This email from a reader spoke of desperation:
I’ve seen your blog in Inquirer.net. And I am one of those people who is trying to fix my life. I’m an accountant, but seems like I am terrible in handling my finances. Last year was the worst year of my life. I incurred huge debt, credit cards & personal loans, due to wrong decisions that I made.
I am now haunted by my creditors. I defaulted in payments, but I am starting now to pay them one by one. Since I incurred loans in different banks and credit card companies, they are charging me huge interest and some are already threatening to sue me in court. I’m willing to pay them all, but I can’t give it in one payment. I want to go on with my life. I have a happy family and I don’t want them to be affected with my problem.
The only solution that I know is to get a single loan to repay all of my debt. But how? I already have a bad credit history. No bank would trust me again. – David (not his real name)
Chinkee Tan, author of “Till Debt Do Us Part” sent this reply:
You are one of the few thousands of Filipinos who are in a credit card trap. I have also counseled a woman in the past who had over 1.2 million in credit card debt from 16 credit card companies.
Allow me to share with you some practical things that helped my other clients to get out of debt.
1. Pay more than the minimum.
Bite the bullet. Paying the minimum only prolongs the agony. Besides, it’s precisely what the banks want you to do. The longer you take to repay the charges, the more interest they make, and the less cash you have in your pocket. Remember in paying off your debt, it is not in the amount that is more important it is in your willingness to pay.
2. Cash out your assets.
Let us look at your list of assets. Maybe you own jewelries, property or anything of value that you can sell. Sometimes we are too emotionally attached to the stuff we have it is so hard to dispose and let go. Maybe the practical question to ask is “Are the jewelries and properties earning more interest than what the credit card company and creditors are charging?” If the answer is ‘no’, then it is time to make the hard decision and sell them because you will generate more when you sell rather than keep your dead assets.
3. Talk to your family and friends.
Perhaps your family or friends could float you a loan. Unless they are your enemies it is time to be nice to them and be friends with them again. Best to keep things on the straight and narrow by using a written agreement. You should clearly establish the interest and repayment schedule in writing to avoid misunderstandings and hard feelings.
4. Renegotiate terms with creditors.
This one, most people are not really aware of. This is where I am going to spill the beans. Let your creditors know your situation. Tell them that if you are unable to renegotiate terms, you’ll have no other recourse but to declare bankruptcy. Ask for a new and lower repayment schedule; request a lower interest rate; and appeal to their desire to receive payment. Faced with the prospect that you may resort to such a drastic step, creditors will do what they can to protect themselves against a total loss. Believe me it works!
5. Seek legal advice.
It is time to seek legal advice if the creditors are threatening to sue you or harassing you that they will go to your office and report you to your HR or superiors. Yes, we may make dumb decisions that led us to debt. But we are not criminals who are running away from the responsibility if we have plans to pay back what we owe. Talk to your lawyer and ask for legal options on how you can walk out of this.
David, hope this helps. May God bless you and may you find solution to your situation.
*Chinkee is one of the speakers in our Take Charge of Your Money personal finance seminar on August 2, 2008, 1:30-5:30 at the AIM Conference Center in Makati City. We only have 100 seats and they are filling up fast. If you are interested in joining (there’s a P250 fee only until today. P300 starting on Monday), you may email register (at) iluvlearning (dot) com.
September 16th, 2008 at 5:56 pm
hey david,
if it’s credit card… try to get an amnesty. if you get to talk with a collection’s agent, tell him you lost your job but would like to pay… Use drama. I had the same problem with my credit cards in the past and the amnesty program worked for me. From 70K debt, they reduced it to 30K (i think) with no interest installment plan.
Goodluck.
August 5th, 2008 at 9:36 pm
I have a suggestion, can you give me the list of the creditors that harrashed you, ill take them down one by one for a 50% discount per head. Just kidding.
What you can do is Pray for a miracle to happen.Who knows maybe your story might reach PGMA and she will use you to make her ends meet…
Chow!
August 1st, 2008 at 7:01 pm
i still have no idea how on earth an accountant screws up his or her finances.
credit cards?
personal loans?
the only thing i can imagine using loans for is starting business.
everything else, pay CASH. yes, even the HOUSE!
August 1st, 2008 at 11:46 am
Whew! as expected, bank disapproved my loan! next move? don’t pay! let my creditors file a case! i’m not afraid anymore. i still have my life.
July 30th, 2008 at 9:12 am
Can we be turned down a US VISA if we have a credit card debt?
