Taming the debt collector
Question: How do I handle these debt collectors who know I have limits in what I can repay and yet try to squeeze out more from me through high pressure collection tactics?
Answer: They may not know it yet but some debt collectors may already be performing unfair debt collection practices, which are defined as: (quoted verbatim)
- the use or threat of use of violence or other criminal means to harm the physical person, reputation, or property of any person;
- the use of threats to take any action that cannot legally be taken;
- the use of obscenities, insults, or profane language the natural consequence of which is to abuse the borrower and/or which amounts to a criminal act or offense under applicable laws;
- disclosure or publication of the names and other personal information of borrowers who allegedly refuse to pay debts, except as may be allowed by pertinent laws and regulations;
- communicating or threatening to communicate to any person loan information, which is known, or which should be known, to be false, including the failure to communicate that the debt is being disputed, except as may be allowed by pertinent laws and regulations;
- the use of any false representation or deceptive means in the collection or attempt to collect any debt or to obtain information concerning a borrower;
- 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 15 days, or the borrower has given express consent that the said times are the only reasonable or convenient opportunities for contact. Such consent, which shall be evidenced by written, electronic or recorded means, maybe given prior to, during, or after the execution of the loan agreement; and
- notwithstanding the borrower’s consent, contacting the persons in the borrower’s contact list other than those who were named as guarantors or co-makers shall also constitute unfair debt collection practice.
If Bangko Sentral ng Pilipinas (BSP)-supervised institutions persistently threaten, insult or deceive you, you may report them to the BSP’s Financial Consumer Protection Department. You may also report harassment by lenders not covered by the BSP, like internet online lenders and other microfinance firms to the Securities and Exchange Commission (SEC) (details at https://youtu.be/gmjDpz_qXO8).
And if you feel that your personal data has been misused, maliciously disclosed, or improperly disposed, please check out this link on how to file a complaint: https://www.privacy.gov.ph/mechanics-for-complaints/#complain2. You may also report such data privacy violators to the following: National Bureau of Investigation – Cybercrime Division ([email protected]), Philippine National Police – Anti-Cybercrime Group ([email protected]).
Please note also that SEC Memorandum Circular No. 3, Series of 2022 (SEC MC 3), which took effect on March 3, 2022, provides the guidelines on the implementation of the BSP Circular No. 1133, Series of 2021 on the Ceiling/s of Interest Rates and Other Fees charged by Lending Companies, Financing Companies, and their Online Lending Platforms (OLPs).
The BSP circular prescribes the maximum interest rates and other fees charged by lending and financing companies, and their OLPs at 6 percent per month, or about 0.2 percent per day, and the effective interest rate (EIR) at 15 percent per month, or about 0.5 percent per day for loans which are unsecured, general-purpose loans that do not exceed the amount of P10,000 and with a loan tenor of up to four months.
The EIR is expressed as the rate that exactly discounts estimated future cash flows throughout the life of the loan to the net amount of loan proceeds. It includes the nominal interest rate along with other applicable fees and charges, such as processing fees, service fees, notarial fees, handling fees, and verification fees, among others. It excludes fees and penalties for late payment and nonpayment.
Also, lending and financing companies may only charge penalties of up to 5 percent per month for late payment or nonpayment on outstanding scheduled amounts due. And a total cost cap of 100 percent of the total amount borrowed—applying to all interest, other fees and charges, and penalties, regardless of the time the loan has been outstanding—is imposed.
Please know that debt collectors performing unfair debt collection practices want you to get angry and exasperated so that you will agree to their terms just to get it over with, even if it is beyond your capacity to comply. So, tell them calmly when they text, call, email or visit again that you will be reporting their illegal debt collection practices and that they will just get their copy of your complaint in the mail. Then politely say “good day” and pray for their enlightenment.
Filing for insolvency is a long, painful and also expensive process that can further drain your resources. There is even no guarantee that you will be able to resolve your debt problems. Insolvency filing should be your last resort.
And remember that even if you feel you are at the “Height Of PEssimism,” there is always HOPE especially if you let Him work through you and your creditors. INQ
Send questions via “Ask a Friend, Ask Efren” free service at www.personalfinance.ph, SMS, Viber, Twitter, LinkedIn, WhatsApp, Instagram, and Facebook.
Efren Ll. Cruz is a registered financial planner and director of RFP Philippines, seasoned investment adviser, bestselling author of personal finance books in the Philippines and a YAMAN Coach. To consult with a YAMAN Coach, email [email protected]. To learn more about personal financial planning, attend the 99th RFP Program this January 2023. To inquire, e-mail [email protected] or text 09176248110.
