No matter how hard you try to make ends meet, there are times when cashflow becomes limited and if you have no one to turn to, lending firms are going to extend a helping hand by assisting you with your financial needs. Most creditors are considered as a breath of fresh air to people who are in need of instant cash. Once approved, the money becomes available within 24 hours and will be repaid on installment basis. 

Although creditors provide financial assistance, borrowers are often in confusion upon finding out that there are finance charges incurred on top of the amount borrowed. This is why creditors or lenders have to educate debtors or borrowers on the terms and conditions. 

The Republic Act No. 3765 provides detailed information of this policy:

Section 4. Any creditor shall furnish to each person to whom credit is extended, prior to the consummation of the transaction, a clear statement in writing setting forth, to the extent applicable and in accordance with rules and regulations prescribed by the Board, the following information:

(1) the cash price or delivered price of the property or service to be acquired;

(2) the amounts, if any, to be credited as down payment and/or trade-in;

(3) the difference between the amounts set forth under clauses (1) and (2);

(4) the charges, individually itemized, which are paid or to be paid by such person in connection with the transaction but which are not incident to the extension of credit;

(5) the total amount to be financed;

(6) the finance charge expressed in terms of pesos and centavos; and

(7) the percentage that the finance bears to the total amount to be financed expressed as a simple annual rate on the outstanding unpaid balance of the obligation.

Section 5. The Board shall prescribe such rules and regulations as may be necessary or proper in carrying out the provisions of this Act. Any rule or regulation prescribed hereunder may contain such classifications and differentiations as in the judgment of the Board are necessary or proper to effectuate the purposes of this Act or to prevent circumvention or evasion, or to facilitate the enforcement of this Act, or any rule or regulation issued thereunder.

Section 6. (a) Any creditor who in connection with any credit transaction fails to disclose to any person any information in violation of this Act or any regulation issued thereunder shall be liable to such person in the amount of P100 or in an amount equal to twice the finance charged required by such creditor in connection with such transaction, whichever is the greater, except that such liability shall not exceed P2,000 on any credit transaction. Action to recover such penalty may be brought by such person within one year from the date of the occurrence of the violation, in any court of competent jurisdiction. In any action under this subsection in which any person is entitled to a recovery, the creditor shall be liable for reasonable attorney's fees and court costs as determined by the court.

(b) Except as specified in subsection (a) of this section, nothing contained in this Act or any regulation contained in this Act or any regulation thereunder shall affect the validity or enforceability of any contract or transactions.

(c) Any person who willfully violates any provision of this Act or any regulation issued thereunder shall be fined by not less than P1,00 or more than P5,000 or imprisonment for not less than 6 months, nor more than one year or both.

(d) No punishment or penalty provided by this Act shall apply to the Philippine Government or any agency or any political subdivision thereof.

(e) A final judgment hereafter rendered in any criminal proceeding under this Act to the effect that a defendant has willfully violated this Act shall be prima facie evidence against such defendant in an action or proceeding brought by any other party against such defendant under this Act as to all matters respecting which said judgment would be an estoppel as between the parties thereto. 

Some people often say that credit cards are only intended for responsible adults who can handle finances properly. Without a doubt, credit cards offer convenience as you do not have to bring cash to pay for your purchases. However, this plastic money can show its sharp fangs and talons to those who are unable to make timely payments. Yes, it is a harmless card that provides you the privilege to make cashless payment, but you can be a slave to debt if you are not a responsible credit card holder. Some may think that the state of being indebted is a humiliating experience, but the truth is, it is a humbling experience as it teaches you one valuable lesson that can make you a better person if and only if you learn from it.

Credit card holders who are being harassed by collectors are a scenario that does not happen once in a super blue moon. There are lots of horror stories involving a credit card holder and a collection agency and if you do not know your rights as a cardholder, the experience can be debilitating. If you have received incessant calls demanding of a payment for your overdue credit card bills, take a deep breath and heave a sigh of relief as it is not the end of the world.

You do not have to make yourself suffer just because of a credit card debt. You can still become debt-free provided, you take full responsibility for mishandling your credit card finances. Some collectors may contact the credit card holder in the wee hours of the morning or late at night just to make the person pay the past due amount. Unless the cardholder has given permission to contact them during these times, calling the cardholder at inconvenient times is prohibited. This violation is under BSP Circular No. 702, Series of 2010.

Under Section 3 and 4 of the circular, the credit companies should do the following:

“1. notify the card holder in writing of the endorsement of the collection to an agency at least seven days before the actual endorsement;

2. give the defaulting credit card holder the name of the agent assigned to the account once they have endorsed the collection to a third-party;

3. change all disclosure documents and marketing materials so that they are printed in plain language and in bold black letters against a white background using the Arial font and a minimum 12 point font size. “

The consumer protection also indicates that a cardholder should also have the option to take advantage of various payment options. If the cardholder cannot pay the debt in full, other repayment plans should be available to them.

Credit card companies who fail to observe the procedures will receive the following sanctions:

“ First offense: Reprimand for the directors/officers responsible for the violation.

Second offense: Disqualification of the bank concerned from the credit facilities of the BSP except as may be allowed under Section 84 of R.A. No. 7653 (“New Central Bank Act”).

Subsequent offenses:

Prohibition on the bank concerned from the extension of additional credit accommodation against personal security; and
Penalties and sanctions under Sections 36 and 37 of RA 7653”