Alburo Law Offices

Proven ways in debt collection

Photo from Pexels | Nicola Barts

 

This article was originally published on October 7, 2017 and has been updated to reflect recent legal developments.

The following post does not create a lawyer-client relationship between Alburo Alburo and Associates Law Offices (or any of its lawyers) and the reader. It is still best for you to engage the services of a lawyer or you may directly contact and consult Alburo Alburo and Associates Law Offices to address your specific legal concerns, if there is any.

Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.

 

AT A GLANCE:

No business can survive without sufficient funds, as every action done in its operations generally has corresponding costs attached to it. When it comes to finances, however, one of the most common challenges faced by many businesses is the difficulty of collecting from their debtors the amounts owed to them. So, how is debt collection being carried out?

 

Pressuring debtors to obtain payment

Pressure may be employed, but only through legitimate means, such as filing of legal action, or availment of other legal remedies to collect the amount due. Resort to harassment in collecting from the debtor should be avoided, as this may enable the debtor to turn the table against the creditor who, because of his bullying, would just expose himself to civil liability for damages, and even criminal liability for coercion. 

 

Some examples of such bullying would be calling debtors during very inconvenient hours (e.g. between 10:00 PM and 6:00 AM); employment of threats; misrepresenting oneself as lawyers, police officers, or other government authorities to intimidate the debtor; making false statements about an impending punishment in connection with a pending case where no case is actually pending; contacting the debtor’s friends, family, neighbors, and workmates, and discussing with them the details of the debtor’s indebtedness; and threatening to deposit post-dated checks prematurely.

 

Legal remedies in collecting unpaid debt

 

Creditors who are having problems collecting from their debtors may very well resort to the following legal remedies:

 

  1. To file an action for collection of sum of money before the court.
  2. In case the debt is secured by a mortgage, the creditor may choose either to file an ordinary action for collection, or he may have the mortgage foreclosed. 
  3. In case there is a check issued, which bounced, the offended party may file a complaint for violation of the Anti-Bouncing Checks Law. This is a criminal action, and therefore imprisonment is among the possible consequences upon conviction. 

 

Civil action for collection of sum of money

 

If the creditor opts to file an action for collection of sum of money, all that the creditor needs to establish are the existence of a transaction for which the debtor became indebted (which may be a loan, or any dealings that create obligations such as sale concerning unpaid purchase price, or lease concerning rentals), the amount of money owed by the debtor, the fact that the obligation is already due and demandable, and that a demand had been made by the creditor upon the debtor. 

 

Please take note, that if the debt does not exceed PhP1,000,000.00, inclusive of interest and costs, the creditor may file his claim before the Small Claims Court. Since the amount of the claim is relatively small and the relief prayed for is solely for payment or reimbursement of sum of money, it is the court’s policy in small claims proceedings not to keep these cases from dragging for long periods before finally being decided. Since the proceedings must be speedy, inexpensive, and informal, the Small Claims Procedure was made much more simple. 

 

Foreclosure of mortgage

 

Foreclosure is a necessary consequence of non-payment of mortgage indebtedness. In a real estate mortgage, when the principal obligation is not paid when due, the mortgagee-creditor has the right to foreclose the mortgage and to have the property seized and sold for purposes of applying the proceeds to the payment of the obligation. (PNB v. Castalloy Technology Corporation, G.R. No. 178367, March 19, 2012).

 

Foreclosure of mortgage may be done through a complaint filed in court (judicial foreclosure). But the creditor, if authorized by the debtor in writing, may foreclose the mortgage constituted on the property without going to court (extrajudicial foreclosure). By virtue of his granted authority, the creditor may take possession of the mortgaged property, and sell it in a public auction, subject to the requirement that notice of the sale has to be given by posting the same for not less than 20 days in at least three public places in the city or municipality where the property is situated (Sec. 3 of R.A. No. 3135). If no such authority to sell was granted to the creditor, then he has no other alternative but to resort to judicial foreclosure.

 

Criminal action for violation of Anti-Bouncing Checks Law

 

The Anti-Bouncing Checks Law (B.P. Blg. 22) was passed for the specific purpose of addressing the problem of continued issuance and circulation of unfunded checks. B.P. Blg. 22 considers the mere act of issuing an unfunded check as a criminal offense. (Mitra v. People of the Philippines, G.R. No. 191404, July 5, 2010)

 

Violation of B.P. Blg. 22 shall be punished by imprisonment for 30 days to 1 year, or by a fine of double the amount of the check, but in no case it shall exceed PhP200,000.00. Both such fine and imprisonment may, however, be imposed at the discretion of the court.

