One of the last things anyone would like to happen: having too much debt. But it does happen when debt is managed poorly. It's bad for one's mental health as it is to the wallet, but the problem of how to get out of debt in the Philippines can really cripple you if you do nothing about it.
Taking proactive steps to solve this financial difficulty is a lot better than wallowing in anxiety and worrying over your unpaid obligations. It all starts with having a firm resolve to pay off what you owe, regardless of the types of debt you have and how you went into debt.
Here are some of the concrete steps you can take to solve your debt problems and get your finances back on track.
How to Get Out of Debt in the Philippines
There's more than one way to solve the problem of how to pay debt despite having low income in the Philippines, mainly because there's more than one type of debt to deal with. It's best to strategize based on the debt you currently have and work your way up from there.
How to Get Out of Credit Card Debt

₱297.49 billion—that's how much credit card debt Filipinos have as of February 2019, based on the Bangko Sentral ng Pilipinas data. And because of the pandemic, the credit card delinquency rate has increased by 11.5% as of late-September 2020.[1]
Unpaid credit card balances are among the types of debt that are easiest to accumulate. One seemingly harmless swipe in a café can snowball into hard-to-manage debt that can go as much as six-digit figures.
Two things make credit card debt among the most challenging types of debt to pay off: low minimum monthly repayments (ranging only from 3% to 10% of the total outstanding balance) and credit card fees on top of the unpaid balance.
If you're wondering how to get out of debt with credit cards, know that the situation won't last and you'll get out of it—only if you start paying it down now. Below are the steps to tackle all your credit card debt.
1. Know How Much Credit Card Balance You Have to Repay
Request an updated account statement for your credit cards from each provider. List down your total outstanding balance and interest rate for each credit card.
2. Know How Long It Will Take You to Repay
Take stock of your income and expenses, then determine the amount you can set aside for your monthly repayments. In doing so, you can set a timeline for paying off your credit card debt.
3. Ask for Credit Card Debt Restructuring
Contact each bank where you have credit card debt. Let the bank know the reason you can't immediately pay off your unpaid balance and what you can realistically afford.
Then negotiate a restructured credit card debt. The bank may agree to lower your interest rate and/or extend your repayment term to make your monthly payments more affordable for you.
Consider applying for credit card amnesty, the Interbank Debt Relief Program, to settle your unpaid balance more easily.
4. Pay Off the Card with the Lowest Debt or Highest Interest Rate First
Debt snowball and debt stacking are two of the most popular ways to pay off not just credit card debt but also all other types of debt.
The debt snowball method makes reducing the number of debts faster, as the smallest debts get repaid first. However, it could cost you more over time, as the higher-interest debts keep getting higher as time goes by.
Meanwhile, the debt stacking method involves paying off credit card debt, starting from the card with the highest interest rate. Arrange your credit card debts, including your other types of debt, from the highest to lowest interest rate and pay them off in that order.
5. Get a Balance Transfer Credit Card
You might want to move your credit card debt to a balance transfer card with 0% interest that allows you to repay without incurring extra interest.
Note that the 0% interest offer is good for a limited time only and changes to a higher rate after the introductory period, so make sure to pay off your credit card debt before that period ends.
Read more: What Type of Spender Are You? Discover Your Money Personality
How to Pay Off a Personal Loan

Not all debt is bad. When used for the right reasons and managed responsibly, a personal loan can help you meet your short-term goals such as renovating your home, starting a business, having your dream wedding, or funding your children’s education.
On the other hand, failure to make timely loan payments will get you into serious financial woes, like getting buried in debt. Worse, it can hurt your credit history and make it hard for you to qualify for loans in the future.
Here are some actionable tips on how to be debt-free in the Philippines if you have a personal loan.
1. Plan Your Personal Loan Repayment Strategy
If you fail to plan, you are planning to fail. This saying could not be truer when it comes to loan repayments. Having no concrete plan on how to pay off your loan is like setting yourself up for failure.
Managing your personal loan responsibly starts with a plan. This is especially important if you have different types of debts to settle, such as credit cards and housing or auto loans.
Look into how much you owe the bank, your loan’s interest rate, your monthly amortizations, and the loan term. Also, list down the due date of each of your loans.
Such information will help you decide which of your loans need to be paid off first. The loan that gets prioritized will depend on your strategy for paying off your loans. It could be the loan with the lowest balance, the one with the highest interest rate, or the one with the earliest due date.
Feeling overwhelmed with managing several loans? You might want to consider debt consolidation to make repayments easier and faster for you.
Get Your Finances Back in Shape with a Low-Interest Personal Loan

