Analysis of Legal Protection Reconstruction for Debtors in Auction Execution of Mortgage Matters Based on Justice

Abstract

The execution of collateral foreclosure often results in both material and immaterial losses for debtors. The process of auctioning collateralized assets frequently leads to disagreements when debtors resist the auction's outcome, creating legal issues for the auction winners. Many disagreements arise when creditors conduct foreclosure auctions through the State Asset Management and Auction Service Office (without going through the courts, as regulated by Law No. 4 of 1996 on Mortgage Rights. This often leads to lawsuits for unlawful acts. The research aims to analyse the legal risks in credit transactions that lack justice-based principles, identify the weaknesses in legal protections for debtors and auction winners, and explore the reconstruction of legal protection regulations for debtors experiencing defaults. This study uses the constructivist paradigm, focusing on the legal rules governing foreclosure, utilizing a social-legal research approach. The research method involves normative legal studies, focusing on legal documents and literature. The findings reveal that current legal regulations, particularly Law No. 4 of 1996 on Mortgage Rights and related banking laws, fail to provide adequate legal protection for debtors in default, who often suffer losses due to the lack of balance between the rights and obligations of creditors and debtors. The study highlights the need for reconstructing legal norms to ensure fairness, emphasizing the imbalance in legal protections for debtors, including issues in the legal structure, substance, and culture. The research concludes that reconstructing justice-based legal protections is essential to create a balance between the rights of debtors and creditors, and this can be achieved through the revision of current legal frameworks to better address issues in cases of default.