Ask Moneymax: What is Credit Card Delinquency and How to Avoid It?

“There’s no such thing as a free lunch,” the 1975 book title of the free-market economist Milton Friedman couldn’t have said it better. In other words, everything has a cost. Yes, especially when it comes to credit cards. Any amount of credit that you consume comes with a fee.    Due to limited physical interactions, online shopping (aka spending) has been brought closer to households. Ironically. With the rapbalanid advancements in technology, e-commerce, and digital payment systems, buying has become a lot easier with just a touch of a finger.  All these—and getting stuck at home due to community quarantine restrictions, tempting holiday ads, and unending promos and rewards—add up to entice you to use your credit card more. Next thing you know, you have maxed out your credit card, which means you have already reached your credit limit. Are there really ways to avoid credit card delinquency? These are what we are going to discover in this article. Credit Card Delinquency FAQs: How to Avoid Getting Into Debt 1. Is there a credit card law in the Philippines? Republic Act (R.A.) No. 10870 or the Philippine Credit Card Industry Regulation Law (Credit Card Law) governs credit card issuers, acquirers, and credit card transactions in the Philippines. It lapsed into law on July 17, 2016. The Credit Card Law promotes fair and sound consumer credit practices in making consumer credit readily available to all Filipinos. Even if credit cards have been existing in the Philippines since the 1970s, there was no law specifically governing it and the credit card industry, except…

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Dear Lender: Go Easy on Me! It’s Pandemic and I’m Bankrupt, er, Insolvent

“I had good intentions and the highest hopes. But I know right now it probably doesn’t even show.” – Easy on Me The lyrics of Adele’s latest song may be specific to her, but its intriguing message may also stir emotions in those going over the demand letters (or emails) from lenders. Receiving a demand letter for outstanding loans is not good news, but ignoring it (hoping that it will go away) is not a wise move, either. Don’t wait until it piles up because the interest rates may add up, and you might end up owing more than your loan amount. If it is a secured loan with collateral such as a car loan or a housing loan, you may run the risk of foreclosure or repossession. The next essential step is to read the letter, no matter how long or short it is, and see if there are any deadlines for you to respond or to make your debt payment. When the country’s main carrier, Philippine Airlines, announced that it filed for creditor protection under Chapter 11 of the U.S. Bankruptcy Code, many were interested to know if there are also bankruptcy proceedings in the Philippines. Before you reply to the demand letter and mention the words “bankrupt” or “bankruptcy” to describe your financial state to your lender or creditor, understand first what these terms are and how they work in the Philippine context. Struggling with Debt Payment? Know the Legal Remedies for Debtors in the Philippines 1. What does being bankrupt mean? The word “bankrupt” refers to…

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Ask Moneymax: I Can’t Pay Off My Debt This Pandemic. What Should I Do?

“Begin with the end in mind.” – Dr. Stephen Covey, The 7 Habits of Highly Effective People To begin with the end in mind means knowing where you’re going, so you can better understand where you are now and ensure that the steps you take are always in the right direction. Covey’s second habit emphasizes the value of thinking first before you act. This applies to all facets of life, even to ongoing personal battles along with the continued rise in COVID-19 cases and the threat of the Delta variant: coping with grief, toxic relationships, struggles at work, and financial hardship. It’s easy to assume the worst, wallow in despair, or disregard contractual obligations. But that’s not how to deal with this pandemic crisis. You need to face your responsibilities head-on. Yes, that includes settling your outstanding bills and debts! This article aims to help you manage debt in this new normal and to provide answers to common questions borrowers ask, like what happens if you can’t pay off your loan and what to do about it. Managing Debt in the New Normal: Your Burning Questions Answered 1. Is there a difference between loan delinquency and loan default? Loan delinquency and loan default are used interchangeably in the Philippines. Under Republic Act No. (R.A.) 10870, otherwise known as the Philippine Credit Card Industry Regulation Law, default or delinquency refers to the nonpayment or payment of an amount less than the amount required to be paid for at least three billing cycles. The law also says that the billing cycle is…

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