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This article first appeared on the January 2011 issue of FHM Philippines.
If you’re neck-deep in credit card debt, you have been getting the demand letters, getting the threatening calls. FHM is not saying you shouldn’t pay up, but we are saying you shouldn’t be subjected to humiliation courtesy of your friendly credit card collection agent because they’re not allowed to.
Belle is harassed day in and day out, with text messages and calls telling her that the court has issued warrants for her arrest. Her children have been told over the phone that their mother is a thief and a swindler. She was also told that she could no longer leave the country. Her neighbors can’t look her in the eye anymore, especially after that time when policemen—or what looked like policemen—barged into her house and took her DVD player and microwave oven.
She is a mother of two young kids, married to an engineer based abroad. She has two credit cards (not counting the ones under her husband’s name), and owes each issuing bank at least P100,000. Apparently the “policemen” who took some of her appliances away were doubling as “collection agents” for one of her cards. She really isn’t sure who the bad guys are here, because the way the collectors are treating her it’s as though she were the criminal.
“Araw-araw kung tumawag, minsan minumura ako tsaka mga anak ko. Magnanakaw daw ako dahil hindi ako nagbabayad,” Belle says. The calls began as routine reminders, then progressed in tones more grim. “At first representative daw siya ng bangko. After nu'n, lawyer na ang tumatawag. Pinadalhan ako ng demand letter saying na magbayad daw ako kung hindi makukulong ako.”
Belle is ashamed of her debt, but feels it accumulated through no choice of her own. Her husband’s salary often gets delayed, and there are tuition fees, utility bills, and car installments that must be paid. “Kaya nga ako nag-apply. Walang cash agad eh, kaya inisip ko na mas mainam na i-charge muna tapos saka na lang hulugan.”
As with most in-debt stories, the plan sounded like it would work, but then reality sets in. “Eh kasi minsan, mahirap din, biglang na-dengue yung bunso, tapos may mga extra ding kailangang bayaran."
With collection agents breathing down her neck, a husband marooned in a faraway desert working for a better (but still uncertain) future, and children too young to make sense of it all, Belle feels isolated by her debt. “Hindi ko alam kung sino ang pwede kong lapitan kasi ako yung nasa mali.” We reassure Belle: You aren’t alone.
Matter Of Interest
Eight million Filipinos were swiping plastic for cash in 2009, according to Euromonitor International, a marketing research firm focusing on the financial industry. Not bad if we were keeping in step with the progress of our Asian neighbors. Global financial news reports say South Koreans have, on the average, two credit cards each. Hong Kong residents charge everything from train rides to chewing gum.
But sadly, we’re the ones who hold the dubious distinction of not paying. The Philippines’ consumer credit defaults triple the average of the rest of Asia, with a staggering P116.1 billion total credit card receivables as of December 2007, according to a study on consumer credit funded by the Banko Sentral ng Pilipinas (BSP) in 2008. Belle’s credit card debt form part of that mountain.
Why aren’t we paying? It could be because of poor credit management, capricious spending habits, sheer financial ineptitude. It could be all these things. But one thing that isn’t up for debate is that the Philippines is one of the countries with the highest interest rates in the world, with cardholders paying an average of 3.5 percent monthly interest. That’s every month. Every year amounts to a staggering 42 percent.
According to Creditcard.com’s weekly interest rate report, the average annual interest rate for American cardholders was 14.1 percent, in May 2010. A New York Times article reported some lobbying took place to impose a ceiling as well and it mentioned that some “pay up to 41 percent.” So our rates trumps even the Americans’ most extravagant rate.
That 3.5 percent interest per month sure answers a lot about why people are neck-deep in credit card debt, but you will never find it explained in your bill. At least not the why of it. FHM tried to get the Credit Card Association of the Philippines, whose members are card-issuing banks, for their side on the matter but have not gotten word from them as of this writing.
The Other Side Of The Fence
Locally, The BSP qualifies bad debt as one that is 180 days, or six months, overdue. At which point you are now called a delinquent account and the “wrecking crew” takes over—the credit collection department.
Stories of collection agents, Belle’s included, are widespread, and are incredulous enough to be misconstrued as encounters blown out of proportion by debtors with a victim complex. But Anna, a former collection agent with a notable bank, does not come to her former profession’s defense.
There’s the word—“quota.” The one reason why collection agents are viciously persistent?
“It depends on your department. What we call the hardcore delinquent accounts, each agent has to get 10 clients to agree to pay a certain amount. Every day yun,” Anna says.
She describes how the hardcore delinquent collection agents are tucked away in a separate corner of the floor, away from collection agents assigned to “soft” and “mild” clients. These clients are often platinum or gold cardholders who are spoken to with dulcet tones and sent off with a chiding reminder to pay their bill. Protocol in handling these cases stands thus: Don’t raise your voice, speak in a refined manner and mind your Ps and Qs. But not hardcore accounts agents. Anna claims they are given free rein to slam down and even throw phones, cuss, and scream at their clients.
