October 7, 2017

Proven ways in debt collection

collection of sum of money

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Related Topic: Repossession of Mortgaged Automobiles

No business can survive without sufficient funds, as every action done in its operations generally have 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 by 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, though, that if the debt does not exceed P200,000.00 (excluding damages and interests), 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 [See: G.R. No. 178367].

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 [See: Sec. 2, Act 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.

If the proceeds of the sale are insufficient to cover the entire amount of the debt in an extrajudicial foreclosure of mortgage, the creditor is entitled to claim the deficiency from the debtor [See: G.R. No. 175816].

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 [See: G.R. No. 191404].

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 P200,000.00. 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.

Alburo Villanueva Law Office specializes in business law and labor law consulting. For inquiries regarding credit and debt collection laws, you may reach us at info@alburovillanueva.com, or dial us at (02)416-3809/0917-5772207.

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13 thoughts on “Proven ways in debt collection

  • Good day! My utang po kc AQ a moola lend pero hndi q pa byad 2 months na..nag email nmn ako sa knila and cnasabi ko na hndi ko pa mbabayadan ngayu ung pera kaso hndi nmn cla nagrereply skin,tinatanong ko kung ano ba dpat Kong gawin kaso wala clang respond! Tpos khpon my dumting sakin na text na NSA supreme court ndaw ung case ko and mag voluntary surrender nadaw ako..2k LNG nman ang utang ko sa knila na tinubuan nila ng npkalaki na umaabot ng 80 pesos ang isang araw ! Ano po ba dpat Kong gawin???

    • gud day, kami rin po my loan sa moola lending, 4k po pero 3600 lang po natanggap namen and aftr 1 month kelangan namen sya bayaran ng 5200 but unfurtunately d po kami nakabayad kc d po inaasahang nagkasakit ang anak namen, pero nagpasabi po kami n d pa namen mbabayaran ung loan pero habang tumatagal po kc lalong lumalaki ung interest,pang 3 months n po ngaung dec.13 kaso umabot n po sa 9k at may nag email n 14 k n daw po ang kailangan naming bayaran, my god!! kinikilabutan ako… tapos ngaun lang may nag txt n nasa suprme court n daw at kailangan n daw pong volountary surrender n daw po c husband ko…anu po bang pwedeng gawin sa gnyan sir?..

      • Dear Jude,

        Hindi totoong nasa Supreme Court na ang kaso ng pagkakautang mo. Kung idedemanda ka man nila, dapat sa Municipal Trial Court sila nagsampa ng small claims case at hindi diretso sa Supreme Court. Wala din “surrender” na kailangang alalahanin, dahil wala naman kulong ang hindi pagkakabayad ng utang.

        -Atty Arjay

        • City Prosecutor’s officer Advisory: Jude…..
          Complainant party has a direct filling with affidavid of complain attachment of evidence in the Prosecutors office. Expect our Camp Crame Warrant Section official to Serve your Bench Warrant with Writ of Preliminary attachment please be informed for your voluntary surrender to avoid commotion at your place Fiscal.Ramon Santiago.Prosecutor office manila. Kindly call at 664-9293 / 0975107387


          • Dear Jude,

            Walang authority and City Prosecutor para mag-issue ng warrant. Hindi totoo itong message na nareceive mo.

            -Atty Arjay

  • Dear mhelay. Hindi mo kailangan mag-alala sa text na natanggap mong nasa Supreme Court na daw yung case mo. Malakas ang kutob kong wala pang case na naifa-file laban sayo. Kung sisingilin ka lang ng utang mo, either sa Regional Trial Court or sa Metropolitan/Municipal Trial Court (depende sa amount) lang sila pwede magsimula magdemanda, at kung tatalon sila straight to the Supreme Court ay madidismiss lang yung kasong isasampa nila.

    Saka hindi through text message ang pag-notify sayo kung totoong may kaso ka. Summons mula sa RTC or MTC lang ang official na dokumentong pang-notify sayo na ikaw ay nakademanda. At itong summons ay dapat dala-dala ng sheriff or ng court process server sa bahay mo o sa lugar pinagtatrabahuhan mo, kaya hindi uubra ang pa-text text lang gaya ng natanggap mo.