 

With such remedies that every creditor may avail of against the defaulting debtor, all such creditor has to do is to choose what he believes is most effective and convenient based on the circumstances surrounding his credit. Always bear in mind that unless creditors take action, many debtors will simply ignore their obligations. Precious cash need not be unnecessarily sacrificed, especially by business entities, simply because of difficulty in collecting debts. This holds very true when the money to be collected could be used on other business activities that would bring more money in the pocket.

 

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Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries regarding legal services, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/ 09175772207/ 09778050020.

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314 responses to “Proven ways in debt collection”

  1. tony Avatar
    tony

    gud pm, may nakuha po akong ref s aeon credit 2 years to pay ang contract….pero dahil po s health related issues na nakaapekto s working capability ko nagkaproblema po ako financially….di ko na po kinaya hulugan ung monthly ng ref kaya tinatawagan nako ng aeon credit…..sinabihan ko po sila n ifull out na nila yung ref dahil di ko na kaya bayaran base on my current condition..ayaw po nila pumayag, sinabi p n kahit ipull out yung ref kailangan ko p din bayaran yung balanse which is mahirap para sa akin…. panay po tawag nila sa bahay madalas asawa ko nakakasagot, pati po sya tinatakot na kakasuhan (buntis po asawa ko 7months at maselan po pagbubuntis nya ayon s OB nya)…masyado po n stress asawa ko sa ginagawa nila….arogante at mayabang po yung tumatawag pero ako ang sinasabihan n bastos kausap (di naman po ako sumasagot ng masama sa kanila pinapakinggan ko lang sila)….hindi po ba pwede na i pull out na lang nila yung item n pininance nila…..parang sa motor po at bahay n isosoli pag di nabayaran tapos n usapan…..

    Reply
    1. Atty. Arjay Avatar
      Atty. Arjay

      Dear tony,

      I don’t think naka-mortgage yung ref mo sa creditor mo, hindi gaya ng mga sasakyan at bahay na naka-mortgage sa creditor kaya pwede talagang hatakin pag hindi makabayad ang debtor.

      And even assuming na naka-mortgage nga yang ref mo (just for the sake of discussion), option parin ng creditor: (1) kung ie-enforce ba nya yung payment ng utang mo by foreclosing the mortgage and selling the item in a public sale, or (2) kung ia-abandon na lang nya ang mortgage over the item at kolektahin na lang yung amount mula sayo.

      In short, walang legal obligation ang creditor mo na tanggapin ang item mula sayo. To the contrary, legal right pa nila ang pumili kung paano nila gustong i-enforce ang bayad sa utang mo.

      -Atty. Arjay

      Reply
  2. Atty. Arjay Avatar
    Atty. Arjay

    Dear Vincent Villanueva,

    Yung tanong mo kung pwede pa bang tawaran ang amount, yung creditor mo lang ang makakasagot nyan, dahil sa kanya ka may utang (and therefore, sya lang ang makakapag-bigay ng tawad sayo sa utang mo). Pwede mo din magamit ang mga remittance receipt, pero sana hindi mo pa nade-delete ang mga text, emails, or any written conversation ninyo kung saan malinaw na ipapakita na ang purpose ng pag-reremit mo sa kanya ng pera talagang para sa kabayaran ng loan mo. Dahil kung yung remittance receipts lang ang meron ka at hindi mo malinaw na maipapakita ang reason mo sa pagpapadala sa kanya ng pera, pwede nyang sabihin na iba ang reason mo kung bakit ka nagpapadala sa kanya (kaya kung nagamit man nya yung pera sa ibang bagay, hindi mo sya basta-basta mapapanagot).

    -Atty. Arjay

    Reply
  3. Ryan Avatar
    Ryan

    Hi sir, I need your assistance or advise. Yung partner ko kasi may hindi nabayaran na credit card (matagal na siyang di nabayaran). Kanina pumunta sa work nila yung collector and sabi na bayaran yung partial amount to close the account within 24hrs or else makikipag coordinate daw sa company ng partner ko. Tapos pinagawa siya ng promisory note. Dahil nacorner siya ng collector sa office nila, wala siyang nagawa at gumawa siya ng promisorry note stating na babayaran niya bukas yung amount with his signature. Ask ko lang kaylangan ba namin talaga bayaran agad agad? Kasi unfortunately wala kaming extra ngayon para pambayad dun. 😔 Totoo kaya na makakapagcoordinate sila company ng partner ko? May bearing ba yung promisory note na ginawa ng partner ko at pwede ba siyang kasuhan agad dahil di natupad yung promisorry note? Thank you.