Accumulated debt begets unscrupulous collection methods as well, it seems. Anna recounts stories from the office, which seem unheard of for some people but is the reality for many others. She tells of an agent who called the university where her “delinquent” debtor’s child was enrolled, “para lang siraan yung may utang. Sinabi niya, ‘Alam nyo ba si Mrs. So-and-so ang laki ng utang sa amin…’"
One of Anna’s coworkers had an especially difficult client: after much pestering the agent was told the cardholder was recently deceased. The agent didn’t call the bluff and visited the cardholder’s residence, where he came face to face with the supposedly dead debtor. The collection agent went in the house and took appliances as payment for the outstanding balance. Agents can choose to investigate where you live, where your children study, and discover other details they can exploit to get you to cough up cash. As Anna sums up, “Kanya-kanyang diskarte para maka-quota.” All in a day’s work.
The bank presumably turns a blind eye to this, or could even be ignorant of these practices, because as anyone who has been on the receiving end of these phone calls know, law firms or outside entities take over and are responsible for getting debtors to pay up.
But Anna isn’t buying it. She claims her former bank, a large and respected name in the industry, actually has dummy law firms who act as collection agents. These agents are even issued identification cards by the law firm, but they are on the payroll of the bank. “Playing safe ang bangko sa ganun. Kasi dati na-criticize na sila for being harsh on collection kaya nila ginawang kunwari outsourced ang collection nila,” Anna claims. They do this to evade public scrutiny, and if the story of the collection agent who took away appliances is to be recalled, lawsuits as well.
Debunking The Myths
In 2004, The Bangko Sentral ng Pilipinas released circular 454, “Amendments to provisions on credit cards.” In it is a subsection titled “Unfair collection practices,” which explicitly states proper conduct and protocol for credit card debt collection. Banks, its affiliates and collection agencies “may resort to all reasonable and legally permissible means to collect amounts due them under the credit card agreement: Provided, That the exercise of their rights and performance of duties, they must observe good faith and reasonable conduct and refrain from engaging in unscrupulous or untoward acts,” with these “untoward” acts outlined thereafter.
Foregoing legalese, the BSP circular is saying that collection agents cannot call debtors up at all hours to swear at them and demand payment. All the more can’t they tell them that they are going to jail, or have their reputation as hindi nagbabayad ng utang spread around, using dubious personas they construct to fool cardholders. They cannot barge into your home and threaten you with any kind of violent action. Much less take your appliances.
The threat of imprisonment is also blown out of the water. The BSP circular says that “threat to take any action that cannot legally be taken” because according to the 1987 Philippine Constitution’s Bill of Rights (Article 3, Section 20), no one can be imprisoned for debt.
Simply put, no one can be imprisoned for not paying his or her credit card bills. A credit card debt can only be taken to court as a civil suit, and never a criminal suit.
Republic Act 8484
Still, to ram down the stigma of the criminal to the beleaguered credit card holder, another common bullet collection agents use against cardholders is RA 8484 or the Access Devices Regulation Act. The act goes after people who defraud banks, not ordinary people who are having trouble paying their huge sums of debt.
What spells the difference?
Defrauders fake credit cards or use it with malicious intent. The evidence they stick to would-be fraud committers of their malicious intent are:
a) They move places of residence without informing the credit card company, the balance of what they owe is over 90 days at the time of the move and said balance amounts to over P10,000.
If all these are proven only then can the cardholder be imprisoned, and not for his debt (referring back to section 20 of the Bill of Rights) but for his intent to deceive the government. “The most critical here, is when a person applies for a credit card indicating his or her office and home address and would maximize his or her credit limit and flee thereafter, since it is deemed to have violated this [Republic Act 8484] act, which is punishable by both a fine and imprisonment,” says Atty. Teodoro Pastrana, in an article in the Manila Times dated January 2010.
Who To Turn To
But while the matter is still floating around in the legislative firmament, Filipinos are finding their own ways to momentarily cope with the stress of dealing with these debt collectors. Failuretopaycreditcard.blogspot. com is a website that almost reads like a self-help book, with an pseudo-anonymous “Banker” persona posting tips on how to handle agents—in colorful colloquial banter.
Followers of this blog are keen to share their own horror stories, and have since created what looks like an online support group, united by their debt and their distrust (and disgust) for these collection agents.
just received a call from a collector, i pretended na katulong ako dito ng boss ko and bastos talaga yung collector na yun, binabaan ko nga ng phone. nakakapanginig ng laman, palibhasa magpapasko kaya kailangan maka quota..
Friday, November 26, 2010
2:09:00 PM GMT+08:00
thony said: irish bastusin mo din. Ganun lang naman laban nian. nsa script na kasi nila pag puro di makabayad ang second option na nila mambastos.
... Ang problem ko po cs cc agency collector ko, ang sama na ang mga sinasabi. Kpag tawag sa office sakto na wala naman ako tlaga dun n dto sa haus ganun din. Sinasabi na nanlalaki ako kc lagi daw ako wala. Minumura pa mga ka-ofis mate ko n mother in law ko dto sa haus. Grabe cnasabi pa nya sa mother in law ko na “ d mo kaya manugang mo, cguro may ginagawang milagro yan, nanlalaki yan, bantayan mo.
angel said: i jaz want to share my experience jaz a while ago. a collector claiming to be an account officer of de guzman law ofc called
me up telling me to pay my obligation in 24 hrs. i told him i don’t have the money to pay and if ever i would have the enough money i will not talk to him instead go directly to the bank and pay. maayos ko syang kausap pero bastos tlga ang mga collector lalo na pag babae kausap…
The things debts do to people.