I have a secondary card owned by my sister and I had it cut off last year, it turns out the credit card company didn’t so my sister was able to use it and has not updated payment just recently creating an amount due of more than 100K.
Can I file for a complaint with the CC company since they have not cut off the card as requested?
July 29th, 2008 at 10:20 pm
i commend the email writer. it takes courage to realize their mistake, have the determination to get out of debt and face his problems. however, there are many who just stop to pay full stop.
July 29th, 2008 at 12:46 pm
hello
i would like to inquire if Citibank will also hold a personal finance seminar in Cebu? i’m interested to join but i can’t attend because i’m currently based here in Cebu.
would appreciate your reply.
thank you.
July 27th, 2008 at 12:52 am
you should file for bankruptcy, if it’s available in the philippines. otherwise, you’d be hounded forever. change your phone numbers, change your mailing address. move to another address. if they threaten to garnish your wages, then you’re in big trouble.
July 23rd, 2008 at 4:55 pm
>>Vic Fabe,
Got to have it. And pay it for 3 years. Loan amortization is just 13T-15T a month for 3 years compared to my current payment of around 23T amonth!
And I don’t want my wife to know it. that I accumulated huge debt. I don’t even have relatives or friends that could lend me some money. It’s difficult, but I’ll have to face it alone since it was my own-doing.
I just hope, banks will give me another chance.
July 23rd, 2008 at 12:17 am
i think companies and corporations can file for bankuptcy in the philippines. i don’t know if that applies to individuals.
July 22nd, 2008 at 10:30 pm
Don’t make out a loan just to pay off your existing loan. That’s is suicide.
Live within your budget. Cut all unnecessary expenses such as cable, eating out, no aircon, commute if your find your gas expensive.
Live within your means and it is going to be a difficult life for you. Accept this. Once you finish your debt in 3 or 4 years time, then that’s the time you can start building your savings.
July 21st, 2008 at 1:19 pm
Is there a bankruptcy law( debts) in the philippines ? Thought its only here in the US. Please let me know, I wanted to know too.
Thank you
July 21st, 2008 at 12:51 pm
Hi All,
Wow! there are so may replies. Thanks. I’m the one that wrote the letter. I’m really in my worst (oh not that worst coz I still have my job & my family) situation now.
To Rimlaw: Your reply has given me enough courage to go on. Thank you very much. How can I contact you? I think I need your services.
Here is my situation:
1. I have a huge debt - around 300T-400T from diferrent banks & credit cards company.
2. 50% of my debts are already overdue. Some already gave me a final demand.
And all, to give you an update, I applied for another personal loan. If these loan is approved, my problem is already solved.
July 20th, 2008 at 11:05 pm
most people are caught in a debt trap for some reasons they made and have to live with it. even philippines is allocating 40-60% national budget for debt servicing. say you file for bankuptcy, how long does it take and how much does it cost. will all your debts be written-off so you can have fresh start.what are the statistics on filing personal bankuptcy in the philippines?
July 20th, 2008 at 5:31 pm
I used to have credit card debts when I was in the Philippines. When I came to Dubai to work, I did not turn my back on it. Having a (slightly) bigger salary now than I used to, I estimate I was now able to pay off the debt faster. I e-mailed the bank to send me an updated credit card statement, to which they happily referred me to their collecting company. As Chinkee mentioned, you can negotiate terms with them as they would rather collect on a discount than not collect anything at all. After 5 months of installments, they gave me a certificate stating that I was free from liability.
If I were you, work out a strategy with the banks for easy payment terms. That said, you should not use your cards anymore. You should also think of shifting to a job with higher pay or an alternative source of income.
July 20th, 2008 at 5:30 pm
Hi!
This is not related to the current post. I just need an answer to a recurring question on my mind.
I have heard of an investment in a provincial country club: 200K for two years that will earn the investor 3% (or 6K) a month (NOT per annum). It seems too good to be true. Is this a scam?
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July 20th, 2008 at 4:30 pm
Hi David,
I pity on you. I have the same experienced as you experience right now. But I already paid my debts. I advise if you can get a help from your friends and relatives (you and your wife) or selling some of your properties, if you may have. I think that is the best solution, other than file bankruptcy. The bank or the credit card companies will make a way to taint your personality or even your work might get affected. Think about it my friend! You are not different with the excon that has a record if you listen to the so called “bank lawyers” of course there is a laywer’s fee if you get their service. As I said the best solution is help from you and your wife’s relatives or even your trusted friends. Don’t be shy to ask their help.
