March 27, 2014

What are unfair practices of credit card debt collectors?

MANILA, Philippines – Those who find themselves in neck-high levels of debt can be secretive about their situation, but the sooner they admit that they are in trouble, the easier it will be to get out of it.

The Bangko Sentral ng Pilipinas (BSP) is urging those in debt, particularly credit card users, to seek help from the bank to discuss a debt restructuring plan.

“For a person to actually come to a realization that they are already facing difficulties before they default—that is a major step. And I hope that people will not waste that realization by trying to pretend or deny that they are in trouble,” BSP deputy governor Dr. Noe Ravalo said on ANC’s “On The Money.”

“It’s even more difficult to make it public. It’s easy for us to show to others that we’re hurting but it’s harder for us to understand why and what’s going on. With money, there’s always that stigma of trying to tell outsiders—your bank, your credit card issuer, your billing agents—‘Look, I’m having difficulty,’” he added.

Ravalo said banks are also encouraged to help those with debt problems with “exit mechanisms.”

They are urged analyze the debtors’ income and expenses, and find out if there is a lifestyle problem.

“The BSP has made it very clear: this is not something that we leave to chance. Consumer welfare is at stake. We need to have ways to let people come into the system, and for people to have an exit mechanism that’s orderly, and for them to have a chance to come back, when their finances are in order,” he said.

Ravalo noted that there are rules that credit card collectors should follow when collecting debt.

BSP prohibits credit card collectors to tell your colleagues or family that you are in debt, intimidate you or put you to shame.

Other unfair collection practices include the use or threat of violence or other criminal means to harm the physical person, reputation, or property of any person; the use of obscenities, insults, or profane language which amount to a criminal act or offense under applicable laws; and threat to take any action that cannot legally be taken.

BSP said debt collectors are also prohibited from making contact at unreasonable or inconvenient times or hours which shall be defined as contact before 6 a.m. or after 10 p.m., unless the account is past due for more than 60 days or the cardholder has given express permission or said times are the only reasonable or convenient opportunities for contact.

The central bank said 20% of requests for assistance that the Financial Consumer Affairs Group gets are about credit cards, 6% of which are on debt restructuring.

“I would encourage those people to please get in touch with the Financial Consumer Affairs Group. We can certainly try to mediate by way of calling the attention of the bank,” said Ravalo.