    Reply
    1. Atty. Arjay Avatar
      Atty. Arjay

      Dear Ryan,

      Kung wala talaga kayong maipambayad, wala naman kayong magagawa. Pero pwede magamit ng creditor nya yung promissory note bilang patunay na may obligasyon yung partner mo, at ito ay nag-due na, kung mag-decide man sila na magdemanda ng collection case or small claims against your partner. Yung tungkol sa pakikipag-coordinate ng colletor sa company na pinapasukan nya, i-check mo muna kasi baka naman meron sa company na nag-guarantor para sa partner mo. If such is the case, pwede talagang gawin yun ng creditor mo. Pero kung purely panghaharass lang ang purpose kung bakit sila makikipag-coordinate sa company, then pwede nyong ireport yung creditor sa Financial Protection Consumer Department ng Banko Sentral ng Pilipinas.

      -Atty. Arjay

      Reply
  4. Joy Sebastian Avatar
    Joy Sebastian

    Gud pm Atty.
    Ako po ay my credit din po sa moola 3k po un 2800 lng nareciv q dhil my processing fee na po.ang nabayaran q lng po ay ang 500+ na prolongation fee for 1month 3 times na po…pero d q pa nbayaran ng buo kc po nging 5k na po.d q na kaya bayaran maari po ba akong kasuhan ni moola po .thank you Atty.

    Reply
    1. Atty. Arjay Avatar
      Atty. Arjay

      Dear Joy Sebastian,

      Maaari kang kasuhan ng creditor mo, pero sa tingin ko hindi nila yun gagawin para lang kumolekta ng P5,000 na pagkakautang.

      -Atty. Arjay

      Reply
  5. Tamilo cosmo Avatar
    Tamilo cosmo

    Hingi sano ako ng advice attorney..
    May lending po ako sa PJH 43K ang kinuha kong pera babayaran sa 1 taon
    Nag open po ako cheque account sa wealth bank at nag issue ako ng 12 na cheque dated from nov. 22, 2006 to oct. 22, 2007..nag problema po ako diko nabayaran on time hanggang natapos ang due date ko…yong balance ko nag interest na naman sila tapos compute ulit sila ng 1 taon..pero sa bank accont na nila mismo ako nagbayad..diko rin natapos bayaran kasi pinauwi na ako ng company ko sa qatar.
    Pagdating ko sa pinas dumeretso ako sa ofis nila para ipagbigay alam na napauwi ako. Nakiusap ako na wag nlng nila mag interest uli kasi nga nag apply pa ako. Sobrang laki narin na ibayad ko sa kanila nasa 80K+ na..sabi nila di pwd nakaalis ako pa saudi magbayad sana ako kaso lumaki na naman..nasa 30K+ na..ayon na bwesit na ako diko na binayaran..panay padala sila na letter sa akin every year..
    Ngaun kasohan daw nila ako ng BP. 22.
    pwd ba nila akong makasuhan ng BP. 22 di naman ginamit yong cheque..
    Salamat po..

    Reply
    1. Atty. Arjay Avatar
      Atty. Arjay

      Dear Tamilo Cosmo,

      Dahil sa 2006-2007 pa ang mga checks mo, hindi ka na nila pwedeng kasuhan ng BP 22 kasi dapat dineposit or pina-encash nila yung checks mo within 90 days from the date of the check, at kinasuhan ka dapat nila ng BP 22 sa prosecutor’s office within 4 years from the time na nag-bounce ang mga checks mo.

