legal steps through institutions such as the State Receivable Affairs Committee (PUPN) and the Directorate General of State Receivables and Auctions (DJPLN). This process includes taking more formal legal action to complete bad loans, which can include debtor asset auctions as guaranteed. For example, if the debtor is unable to repay the loan, the bank may take possession of the debtor's assets and sell them to recover the loan amount.

Conclusion

Settlement of bad loans in a mortgage agreement requires a good understanding of the rights and obligations of both parties and the causes of the problem. By understanding the factors that affect bad credit and implement the appropriate settlement ways, it is expected that banks can minimize the risk of losses and help the debtor to continue to meet their obligations. Through a wise approach, it is expected that the relationship between the bank and the debtor can be maintained well.

Recommendations

Based on the study, the following recommendations can be made:

Banks should conduct thorough background checks on debtors before providing loans.
Banks should have a good mechanism in evaluating credit feasibility to minimize the risk of bad loans.
Banks should negotiate with debtors to find solutions together before taking legal action.
Banks should take legal steps through institutions such as PUPN and DJPLN if negotiations do not produce results.

By implementing these recommendations, banks can minimize the risk of losses and help debtors to continue to meet their obligations.

Q1: What is Home Ownership Credit (KPR) and how does it work?

A1: Home Ownership Credit (KPR) is a facility provided by banks to individual customers to buy or repair houses. In Indonesia, bank credit activities are regulated by Law Number 10 of 1998, which is a change to Law Number 7 of 1992 concerning Banking. The KPR agreement involves two parties: the debtor (the borrower) and the creditor (the bank). The debtor borrows funds from the bank to buy or repair a house, while the creditor provides the loan and receives interest on it.

Q2: What are the causes of bad credit in KPR agreements?

A2: The causes of bad loans in KPR at the North Sumatra Bank Kabanjahe Branch can be categorized into two factors: internal factors and external factors. Internal factors include the weak administrative system and credit supervision, while external factors include the failure of the debtor business, which can be caused by various factors such as unstable economic conditions, as well as disaster that befell their debtors or business activities, such as natural disasters or economic crises.

Q3: How can banks settle bad credit in KPR agreements?

A3: Settlement of bad loans in KPR at the North Sumatra Bank Kabanjahe Branch can be done through two approaches: credit saving through negotiations and settlement through legal institutions. Credit saving through negotiations involves negotiating with debtors to find solutions together, such as debt restructuring, changes in payment period, or interest adjustments. Settlement through legal institutions involves taking more formal legal action to complete bad loans, which can include debtor asset auctions as guaranteed.

Q4: What are the benefits of settling bad credit in KPR agreements?

A4: Settling bad credit in KPR agreements can have several benefits, including minimizing the risk of losses for banks, helping debtors to continue to meet their obligations, and maintaining a good relationship between the bank and the debtor. By understanding the factors that affect bad credit and implementing the appropriate settlement ways, banks can minimize the risk of losses and help debtors to continue to meet their obligations.

Q5: What are the recommendations for banks to minimize the risk of bad credit in KPR agreements?

A5: Based on the study, the following recommendations can be made:

Banks should conduct thorough background checks on debtors before providing loans.
Banks should have a good mechanism in evaluating credit feasibility to minimize the risk of bad loans.
Banks should negotiate with debtors to find solutions together before taking legal action.
Banks should take legal steps through institutions such as PUPN and DJPLN if negotiations do not produce results.

By implementing these recommendations, banks can minimize the risk of losses and help debtors to continue to meet their obligations.

Q6: What are the implications of the study for the banking industry?

A6: The study has several implications for the banking industry, including the need for banks to conduct thorough background checks on debtors, have a good mechanism in evaluating credit feasibility, and negotiate with debtors to find solutions together. The study also highlights the importance of taking legal steps through institutions such as PUPN and DJPLN if negotiations do not produce results. By understanding the factors that affect bad credit and implementing the appropriate settlement ways, banks can minimize the risk of losses and help debtors to continue to meet their obligations.

Q7: What are the limitations of the study?

A7: The study has several limitations, including the fact that it is based on a case study of the North Sumatra Bank Kabanjahe Branch and may not be generalizable to other banks. Additionally, the study relies on secondary data and may not capture all the relevant factors that affect bad credit. Future studies should aim to overcome these limitations by conducting a larger-scale study and collecting primary data.

Q8: What are the future research directions?

A8: Future research directions include conducting a larger-scale study to generalize the findings of the study, collecting primary data to capture all the relevant factors that affect bad credit, and exploring the impact of other factors such as economic conditions and regulatory changes on bad credit. Additionally, future studies should aim to develop a more comprehensive framework for understanding and managing bad credit in KPR agreements.