Philippine Fair Debt Collection Practices Act
This article is posted under General Information, Personal Finance.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.
To receive more information like this in the future, please subscribe to Ready To Be Rich.
———
Photo courtesy of luba ma
What To Read Next
What Happens If I Don’t Pay My Credit Card Debts?What will happen if you don’t pay your credit card debts? Will you go to jail because of it? These and a lot of other questions about credit cards have been answered below, courtesy of a credit card officer which I had the opportunity to interview. Due to the sensitivity of the topic, the credit card officer,...
The Bad Credit Hotel Online Game
Are you suffering from too much debt? If so, then maybe you need to spend a night at the Bad Credit Hotel. This online game was commissioned by the U.S. Treasury and the Advertising Council in America. It hopes to teach young people about responsible credit card use and educate them regarding debt management and basic personal...
What To Do When Your Parents Are In Debt Trouble
As a child, most of us believed that our parents are perfect. But as we grow older and become more independent, we often realize that our parents are just like any one who would sometimes make bad choices and commit mistakes. Such is the realization of a friend who confided with me one night about the enormous...
Hi, my name is Fitz and this is my blog on personal finance.
Naku, kelangan ko nang sindakin ang mga may utang sa akin habang puwede pa. Hehehe…
Hope this bill will become a reality.
i was wandering if you might have a knowledge about bouncing checks(B22).. i have this friend who got loans which she issued multiple PDC’s for like 3 banks, because she needs it for hospitalization of her mother, whose suffering from cancer. well she used to pay it on time, but as her mom conditions worsen, she failed now to pay it (like 4months pass due). and she was too afraid that she might be sent behind bars for these PDC’s. I wanted to help my friend, she is so paranoid now, dame na kase tumatawag sa kanya, kakasuhan daw siya sa higher court, for intentionally not paying and issuing bounced checks. hope you could help me with this. thanks
Do debt collection agencies need to have a license to operate in the Philippines??
Hi jared. Debt Collection Agencies operate as a business, thus, they need a license to operate in the country.
I don’t know about other countries but these guys helped me a lot with debt collectors and i think they are expanding to other countries. http://cpinstituteonline.org.
Fitz Salamat Malaking Tulong itong webpage mo.My mom just passed away after two months battling with lung cancer.The expenses at the hospital and the funeral left us in debt.Now I’m being hounded by http://www.cibi.net.ph/home.asp# for my credit card bill.I would have wanted to explain my side, but the lady collector was so rude,I didnt bother.When I asked her not to call until she was in a better mood,she rang again and yelled “magnanakaw!”(thief!).Minsan hindi na sila maka tao.Anyway as far as I know,nobody goes to jail for being behind on your credit card bills and bouncing checks.
oh really? what will happen to those who have overdue acount of credit cards if they won’t pay their overdue acount?
Hi Nivz, as far as I know, if you don’t pay your overdue account, the worst thing that could happen is that you’ll destroy your credit history and will find it hard to leverage financially.
hi, i just like to ask something. i have unpaid bills (creditcard) and of course i never wanted for this to happen just that i had too much obligations at home that i dont have enough cash for my own expenses. now, the collector (hired or working for the bank) of course kept calling me in the office. but the person was very rude. he would leave badwords and threats in my voicemailbox. it’s very rude and embarrasses me in the office. is there anything i can do to protect my self? i know i had to pay my bills but i dont think i deserve that kind of treatment and the threat that he will have me kicked out of the office really bothers me. i hope comeone can give me an advise. thanks!
Just pay you bills or call the creditor and make arrangements to pay your bills. Sell all of your valuables to pay your bills.
And from now on, don’t use credit cards. Pay cash. Obviously you are not responsible enough to have credit.
Lastly, don’t leave the country to escape your debt. You are just compounding the issue for your relatives in the Phils.
A month back, someone tried to harrass me sa ofc and they identified themselves as police. Our office personnel was smart enough to call the headquarters they represent at nalaman na wala daw names na ganun na ngeexist dun. Afterwards they did not call anymore. I was just surprised the other day kase some “policemen” daw ang ngpunta sa house namin looking for me and gave a fiscal’s name and number coarsely written on a piece of paper.Yun lng. I dont even know if their visit is legal and I dont know if they are indeed police or mga ngpapanggap lng para manakot. They didnt even leave any legal document for me to know what the visit is all about. I really dont like it coz its scary and humiliating. Is that legal? What else can I do to stop them from coming to my home?