To gain financial freedom, you have to steer clear of your debts first. If you're buried deep in debt, don't lose hope because you can avail of a personal loan with a low interest rate like the Citi Personal Loan. You can use the funds to repay your balances with other lenders.
If you apply for a personal loan from Citibank through Moneymax (and get approved subsequently), you'll receive a free gift!
Note: This product is sold by Union Bank of the Philippines, using certain trademarks temporarily under license from Citigroup Inc. and related group entities.
2. Find Ways to Increase Your Income
Still struggling to pay off your monthly balances even if you always control your spending? Your income may not be enough to cover all your expenses, including your personal loan repayment.
Consider getting an extra source of income, like a side business or a part-time job. This is just a small sacrifice to make compared to missing your monthly loan repayments and paying more interest in the long term.
There will also be a time that someone dear to you, a family or a friend, will borrow money from you. While you're paying your other debts, consider refusing to lend money to your loved ones, so it won’t compromise your own finances.
3. Avoid Taking on New Debt with High Interest
Are you being tempted to borrow money from loan sharks for an easy source of payment? Taking on more debt than you can actually afford is never a good idea. You'll only run the risk of racking up more debt. Either you reduce your spending or increase your income. Better yet, do both.
Read more: 10 Spending Habits to Break Before You Turn 30
4. Negotiate with Your Lender
Have you exhausted all means to manage your personal loan properly but you still fall behind your monthly payments? Or there is a sudden financial emergency that has kept you from making timely loan payments?
If you find yourself in any of these situations, it's best to reach out to your lender, explain your case, and work with them to come up with a solution.
You may request the bank to restructure your personal loan. This may reduce your monthly installment amount, extend your loan term, or reduce your loan’s interest rate. Of course, such loan restructuring comes with strict conditions that you'll have to follow.
Related articles:
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- Ask Moneymax: What to Do When Harassed and Threatened by Lenders? SLAP!
How to Pay Off a Home Loan

With the constantly increasing prices of real estate property in the country,[2] it's almost impossible to afford a house without taking out a home loan. And unlike credit card debt, home loans take years to pay back. Aside from borrowing a sizable amount of money, you'll have to deal with interest rates, mortgage insurance, and other additional fees.
But owning a house must be worth all these troubles, especially if you're currently struggling to pay off your own. There's no point in backing out now, so here's how to get out of debt when you are broke and save your home from being foreclosed by your home loan provider.
1. Make Drastic Adjustments to Your Budget
Because a home loan takes longer to repay, you need all the adjustments you can make to your budget. Cut expenses you don't need, sell some assets to help fund your repayment, and refocus your earnings to pay off your home loan. You should also consider adding more sources of income.
Read more: 40 Money-Saving Tips for Everyone: The Ultimate Financial Hacks List
2. Make More Frequent Payments
To pay off your home loan quicker, make more frequent payments exceeding your monthly amortization. Take advantage of your lump sum earnings like your 13th month pay, annual bonuses, tax returns, and other huge influx of cash. This will help decrease the cost of your loan and reduce your loan term in the process.
3. Refinance Your Home Loan
Having a hard time with your current home loan? You can refinance your loan to help you get a more manageable loan term. Refinancing involves paying off your existing home loan with another loan from a different provider. This method will work if you can get a new home loan with lower interest rates or more flexible loan terms.
Most banks in the Philippines offer home loan refinancing to help distressed homeowners pay off their debts. But before you avail one, weigh the pros and cons of loan refinancing to see if it's the best way to get out of debt given your situation.
4. Negotiate Your Home Loan
It never hurts to just ask. If you're having a hard time, you can negotiate your home loan terms with your bank. Depending on the agreement, they can either adjust your grace period, restructure your loan, or decrease your interest rate. Be upfront about your current situation and you'll surely get a fair solution to your debt problems.
How to Pay Off a Car Loan

A few years ago, you may have taken out a car loan to purchase a vehicle you'd never have if you paid in cash. You were confident back then that you could afford the down payment and monthly amortizations because you have a stable job that pays well.
But then the unexpected happened. You lost your job, you or a family member got seriously ill, your home got damaged due to a natural disaster, or something came up that messed up your finances. Apparently, you can no longer afford to repay your car loan.
So how do you deal with such a situation? Find out how to get out of debt in the Philippines and avoid heart-breaking vehicle repossession.
1. Make Additional or Lump-Sum Repayments
To pay off your car loan faster, pay more than your monthly amortizations. While this sounds like a challenge with your difficult financial status, you can find ways to increase your income and use the extra earnings to pay down your car loan.
2. Refinance Your Auto Loan
Are your monthly car loan payments taking much of your budget? Just like home loans, you can also consider changing to a new loan with a different lender that offers a more favorable term, like a lower interest rate and lower monthly repayments.
3. Modify Your Car Loan
Car loan modification, if your lender allows it, is another way to make overdue car loan payments more manageable. It may involve lowering your loan's interest rate and monthly amortizations by extending the repayment term or suspending/lowering monthly payments for a limited time.
Call the bank to explain why you can't repay your car loan with its current structure. Ask if they will agree to modify your loan so you can afford to pay it off.
How to Pay Off Debt from Other People

Part of solving how to get out of debt in the Philippines is dealing with your debt from family and friends. Since it's one of the informal types of debt, it involves no document requirements, written loan agreement, interest rate, and physical collateral.
Payment terms are flexible, as the borrower and lender undergo an arrangement based on trust. But then when trust is broken because of failure to pay one's debt, the relationship gets ruined.
What should you do if you really want to pay back the amount you owe but currently don't have the means to do it?
Communication is the key. Nothing irritates a lender more than giving them the impression you have no plans of repaying the money you borrowed. Explain the problem that keeps you from paying off your debt and assure them that you're taking action to solve it.
Also, constantly update the lender about when and how much money you can repay per period. Even if you can't repay the full amount, make an effort to pay back a portion of the amount per week or month.
Final Thoughts
No matter what types of debt you're trying to pay off, make it a priority so that you can move on to your other financial goals.
No matter what type of debt you're trying to pay off, make sure to find out how to get out of debt in the Philippines. Every time you get a raise, bonus, or commission, use it to pay down your debt. When things get tough, never lose sight of your main goal: to clear your debt and gain financial freedom.

Sources:
- [1] Credit card delinquencies seen increasing (Philippine Star, 2021)
- [2] Property prices further rise in Q4 (Philippine Star, 2022)