Debt collectors on the loose

QUESTION: I am a frustrated father. I thought I raised my children well.  But I just learned one of them is heavy in debt and that collectors are running after him. I found this out as I happened to answer one of the calls of these debt collectors. My child could have asked for my help before his debt problem became too large.  But he keeps his problem to himself to this day. He does not know that I already know. How do I help him manage his debt problem?   (A query submitted to “Ask a friend, ask Efren” free service available at www.personalfinance.ph and Facebook)

Answer:  The reason it is called personal finance is because the subject matter is what it is—personal. It is taboo to openly talk about your financial problems because it is an admission of past errors.

People talk freely about the need to save, invest and even get insured and it is very easy to put a positive spin on these three topics. If we were to play the word association game, debt will immediately conjure negative thoughts and feelings.

People who are wallowing in debt tend to be secretive, not just because of the embarrassment but also because they are afraid of coming out in the open. The latter means they are more visible to collectors whom they successfully dodged in the past.

Stress can be high especially when debt collectors are pounding on your door but even delinquent borrowers have rights.

The Bangko Sentral ng Pilipinas (BSP) Circular 454 states as far as credit card receivables are concerned, “banks, bank subsidiary/affiliate credit card companies, collection agencies, counsels and other agents may resort to all reasonable and legally permissible means to collect amounts due them under a credit card agreement.”

However, such entities must also observe good faith and reasonable conduct and avoid engaging in unscrupulous or untoward acts. The following are examples of such acts:

• the use or threat of violence or other criminal means to harm the physical person, reputation, or property of any person

• the use of obscenities, insults, or profane language which amount to a criminal act or offense under applicable laws

• disclosure of the names of credit cardholders who allegedly refuse to pay debts, except as allowed under pertinent sections of the BSP’s manual of regulations on banks and non-bank financial intermediaries

• threat to take any action that cannot legally be taken

• communicating or threat to communicate to any person credit information which is known to be false, including failure to communicate that a debt is being disputed

• any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a cardholder

• making contact at unreasonable/inconvenient times or hours which shall be defined as contact before 6 a.m. or after 10 p.m., unless the account is past due for more than 60 days or the cardholder has given express permission or said times are the only reasonable or convenient opportunities for contact

There is no need for people with past due debts to suffer alone.  In fact, there is no need to suffer at all.

Suffering exists because borrowers run away from the very people who can help them, the lenders.  Lenders have hearts, too, and they are willing to restructure past due debts provided the borrower cooperates.

Since your child is keeping his debt problems to himself, you or his true friends should give him the foregoing advice:

Getting out of debt is one thing, but staying out of debt is another.  This is an area where your child may also need assistance through a “staying out of debt buddy.” This buddy must help him monitor periodically if he is following his debt repayment schedule by staying within budget.

When your child becomes a master of his budget, he will be able to level up to the necessary activities of protecting his downside through life insurance and boosting his finances through investing.

After all, personal finance is nothing more than cash, debt, risk and wealth management, in that particular sequence, or what we call the CD-RW of personal finance for easy recall.  It is an old technology, but it still works wonders.

If you want to know more about managing debt, check out our website at www.personalfinance.ph for free tools you can use. You can also check out our EnRich™ Getting Out of Debt or GOOD program at www.personalfinance.ph/good.html.

(Efren Ll. Cruz is a registered financial planner of RFP Philippines, personal finance coach, seasoned investment adviser and best-selling author. Questions about the article may be sent by SMS to 0917-505-0709 or e-mailed to [email protected]. To learn more about personal financial planning, attend a free personal finance talk on July 12, 7 p.m. at PSE Center. For more details, inquire at [email protected] or text <name><email><RFP> at 0917-9689774.)