When debt collectors maltreat you

Question: I will not deny it.  I am past due with a lot of debts. But it is not like I willed to renege on my obligations. My family members’ health circumstances compelled me to raise money.  When my own resources got depleted, I resorted to borrowing. Before I knew it, I had borrowed beyond my capacity to repay.  But does my financial situation give license to debt collectors to be so offensive to me whenever they come calling? —asked at “Ask a friend, ask Efren” free service available at www.personalfinance.ph and Facebook.

Answer:  You are not alone. Our EnRich™ Getting Out of Debt (GOOD) program has come across scores of people who did not intend to over-borrow and who are now being harassed, to say the least, by debt collectors.  In one instance, the pestering calls of the debt collector to the human resources head of our client’s employer led to the firing of that client. And when our client told the collector what he had done, he simply laughed it off and said he would do the same to his wife.

Wow! How could anyone be so cruel?  The debt was a financial transaction.  It was about unpaid credit card balances that were turned over to a collection agency.  The collection agency entered a business transaction.  Why are they then making it personal?

Bangko Sentral ng Pilipinas (BSP) Circular 454 specifically states that banks, subsidiary/affiliate credit card companies, collection agencies, counsels and other agents cannot engage in unfair collection practices. BSP Circular 454 goes on to identify the following acts as unfair collection practices: (quoted verbatim)

a) the use or threat of violence or other criminal means to harm the physical person, reputation, or property of any person;
b) the use of obscenities, insults, or profane language which amount to a criminal act or offense under applicable laws;
c) disclosure of the names of credit cardholders who allegedly refuse to pay debts, except as allowed under Subsec. X320.9 and 4301N.9;
d) threat to take any action that cannot legally be taken;
e) 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;
f) any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a cardholder; and
g) 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 those times were the only reasonable or convenient opportunities for contact.

There is a two-pronged strategy in addressing the rudeness of debt collectors. One is to report them to the Financial Consumer Protection Department of the BSP (i.e. email [email protected] or call 632-708-7087). Be sure to document all communications with your debt collectors including text messages and e-mails.  If you can, record your conversation with their consent.

The other is to come up with a credible and holistic repayment program to address your debt not just with one creditor but with all of them.

(Efren Ll. Cruz is a registered financial planner of RFP Philippines, personal finance coach, seasoned investment adviser and bestselling author. Questions about the article may be sent by SMS to 0917-505-0709 or emailed to [email protected]. To learn more about personal financial planning, attend 58th RFP Program on Nov. 5- Dec. 10. For more details, inquire at [email protected] or text at 0917-9689774.)