Loan Contract

Generally, a loan agreement is secured by collateral. The form of collateral depends on the type of asset intended to be encumbranced. There are two types of asset which are movable asset and immovable asset.

Movable asset can be encumbranced by pledge or fiduciary and immovable asset which is land may be encumbranced by Tanggungan Right.

The creditor of secured loan agreement has a right to execute the collateral when the debtor breach the loan contract.

The loan agreement may also be secured by personal guarantee. Basically, the personal guarantor has a special right which is to demand that all debtor’s asset must be first confiscated and sold to fulfill debtor’s payment obligation before creditor confiscate and sold the personal guarantor’s asset, but the special right may be waived based on agreement between creditor and the personal guarantor.