Learning about the U.S. Fair Debt Collection Practices Act from playing the Bad Credit Hotel online game made me wonder if such laws also exist in the Philippines.

I know some people who have been harassed by credit card debt collectors and suffered a significant amount of humiliation from their family members and colleagues because of rude calls and letters from these agents.

These horror stories actually made some friends of mine paranoid about getting credit cards. This is sad because credit cards are great tools for financial leverage if you know how to use them wisely.

Anyway, my online search led me to the Philippine Senate website. Apparently, on July 4, 2007, during the 14th Philippine Congress, Senator Miriam Defensor Santiago introduced Senate Bill Number 1277 entitled “An Act Providing For Fair Debt Collection Practices and Requiring Debt Collectors To Observe Such Practices”.

In her explanatory note, she says:

There is abundant evidence of the widespread use of abusive, deceptive, and unfair debt collection practices by many creditors and debt collectors. Abusive debt collection practices have contributed to a number of unwarranted personal bankcruptcies, to marital instability, to loss of jobs, and to invasions of individual privacy. Existing laws are inadequate to protect borrowers. In fact, the borrowers’ only recourse is Article 287 of the Penal Code.

The purpose of this bill is to eliminate abusive debt collection practices by creditors and debt collectors for the following reasons: First, means, other than misrepresentation or other abusive debt collection practices are available for the effective collection of debts; second, to ensure that those creditors and debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged; and third, to provide an adequate legal remedy to consumers against abusive debt collection practices.

In case you’re wondering what Article 287 of the Philippine Revised Penal Code is, I also researched that and it states:

Art. 287. Light coercions. Any person who, by means of violence, shall seize anything belonging to his debtor for the purpose of applying the same to the payment of the debt, shall suffer the penalty of arresto mayor in its minimum period and a fine equivalent to the value of the thing, but in no case less than 75 pesos. Any other coercions or unjust vexations shall be punished by arresto menor or a fine ranging from 5 pesos to 200 pesos, or both.

In any case, if you’re interested in reading this Senate Bill, it is available for download as a PDF file on this page. I tried to fully understand what it says and from my point of view, here are some of the important things cited inside the bill:

• All debt collectors must fully identify himself or herself and state the institution he or she represents.
• Debt collectors cannot call during times when it is known to be inconvenient, which is initially assumed to be before 8 in the morning and after 9 in the evening,
• They cannot contact the consumer at work if the collector knows that the employer doesn’t approve of such calls.
• Debt collectors may not harass, verbally abuse or use profane language when communicating with the consumer
• They are also prohibitted from using false representation or identity, such as that of a lawyer or a police authority, to coerce the consumer into paying his or her debt
• Debt collectors may not solicit payment for fees other than which is legally owed by the consumer.
• They should also honor a written request from the consumer to stop further contact from them.

I think this law is a very important one. Unfortunately, this bill is still pending in the Legislative Committee on Banks, Financial Institutions and Currencies.

Please note that I have no legal background. If you think that I misinterpreted any part of the bill in this post or if you have any update or additional thoughts regarding this matter, then please share them by leaving a comment below. Thanks.

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Photo courtesy of luba ma