July 19th, 2008 at 1:36 pm
I disagree with the suggestion of taking out another loan either from SSS or somewhere else. Unless you have the means to pay back, no more borrowing.
File for bankruptcy. This will give you more time out from your creditors. Or talk to them how they can reduce the interest rates with a promise of amount to be paid every month.
Sort out your sources of funding, sell some of your stuff that you don’t need and live very very frugally. Cut off vices unneccesary habits. Key here is to pay pay pay until everything is erased.
Good luck. There is light at the end of the tunnel.
July 19th, 2008 at 1:22 pm
Hi David:
The only solution to your problem is face your creditors in court. Just follow the following legal advise:
a. Credit Card Debts: Most credit card companies toss their uncollected loans/bills to a Collecting Agent who will threaten you will lawsuits if you are unable to pay. we lawyers are reluctant to handle cumbersome credit card collection cases for the simple reason that proving them in court are too tidiuous and time consuming for a very little pay. It takes time and the result are uncertain. Cases will only end up with a decision that can never be implemented for reasons that judgment debtors have no properties to levy against. What I am saying here is from the practical point of view. Let your lawyer handle a credit card lawsuit and, while the case is pending, you cannot be obliged to pay for the amount demanded by the companies. The same amount demanded may not be the same amount proved in court. Cases takes years to finish in court. By the time it is finished your financies may have already improved.
b. Bank Loans (No collateral): The same as above. While the case is pending for years you will be worry free. By the time it is decided, your financies may have already improved, or your lawyer may settle for a much lesser amount (only the principal). As bank lawyer, I know how the ballgame is played. They can recommend a write-off if the defendent has really no assets to levy upon or recommend payment of principal only if necessary. Banks have a ceiling of 5% of their fortfolio for bad loans. Only a bank-lawyer’s recommendation is necessary to write these off as bad loans.
c. Bank Loans (With Mortgage): If you cannot pay your loan, your bank will only run after your collateral. But if your collateral is defficient, they will file a simple case for “Sum of Money” to recover the defficiency. Again, this is a last resort remedy and bank lawyers can easily recommend a “write-off” if you have no other assets to levy upon.
If you fear that your other “free” assets will be levied by banks, “transfer” them to another name. Leave the mortgaged assets for banks to foreclose. Save your “free” assets. This is your only option. Your credit status is already tarnished but your credit woes will kill you if you remain “unwise” to handle them. Engage a lawyer experienced in banking, not just plain lawyer who will screw you just the same in the end. I have handled similar cases in the past and my clients painted back a happy smile on thier faces. Good luck!!!!!!
Your buddy,
Rimlaw
July 19th, 2008 at 12:56 pm
My husband and I stopped charging on our credit cards, started to spend cash, and paid out our cards one by one, starting with the least amount. We started this last quarter last year and we’re credit cart debt-free!
Do Google Financial Peace University.
July 18th, 2008 at 5:44 pm
http://www.hsbc.com.ph/ph/cce/faq.htm
Bankruptcy
As a final resort, if you have no surplus income for repaying your creditors, or no income at all, you may have to file for bankruptcy. This is a very serious step. Your creditors may appoint an external trustee, to whom you will have to submit regular reports on your financial affairs. Or they, and the courts, may contest your bankruptcy petition, and scrutinise your debts and assets, especially if they suspect fraud.
Declaring bankruptcy becomes a matter of public record. More generally, many employers request a credit report when considering job applicants. Declaring bankruptcy would therefore affect your employment prospects and future opportunities. In addition, local newspapers often carry listings of bankruptcy, which could cause you embarrassment with your relatives, friends and neighbours.
July 18th, 2008 at 3:46 pm
Hi David,
Try to borrow from SSS, Pag-Ibig or GSIS if you have not yet availed from these institutions.
It might also be the time to start a even a very small business which would give you additional earning power, which you may use to help you pay off your debts.
Starting a small business does not necessarily require a huge capital. You just need to be creative.
To have some idea, try to search “domz products” in google.
Goodluck to you.
July 18th, 2008 at 1:45 pm
i’m not bankrupt or something, but how does it work? hehe. maybe it’s a good topic for a new post salve. hehehe.
July 18th, 2008 at 11:41 am
pare, get an SSS loan or borrow from your company’s pension fund.. how much ba debt mo?
If its in the millions and you don’t have assets to cover it.. file for bankruptcy na.