      -Atty. Arjay

      Reply
      1. Tamilo cosmo Avatar
        Tamilo cosmo

        Salamat po attorney..medyo nabawasan na yung kaba ko…

        Reply
  6. Ren Avatar
    Ren

    Gud morning atty. Mgttnong lng regarding s pg surrender ng ssakyan….6mnths n po kc akng hnd nkhulog due to my financial problem. Ngyn po meron n pong ngpunta smin n mga tga legal office n dw cla at gsto ivehicle inspection ang sskyan ngkataon po n nsa byahe ako at cnbi n ssundan nlng dw po ako. .ngyn po nlamn ko n pinablotter po ako s aming branggay at kng ano ano pa cnbi s mga kapitbhay nmin kesyo pti buhay ng mother at iba kong pamilya ndmay…at kng ano ano pa po ang tnxt skin n kesyo pwede dw nla akong ipapettion s lugar nmin pra mpaalis kmi ng pamilya ko kung saan dun ako pinanganak kya ngulat ako s mga txt n ntanggap ko, ng nkauwi ako around 6pm nlman ko n nndun pa s branggay at mya mya lng ay kumatok n s bhy at pingbuksan ko nmn pra papasukin kso ngrefuse cla n pumasok kinausap ko cla s lbas at tinanong kng bkit ano ano pa ang tntxt skn kesyo tintgo ko dw ang sskyan s totoo lng po ngyn plng nmn po my ngpunta s bhay at gnun pa ang inasta at sa glit ko po s mga tnxt skn cnbi ko n kunin n nla ang sskyan kng gsto nla pro ng tumanggi po cla n kunin ang sskyan cnbi ko dn n ng dhil s sskyan kya akong ipapettion n umalis ng lugar nmin….hanggang s ng usap kmi s barnggay nung gabi n un at cnbi ko n dn n issurender ko ang sskyan pra hnd gnyn kng ano anong mga txt ang nbbsa gling sknla humingi ako ng voluntary surrender bnigyan nla ako ng form n blanko at idrive dw papunta s opis nla ng gabi n un dhil 24/7 nmn dw cla hnd ako pumayag . Nkpg usap kmi hanggat cnbi ko n bbyran ko ang updating balance ko hanggng june 30 ayw nla pumayag gsto nla byran ko ang ng full payment ang sskyan s june 30 n ngkkhlga ng 2million dw which is 5 yrs to pay ang sskyn….ano po b ang tamg gwin atty.? Pno po ang tamang pgsurrender ng sskayn? At ano dn ang tamang gwin s mga tga legal office n kng ano anong pnnkot ang at slita ang mga cnbi smin ng pamilya ko.??? Please help po…thanks

    Reply
    1. Atty. Arjay Avatar
      Atty. Arjay

      Dear Ren,

      Kung gusto mong i-surrender ang sasakyan, magbigay ka sa kanila ng written authority na pwede na nila itong kuhanin. Pero option parin ng creditor mo kung kukuhanin nga nila ang sasakyan o hindi. Wala silang legal obligation na tanggapin ang sasakyang voluntarily sinu-surrender sa kanila, dahil pwede nilang i-abandon ang collateral (yung sasakyan) kung sa tingin nilang hindi nila ito maibebenta agad para maimpambayad ng buo sa outstanding loan amount mo. Kung i-abandon man nila ang collateral, option parin nila idemanda ka na lang ng collection case para kolektahin ang buong outstanding amount mula sayo kahit hindi na secured ng collateral ang loan.

      Kung text sila ng text ng mga kung anu-ano sayo, may dalawa kang options:

      1. Ireport mo yung collector/agency sa Financial Protection Consumer Department ng Banko Sentral
      2. Ignore mo na lang, dahil completely harmless ang mga text nila sayo (kahit pa nakaka-irita)

      -Atty. Arjay

      Reply
  7. Jing Santos Avatar
    Jing Santos

    Hello po Atty

    Inquire ko lang po after agreement ng settlement sa ctbc kala ko po konti na lang babayaran ko which is 14k plus na lan. I was surprised pag pnta ko sa bank me mga additional charges na naman from collection agency. Ng consult na din po ako sa BSP and ayun request ko kase direct sa bank na ko mg settle ayoko na mkipag usap sa mga agency na nagtthreat ng demanda or kung ano ano. Hassle lan din un pagtawag nila sa kawork ko and ssabhin na pag d ako ngbayad sila magbabayad e d naman sila co maker or me pinirmahan naging reference ko lang po sila.

    Thank you

    Reply
  8. King Roman Avatar
    King Roman

    Atty. May utang po ako sa Moola noong December pa na 3k. Tapos always sila tumatawag minsan sinasagot ko minsan hindi. Yung calls nila since December hanggang first week of June. Ang alam ko noong mid week of May tumawag sila na sinagot ko talaga tapos kailangan ko lang daw magbayad ng 6k. Tapos di ako nakabayad on that day so until now wala talaga akong nagawang payment,June 20 na. Tapos natatakot na po ako dahil di na sila tumatawag since pag start ng June. Willing naman akong i sette yun next month pag maka bonus however tanong ko po, kakasuhan ba nila ako?makakareceive ba ako ng sopina dahil dito?Magkakarecord ba ako sa NBI at magkaka-issue ako sa pagrenew ng NBI clearance ko? Ano po ang ibig sabihin ng i forward nila sa Credit Association ang info ko? At ano po ang magiging epekto nito sa akin? Sorry po sa maraming tanong pero importante lang po talaga.

