DEBT TIP TO FRIENDS

DEBT TIP TO FRIENDS

Are you indebted to a "micro-finance" company that when you analyze actually charges interest higher than the traditional 5-6 brought to the Philippines by Indian brothers?

Are you indebted to a card company and its collecting agents have been harassing you with terror calls?

Are you indebted to a bank with your land in the brink of foreclosure?

Whatever debts you have, DO NOT WORRY.

Here is a tip from me.

If somebody threatens you with what or brings you to a barangay chairman's office or sends you a demand letter to pay and threatening to sue with all imaginable legal actions, DO NOT WORRY.

Most of these debts, from banks or otherwise, are based on contracts signed by debtors on the knife's edge.  Except for a few, most debts are actually incurred because of necessity.

And because the debtors coming to these creditors are already standing on a very weak ground, the loaners cannot bargain.  After all, nobody can bargain from a very weak ground.  

WORSE, those borrowing money are always ready to sign a contract of loan however high the interest, penalties and surcharges.  

Microfinance corporations deceive their pensioners-loaners with interest of 1.5% up to 3% per month and you thought you got a good bargain; only to find yourself indebted beyond recovery because when you compute the interest would run up to 87% for a six-month-payable loan.  Why?  It is because the micro-lenders get in advance the amount equivalent to the interest for six (6) months in a debt payable in the same period.

Banks are also double-timing most loaners who give their house and lot in mortgage to guarantee the loans.   One immoral act of banks is they negotiate you for an updating of loan and you pay some amount while at the same time the bank file an application for a foreclosure proceeding to hook your family house.  This act is illegal in California and in, presumably, other states of the USA.  But there is no law that punishes it in the Philippines.  I wonder why.

Nevertheless, if you are indebted in whatever manner, DO NOT BE AFRAID.

Just challenge your lenders to sue you.  After they sued you a very good opportunity knocks on your door.   This is because if your creditors sue you in court for failure to pay loans with high interest you now have the right to file a counter-claim without paying any filing fee.   And in your counter-claim, just invoked the NEWEST RULE OR POLICY ON INTERESTS ON ALL KINDS OF LOANS, FOR FORBEARANCE OR OTHERWISE.

What is this new rule?  This is Monetary Board's Memorandum Circular No. 799 gives a sigh of good relief.  In addition to this new rule, we have the jurisprudence (cases decided by the Supreme Court) that limits monthly interest for loans only up to 1%.

Under this new Monetary Board circular, if there is no express stipulation to the contrary, the creditors can charge from the borrowers only 1/2% per month in interest.

Under the jurisprudence, the creditors can charge only up to 1% per month.

So that if you set up this counterclaim, the court will be obliged to reduce the interest rates charged against the debtors, to 1% only if there is a stipulation higher than 1% or to 0.5% per month only if there is no clear stipulation.

What about penalties or additional charges due to late payments usually charged by credit card companies?

To my mind, you have nothing to worry about that because these are CIRCUMVENTION of the law on interest and the Court will strike these down as interest and will be reduced accordingly by the same court.

One more.  No interest can be charged if there is no written agreement that there shall be interest.

So why worry?  

Borrow money now and start your small business that you are sure you can attend to personally.  If you personally attend to your small negosyo, it will grow for sure.

But be sure that amount of loan that you get is one that has monthly amortization or installment that is half your spare money every month.  This is to ensure you can pay and you build up your credit reputation.  

But if by a stroke of bad luck you failed to pay, do not worry because you can get relief from 1% per month jurisprudential interest or 0.5% per month per MB Memo Circular No. 799.

Wink!