If you’re mired in runaway consumer debt and don’t know how to pick yourself up, here’s something that should give some measure of comfort: you’re not alone.
There are more than five million credit cards out there with P116 billion charged to them based on end-December 2007 figures from the Bangko Sentral ng Pilipinas, the Philippine central bank, and P16.5 billion have fallen past due.
Assuming Filipinos are an android population with identical spending habits, we have an average of P23,219.60 charged to our credit cards. Are you below, or higher than the average?
Now, these are just credit cards. Filipinos owe P81.8 billion in auto loans and P4.4 billion of the amount turned past due in December 2007. In the Philippine setting, that’s probably just half of what is owed to five-six lenders, personal loans with banks, family members and friends.
See, you’re not alone 
The question is: is it possible to repair a bad credit record? That’s tricky, but not totally impossible, as I said in my article in the Philippine Daily Inquirer “Five steps to fix a bad credit record.” Here’s a summary
- Admit your mistakes. Hiding from creditors has never done anyone any good.
- Pay your debts. Ask for better terms, but understand that you will have to pay interest. We can’t really expect the bank to bend over backwards for us alone, can’t we?
- Save regularly in the same bank. The regularity over time will help you tell your turnaround story convincingly. Some banks allow you to borrow against that deposit, too.
- When you pay your loan fully, ask the bank to give you a certification.
- Live within your means.
I once got a phone call from a friend who said since her record is bad anyway, there’s no use paying for a car loan that has turned sour. That’s digging yourself deeper. Maybe bankers are a little bit boring and unforgiving, but some of them are actually not that bad. It can’t hurt to talk to one if you really are having a problem with paying your debt. Call them first; don’t wait for them to call you.
P.S. If you are a glutton for punishment and want to see my face and hear my voice after reading this blog, catch me later on Mornings@ANC. I will be guesting again on their program “Money Matters.” I think the program will start at 9am.
July 17th, 2008 at 12:00 pm
[...] we all know why misusing credit cards is a nightmare waiting to happen. Thoughts? [...]
July 14th, 2008 at 11:47 pm
I don’t have a credit card for over a year now. This is actually a self-imposed punishment after I got out of a run-away credit card debt last year.
Last Oct, I applied for a bank cash loan, for my wife’s upcoming delivery. I was denied for unknown reasons. I suspect, it was because of my bad credit score earlier that year. Serves me right, I guess.
When I went to the US last month, I was shocked. I was without a credit card and how pathetic I feel. I had to go the cashier to pay my gas, I had to count change in grocery tills, can’t rent a car under my name!
Now I want my credit card back, but I feel that I’d be declined again.
July 14th, 2008 at 12:17 pm
Been there done that (those who offer credit cards to just-got-work-and-still-naive ought to be shot hehe). I’ve learned my lessons well and have been responsible about my usage ever since.
July 14th, 2008 at 12:04 pm
Do i have to got through a lawyer to pay my credit card debts. they are asking for almost triple the amount i should be paying My credit limit is 54K and they said that i have to pay like 130K.
Is it better to go to the credit card company instead of a second party law firm?
July 14th, 2008 at 11:59 am
Ouch! I’m higher than average. It feels good to have so much company in my misery. hehehe.. It’s so hard to undone a bad financial habit but I’m already at number 2 and slowly but surely paying off every bank I owe.