    Reply
    1. Atty. Arjay Avatar
      Atty. Arjay

      Dear King Roman,

      1. Pwede ka nila kasuhan, pero hindi ko kayang sumagot para sa kanila kung talagang gagawin nila.

      2. Makakareceive ka lang ng subpoena (summons) kung kakasuhan ka nila.

      3. Hindi makakaapekto ang utang mo sa record mo sa NBI, at hindi din makakaapekto ito sa pagrenew mo ng clearance.

      4. Magkakaroon na ng access sa info mo ang lahat ng members ng Credit Association, including banks, lending companies, financial institutions, insurers, etc. Therefore, makikita nila na meron kang hindi magandang credit standing, at pwede itong maging dahilan para mahirapan ka nang umutang sa mga susunod na pagkakataon.

      -Atty. Arjay

      Reply
      1. King Roman Avatar
        King Roman

        Thank you po Atty. Napaka-helpful po nito.

        Reply
  9. maria jemielyn ann villalfores Avatar
    maria jemielyn ann villalfores

    hi, tatanong ko lang po, meron po kasi account sa aeon na hindi ko na nabayaran, kukuha po ako nbi clearance para sa trabaho, possible po kaya magkaron ako ng hint? or magreflect sa pangalan ko un, salamat po. worried po kasi ako.

    Reply
    1. Atty. Arjay Avatar
      Atty. Arjay

      Dear maria jemielyn ann villalfores,

      Hindi makakaapekto ang outstanding account mo sa pagkuha mo ng NBI clearance.

      -Atty. Arjay

      Reply
  10. Rose Mary Gumapac Avatar
    Rose Mary Gumapac

    gud day po atty.gusto ko lng po sna humingi ng tulong about s sitwasyon ko.about sa nkuha ko aplliances po sa under aeon credit..my buwan po kasi ako n di nbyran.3-4months po..pero ngaun june2018 p nmn mttpos ang knuha ko..kkpnganak klng dn po kasi nwaln dn po me work.at preho pa ngkskit ang parents ko.kya po ngipit po tlga me.ngbyad pa po ako lastmonth May2018 s 7-11..dun prin s account ko s aeon..mgbyad pa nmn sna ako ngaun june kso my ngtxt nga po sken ng gnito at tlga nkkstress po…
    this is fr aeon credit.scheduled of visit will serve to you.with coordination of your brgy officials that will be held on june20 2018.by our legal dept.representatives in line of your deceit case.pls secure your residents venue to avoid any untoward incidents.kindly coordinate with maam mariz at this cp no….etc.for details to avoid full extent of the law…
    totoo po kya yn.at ano ibg sbhin ngtxt ako at ntwag s no n yn dnmn nsgot.ngreply ng cno to at itxt kita mmya icheck kp maam..un lng po..sobra po nstress nko at d mktulog..ano po b dpat gwin ko slmat po sna sgutin mo po ako atty..godbless

    Reply
    1. Atty. Arjay Avatar
      Atty. Arjay

      Dear Rose Mary Gumapac,

      Tinatakot ka lang. Saka kahit naman puntahan ka talaga nila, wala din naman silang magagawa kung talagang wala kang maipambabayad. Based sa narration mo, wala din akong nakikitang basis para mag-file sila ng case based on “deceit”, dahil ang simple collection cases (or small claims cases, if less than P200,000) ay hindi naman criminal in nature.

      -Atty. Arjay

      Reply
      1. ms maria29 Avatar
        ms maria29

        maraming salamat po atty.arjay sa pagtugon..npakabuti niyo po at marami kau ntutulungan…tumawag ndn po ako sa aeon credit.regarding sa account ako.sbi nga po ay nka endorse na sa collection agency account ko at dun nlng me mkpgusap..aayusin ko po agd ang obligasyon ko na pgbbyad khit nplki ang utang ko.gnun po tlga yta..mhirap mn isipin na hlos doble o triple p ung nging presyo nung item na knuha ko kung iisipin e.wla n mggwa.wla nmn cguro tao gusto mgipit at di agd mkbyad ng utang.ntutunan ko nlng na hindi hindi npo ako kukuha ulit sa mga gnyan hulugan.npkhirap po kasi ng sitwasyon na gipitin kdn ng kapwa mo..dhil lng sa d pgbbyad agd.at tlga nkkstress po..maraming salmat po ulit..God Bless

        Reply

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