Dead-worried about old credit card debts you haven't paid off? Stop stressing out and start dealing with them by availing of the credit card amnesty program in the Philippines.
This debt settlement program allows delinquent credit cardholders with unpaid credit card debt in the Philippines to pay off their outstanding balance at lower interest rates and longer repayment terms. You can then get back on track with your finances and improve your credit standing.
Some banks like HSBC have their own amnesty program for credit card debt. There's also a credit card amnesty program in the Philippines that consolidates cardholders' debts from different banks.
Wondering what happens to unpaid credit card debt in the Philippines? Here's what happens if you fail to settle your credit card balance:
Read more: What Happens If You Pay Only the Minimum on Your Credit Card
Under the Philippine law, failing to pay credit card debt in the Philippines won't land you in jail. Unsettled credit card debts are regarded only as a civil and not a criminal offense. Article III Section 20 of the Philippine Constitution states that "no person shall be imprisoned for debt."
So if you keep getting calls from credit card agents threatening to put you in jail, don't panic and go into hiding. There are laws that protect your rights as a consumer. Furthermore, debt collection agencies are prohibited from resorting to unfair treatment and cruel actions.
However, a credit card debt lawsuit in the Philippines is possible if the fraudulent use of credit cards occurred. This can be subject to criminal prosecution with a corresponding jail term.
According to the Credit Card Association of the Philippines (CCAP), debt collectors aren't supposed to threaten you, your reputation, or your property.[1] However, a lot of them do so via text, call, or email just to get cardholders riled up, scared, or panicked enough to pay.
Under Bangko Sentral ng Pilipinas (BSP) Circular 454 Section 7, banks, credit card companies (subsidiaries or affiliates), collection agencies, counsels, and agents are prohibited from the following when collecting payments for unpaid credit cards in the Philippines:
Should a debt collector do any of these things to you, make sure to get their consent to record all your phone calls and document your email and text exchanges.
Report unfair debt collection practices to your bank. This way, it can do something about its collection agencies’ unethical collection methods or rules of engagement.
Also, check if the collector represents an authorized agency. Visit the CCAP website for the list of accredited debt collection agencies in the Philippines.[2]
The BSP and CCAP member-banks have a debt restructuring program called the Interbank Debt Relief Program (IDRP) to help delinquent credit cardholders in the Philippines settle their overdue accounts.
The IDRP is a repayment plan that consolidates and restructures your credit card debts. This credit card amnesty program in the Philippines offers more affordable monthly amortizations with lower interest rates.
A debtor can enjoy the same interest rates (maximum of 1.5%) for all credit card accounts and a longer repayment term (as long as 10 years). It's a more manageable way to pay off all your credit card debts. Most importantly, it will not negatively affect your credit history.
To settle credit card debts in the Philippines, you can apply for this amnesty program. If your bank's a participant in this amnesty program, submit all the required documents and wait for approval.
Watch the quick overview of what the IDRP is and how it works in this video:
Here are some banks that allow credit card debt restructuring under the IDRP:
Not all credit cardholders in the Philippines qualify for credit card debt restructuring. The IDRP is open only to those who meet its strict requirements.
To settle your debt, you can either avail of the IDRP's or your own bank's credit card restructuring program.
Call your issuing bank to apply for credit card debt restructuring under the IDRP. If you have multiple credit cards from different banks, the credit card provider with the highest combined outstanding balance will take the lead in processing your credit card amnesty application. A representative from the lead bank will call you regarding the arrangements and application process.
Banks in the Philippines are generally open to credit card debt restructuring negotiations with their delinquent customers. You just need to provide proof that you can repay your unsettled balance in installments over a longer period, which typically ranges from 12 to 60 months.
Submit these documents when applying for credit card amnesty:
When applying for credit card amnesty under the IDRP, you must declare all your outstanding credit card balances. You can't apply only for a specific credit card account. If your application for credit card amnesty is denied, you can apply again after six months.
Alternatively, you may contact your credit card issuer to inquire about its bank-specific credit card amnesty program for delinquent accounts.
Through its own Payment Plan, HSBC helps credit cardholders manage their payments. Cardholders struggling with payments are advised to contact HSBC as soon as possible to apply for a payment plan.
Here's what you need to do:
If you're having trouble dealing with credit card debt, you can also apply for a credit card balance transfer. Here are some of your best options:
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When you get approved for credit card amnesty, you can pay your monthly amortization directly to the issuing bank or any other accredited bank or payment center.
Moreover, expect these things to happen:
If you miss paying for two consecutive months, your credit card amnesty will be canceled and considered in default. The IDRP has a Default One, Default All policy, which means defaulting with one bank will cancel the IDRP arrangement with the other banks. When this happens, you can't apply again for IDRP.
What happens to unpaid credit card debt after seven years in the Philippines?
A common misconception is that unpaid credit card debts disappear after seven years. Unfortunately, records of unsettled credit card debts in the Philippines will not disappear or be written off. No matter how many years have passed, you still owe these debts to your credit card issuers.
Debt collections typically last up to seven years, which can be the reason why people think debts are removed from the bank's database after that. But just because you've stopped receiving calls or letters from agents doesn't mean your debts have been eliminated.
Debt collection agencies can still collect payments for your old debts or simply declare them as "uncollectible accounts." When that happens, you'll fall under their negative list database systems.
The best thing to do is to settle your credit card debts as soon as possible. Once you've fully paid them off, get your clearance from the bank. This will serve as proof that you have no more unpaid credit card debts.
Once you fully pay off your credit card debt, you can request a certificate of full payment either from the bank itself or from its authorized debt collection agency.
You'll need to submit the deposit slip or proof of payment and sign the clearance form to acknowledge receipt. Make sure to keep this certificate of clearance and save a soft copy in case your credit record is not updated accordingly. Show your full payment certificate as proof that you've already settled a particular credit card debt.
Now that you know how to settle credit card debts in the Philippines, do your best to pay them off ASAP. Although an unpaid credit card debt won't land you in jail, it will negatively affect your quality of life and financial health.
Being debt-free will give you peace of mind. As much as possible, don't neglect your monthly dues and allow your debts to balloon to an amount you can't manage.
If you fall on hard times and fail to pay off your credit cards, it's not the end of the world. You can avail of the IDRP or credit card amnesty programs of different banks in the Philippines to ease your debt repayment.
Once you're debt-free, it's time to start over and get your finances back in shape. Fix your credit score and make the right financial choices this time around. Compare credit cards, so you can find one that suits your needs and budget best.
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