Hello. Naging very helpful po ang topic na ito, lalo na sa mga CC users na kagaya ko. I wonder kase kung ano ang mangyayari sa akin if sakaling diko na kayang bayaran ang mga CC bills ko. Alam kong mangungulit sila para maningil. Pero hanggang kelan? darating pa ba sa point na pati employer ko ay kokontakin nila? Nakakahiya nga at nakakatakot kung ganun. At sa mga banks, ano po ang nangyayari kung sakaling ‘dina talaga sila nababayaran? Wala po ba silang budget para sa mga ganyang cases? idedeclare nilang loss?
Don’t let these turds intimidate you – they’re just using every tactic in the book to make you pay up.
Some things you should know:
1. No one goes to jail because of bad debt. Period. Unless of course there are cheques involved, then that makes things a bit complicated. The point here is that they can’t force you to pay up if you really have no means of doing so.
2. Credit card issuers have what they call collection “buckets” – buckets represent the number of months a cardmember is delinquent. When your delinquency reaches the last bucket, the bank writes off or “charges off” your debt as an operational loss and they “sell” your account to a 3rd party collections agency. How does that work?
For example, your original balance is 100,000.00. We all know that credit card issuers make a profit from the interest, penalties and other fees that they slap onto the cardmember. When they charge-off an account, they sell your original 100,000.00-peso debt to a collections agency. So the bank is able to get back the amount they loaned you – it’s just that they didn’t profit from it, which is why it’s considered a loss.
So how does the collections agency make a profit?
They will continue collecting the total amount you owe the bank – which includes all the interest and penalties accrued from being unpaid over time. So your Php 100,000.00 debt plus interest and penalties, would make your total balance amount to, say, Php 150,000.00. If they are able to successfully collect from you, then they just earned themselves Php 50,000.00.
The rude bastards who harrass you are, more often than not, the employees of the collection agency and not the bank.
3. Threats of having the police or baranggay tanods arrest you is just plain B.S. – if ever someone does show up, it’s just one of those retard collectors playing pretend (you gotta give them props though for making an effort for being in character and memorizing their lines – seriously, these guys could get jobs as extras na goons for some low-budget action film here).
3. A law firm or Atty. Blah Blah calls you and threatens to take you to court because of your unpaid debt. Right. Again, it’s just the same collectors, only this time, they’re playing a different character.
Besides, don’t you notice that most of these idiots have really bad grammar? I mean, seriously, if you really are a lawyer, shouldn’t you at least be able to speak decent English?
On the flipside, though, you should also realize that these guys get paid by the number of debtors they successfully collect from – so think: rudeness = takot sa gutom.
But still, that does not justify their inbred behavior.
So the next time someone harrasses you, and says things like what that jackass Ontime said above, don’t cower into your little corner. Talk to them calmly and politely. If they’re still rude and abrasive, feel free to yell back, cuss at them or simply hang up.
Just because you owe money that you’re unable to pay doesn’t mean you are devoid of your rights as a consumer.
Thank you so much Senator Santiago for protecting the rights of consumers and debtors. In our case (officemates) credit cards simply arrive in the office with a note saying “treat this as cash”…of course, who can resist such a ploy given our minimal monthly income?
These credit card collection agencies are profiting at the expense of financially hard-up Filipinos! We hope their immoral practices will soon end.
Thank you.