    -Atty. Arjay

  • Good Day! May loan po aq sa lending company worth 60k and total of 87010k but unfortunately d po aq nkbyad kc nanakaw po ung pambyad ko sana sa loan,andito po aq sa bahrain,uuwi aq sa pinas ds coming december kya i’ll keep in touch with the lending company kung pano masettled un they ask me to pay the whole debt worth 112k sabi ko dq kayang bayaran ng buo un ang advise nila byaran khit atleast kalahati pero ngbigay silamng due date which is 23 of the month sabi ko end of the month ang sahud dito. recently may pumunta daw sa bahay namin at kinuhaan ng picture ang mga kapatid q if hnd daw aq mgbayad dadamputin daw sila at pinapirma daw cla. Legal po ba yun? Ano po ba dapat kong gawin if hndi ko kayang bayaran ung hinihinge nilla especially now na buntis aq at uuwi lng para manganak. May kaso na daw po aq Bp22, san at paano ko po ba macheck kung tlgang me kaso at totoo ba na huhulihim aq sa airport pag uwi ko?makakabalik pa ba aq dito sa bahrain incase umuwi ako? Sana po matulungan nio ako. Salamat

    • Dear Chelxymae,

      It’s normal for them to demand from you to pay your obligation, at hindi na problema ng creditor mo kung nanakaw yung dapat impambabayad mo sa kanya. Pero hindi totoo yung sinasabi sayo na ipadadampot yung mga relatives mo, dahil wala naman silang ginawang kasalanan para ipaaresto. In the first place, wala naman criminal case na naka-file sa kanila kaya wala din basehan ang pagpapadampot sa kanila.

      Kung may na-issue kang cheke na tumalbog, pwede ka talagang makasuhan ng violation of B.P. Blg. 22. Kung may isinampa mang kaso laban sayo, most likely doon yan sa Prosecutor’s Office ng city or municipality kung saan nila sinubukang i-deposit or i-encash yung check. Doon ka magverify kung may case na pending laban sayo.

      Assuming na meron kang kaso for violation of B.P. Blg. 22, hindi ka parin nila maipapahuli pag-uwi mo dito sa Pilipinas kung wala ka naman warrant of arrest. Lalong hindi ka nila maipapahuli kung sakali mang wala naman talagang kaso na naka-file laban sayo.

      -Atty. Arjay

  • Hi po tanong ko lang sana pinadalhan po ako ng letter ng isang collection agency ano na po ba ang mangyayari sakin at pwede ko gawin since wala pa po ako pambayad and for sure pupuntahan po nila ko sa work at bahay?

    • Dear Dara,

      Makipag-ayos ka sa creditor mo. Kung wala ka pang pambayad sa ngayon, kausapin mo yung creditor mo (or yung collection agency na may hawak ng account mo) at ikaw na ang magbigay ng offer mo sa kanila based on terms and conditions na sa tingin mo kakayanin mo. Kung tanggapin nila yung offer mo, well and good. Wala naman masama makipag-negotiate.

      -Atty. Arjay

  • Good day.

    I filed for a personal salary loan back in July, and was granted. The amount released for P40,000 and this was a help that was extended to my ex-partner to fund his car loan. He didn’t have sufficient papers to apply for a salary loan, hence my name on the financial institution. We had a verbal agreement that he will pay the loan when I handed the cash over. But due to livelihood plans of his that did not materialize, I ended paying the first two months amortization. When we separated, he simply made a promise that he will pay the monthly amortization. When I asked him to sign a written agreement, with terms copied from the original terms and condition provided by the financial institution who granted the salary loan, he refused to do so. I took the matter to the barangay to seek help for him to simply sign the agreement,but he was insistent that he will not sign such document wherever this may lead to. He simply stated that he is the aggravated party should he sign. My point was simple. If he is so sure that he will pay on time, then why is he going to be aggravated? I have text message to confirm that he indeed know that he is indebted to me, and will pay the monthly amortization. And the session at the Barangay was also documented. Please. I am seeking legal help as to how do i go about this dilemma. Can I bring this to Small Claims court? Without a contract of the loan between him and I? I am a single mother , and I can not afford to pay a hefty amount if he seize to pay the monthly obligation. There will be heavier penalties, and my name is at risk of having negative credit score to financial institutions if he miss making payments. This predicament is taking toll on me and my job, as I work nights. Will the Public Attorney’s Office help? Do I even have a case?

    Would appreciate any reply and/or help I could get.
    Thank you.

    • Dear SariGabriel,

      It’s good that the proceedings before the Barangay were documented, so if his admissions of indebtedness are contained in the barangay documents (e.g. minutes of the proceedings), then you may use it as evidence if ever you plan to take up legal action against your ex-partner. Unfortunately for you, if you plan to bring a collection case against him for the amounts due for the monthly amortizations, then you can only sue for the amortizations that already fell due. This means that you still have to wait for all monthly amortizations to fall due before you can file an action for collection based on the ENTIRE amount of the loan that you paid on his behalf (and you have to actually pay for the loan for you to have a cause of action to collect from your ex-partner). Based on your circumstances, your legal remedy is not an action for collection of sum of money, but an action for specific performance if you intend to compel him to sign a written contract with you regarding the internal arrangement between the two of you where he has to assume all responsibilities for the loan that you took for him.

      -Atty. Arjay

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