Lop Buri Governor Thanakom Jongjira, accompanied by the provincial police chief and a senior military officer, yesterday negotiated with the loan shark on behalf of Sangvien Raksapetch, 52, now in hospital with serious burns.
Her condition is now stable but it remains unclear whether she will ever recover fully.
"She has burns over half of her body. At this point, we can't say whether all her organs will function normally after the wounds heal," Dr Ponlert Phanthanakul of Vajira Hospital said yesterday.
He said the medical team, for example, would have to check her eyesight and other bodily functions further.
Sangvien poured fuel over herself and set it ablaze with a lighter during her visit to a government call centre that responds to people's complaints.
The centre is just across from Government House in Bangkok.
Hailing from Lop Buri province, Sangvien had told several officials that as she was illiterate, she ended up signing on to a Bt1.5-million (S$59,000) debt when in fact she had borrowed only about Bt400,000.
Help pours in
The call centre's officials said Sangvien was talking to an assistant district chief of her home town over the phone inside the centre when she suddenly set herself on fire.
Her tragic case made headlines, and various agencies have rushed to help her.
Thanakom yesterday vowed to ensure Sangvien's debt was written off once she was released from hospital. He said the loan shark had agreed to cancel the debts so as to allow her to recuperate without worry.
"The moneylenders say they will count this as merit-making," Thanakom said after talking to the lenders for more than an hour.
PM's Office Minister ML Panadda Diskul disclosed that Prime Minister General Prayut Chan-Ocha, who is now in Italy, had also inquired about Sangvien's condition.
Panadda said out-of-system debt was the most widely reported problem at the government's call centres and the Interior Ministry's Damrongdhama centres.
"We are trying to help," he said.
Meanwhile, National Legislative Assembly member Somchai Sawaengkarn said the Debt Collection Bill was being prepared in a way that would cover loans both in and outside the system.
"We will ensure justice to both moneylenders and borrowers," he said.
Bank of Thailand Governor Prasarn Trairatvorakul also expressed concern at the "2014 BOT Symposium" held yesterday over the problem of loan-sharking, which had resulted in high household debts. He said the problem needed to be resolved at the core through job creation and improvement of wealth distribution.
"Measures such as lower interest rates and microfinance can improve borrowers' ability to repay their debt only in the short term," he said.
People should be provided with knowledge on savings and financial management, he added.