to ex-collector, you are an angel from above!!!words are not enough to express the feelings i have right now..because someone just called me up 30 minutes ago regarding my unpaid credit card bills. just like anybody else, i do not have intentions of becoming a criminal because of this…but honestly, i am really afraid…to my kababayan sen.defensor santiago, cheers to you!!! sana nga this bill will be finally be approved…to protect Filipinos who’s earnings not even sufficient due to economic reasons…yun bang tipo ng masipag naman mag trabaho pero di maganda ang kompanya at dahil dito nag tyatyaga na lang kaysa mapabilang sa high percentage of unemployed dito sa pinas…
one more question…will this in any way has an effect if ever my family and i will process papers to migrate to canada in the next 2-3 years? i have my passport now already…
to all the people na nag share ng info, thnx a lot…but i just want to know if what will happen if may involve na bouncing checks??? i have a loan in a bank payable for 3 yrs, i had no probs in paying for the first year but something happened to my dad because he had cancer and because of that i wasn’t able to pay it anymore..I have 3 CC’s as well, good payer kc ako noon so banks will just send me a CC sa office w/o any application…hindi na ako nakabayad sa lahat ng mga utang ko sa mga banks coz of high interest rates/penalties and other charges… and there was one time a law firm contacted my aunt saying that they will put my case on a higher court if i won’t pay…and the worst thing is, I lost my job…I’m planning to get a passport para mag work abroad, is there any chance that I won’t get a passport for bad credit history????and if i’ll go to jail because of bouncing checks???
@heather101, this is just what I know and may not be correct but I believe that having a bad credit history doesn’t greatly affect your chances of getting a passport so you’re fine on that aspect. However, issuing bouncing checks can be turned into a criminal offense and yes, you can go to jail.
dis january nangailangan aq ng malaking halaga kc may babayaran aq n utang…lumapit aq sa kaibigan q..meron silang kinkuhanan n nagpapautang ng 5 6..inissuehan aq ng cheke n P30,000 dated last jan 24..ang usapan namin ay makikiride lang cla sa uutangin q..kaso sa dahilang kinailangan q lahat ng pera d q cla nabigyan..dun n cmula ang pang haharass nila to d point n tinatawagan n nla aq sa ofis at kinakausap ang mga boss q…dinala p aq sa presinto last friday para magpablotter..pinuwersa nya aq n magbigay ng promisori note..para matapos nalang ang usapan pumayag aq sa una nilang gusto n ibigay q ang 15000 last sat…kaso..ung inaasahan q n pera ay d dumating kaya 4000 lang ang naibigay q…tnxt q cla kahapon n magkita kami sa pinagblotteran sa akin para makagawa aq ng promisori note uli…pinipilit q n mabayaran kaso talagang nahihirapan aq n makahagilap ng pera sa ngaun…ang sv nila ay pumunta n cla sa presinto dahil hindi q tinupad ang pangako q na maibigay ang 15,000 nung sabado…natatakot aq n iskandaluhin uli nila aq dito sa opisina…willing aq magbayad kaso hindi q kaya ang gusto nila n agad agad ay ibigay q ang pera…panu po ang gagawin q…tnx…
Thanks so much Fitz and ex-collector for sharing your ideas. you helped us a lot.
Just wanna ask btw, if i wanna payoff credit card debts but account was already sold to some b.s. 3rd party agency, is it still better to go directly to the bank i owed instead of the agency? im just not comfortable dealing with those crocs. thanks again.
@bubbles
I’d recommend that you go directly to the bank, if you can contact their credit collection office, the better.
Then ask them to give you the exact amount of debt you owe and pay the bank the amount directly.
The bank can take care of the collection agency commission.
Hi, Mr. Fritz.
I have a credit card debt. I recently lost my job with two months back pay to collect pa. The collecting agency wanted me to pay the discounted amount of 16,000 (original debt 24k). I was only able to raise 2000. I thought I would be receiving my back pay and said that I’ll try to meet the 02/26 deadline for the 16K at the same time asked for an extension. Unfortunately, I didn’t get to collect. What should I do? Will I be facing legal action next?
Thanks.
@Gretchen
The short answer is no. Please read this article for more information: What Happens If I Don’t Pay My Credit Card Debts
Sana me relevant tanong ko. Kung hindi paumanhin sa inyu. Yung DSL ko me unpaid na 7,000. tapos binigay sa collection Agent hinarass ako na magbayad ng 11000 tapos sabi ko la pa ko pambayad. Sabi dadalhin na raw nila sa korte ang issue at dadagdag sa babayaran ko ang attorneys fee. Isa ba to sa style nila na pangharass. Pwede pa ba ko dumiretso pa sa ISP company mgabayad ng talagang balance na 7,000. Me nakasuhan na ba sa delay na pagbayad ng service? Ako lng ba nakakaranas nito? =(. Thanks to you Mr Fritz and Senator Santiago.