TIPS: Debt Collection Agency

Readers, here are tips to equip yourself with basic information of your rights when it comes to debt collection.

1. You have the right to ask the debt collector a copy of your Statement of Account (SOA) duly signed.  For example, credit card issued by Citibank then it must be signed  by the Citibank.  Please take note that a demand letter or an offer letter showing a discounted rate of your debt is not your SOA.  If they provide you an SOA, make sure to verify it with the bank for its authenticity.  Make your request clear or adopt a mantra:  No SOA, No Pay.

2. You have the right to decide on how much you can afford to pay your debt. Do this by sending a proposal letter through email or the post office for your proposed mode of repayment and it should be according to your financial capacity.

3. Once you confirm agreement, it should be officially written (never a verbal one). A written proof is what you need in case they deny your payments.

4. In case of disagreement in the proposal, then don’t pay. Challenge the collecting agency to pursue the case in court where it is handled properly. It should be noted that credit card debt, done in good faith (such as bankruptcy, unemployment, etc) is not a criminal act but a simple case of breach of contract therefore constitute a civil case. Credit card debt eventually turns into criminal act at the issuance of bouncing checks (estafa) or was stolen and used by another person.

5. In some cases, collecting agencies may use police presence as shock factor to knock at your door: will dangle a piece of paper in your face as “warrant of arrest” but will not allow you to read it. These are one of the many ploys to pressure you out of your wits to pay your debt. Don’t panic. Instead, get their names, their precinct and their car’s plate number. You may also take a picture of their faces through your phone camera or press start a video. Again, be wary that this is not the job of policemen, barangay captains or kagawads. File a complaint or case against them for abuse of authority if they keep on harassing you.

6. Credit card collection agencies will use guises and disguises for the sole purpose of collecting money from you. Commonly used are “LBC uniformed men” to enter your home by announcing a package delivery. Once you allow them to enter the house, they will reveal their true identity and will try by all means to purge money from you or pull-out appliances at your house to swap for your debt. At times they will claim to be the sheriff of the court and extort money from you. Be vigilant and tell them to go or you file a criminal case against them for trespassing, extortion or unjust vexation.

7. Some initial pressures used by credit card collectors are in the form of text messages or persistent calls. Messages may say you have a pending warrant of arrest or will contain details of court case number, name of the judge, branch of court and time of hearing. The purpose of this is to sow panic and fear. However, a text message containing information of an impending warrant of arrest is a give away. A proper court will not issue such nonsense. Warrant of arrest is for criminal cases and credit card debt is a civil issue. It should be noted that warrant of arrests are personally delivered by court authorities by surprise and not over the phone or texts messages, fax or email messages.

8. What is RA 8484? Most often, this republic act is used by collecting agents to intimidate defaulters. In essence, Republic Act 8484 is also known as the Access Devices Regulation Act of 1998. In layman’s language, an access device means any card, plate, code, account number, electronic serial number, personal identification number and other telecommunication services, equipment or instrumentalities-identifier or other means of account access that can be used to obtain money, goods, services or any other thing of value to initiate a transfer of funds. RA 8484 is also applicable to person/persons who applied for a credit card using fake identity/identities which is classified as a fraudulent act and has nothing to do with your credit card debt or non-payment of debt.

9. Having said all that, it is worth mentioning as well that credit card defaulters can still travel abroad. Do not believe if collectors will threaten to file a hold departure order against you because it’s merely a bluff. For those getting an NBI clearance for work or other purposes, don’t believe in hearsay that you cannot get your clearance despite your standing debt. Take note that NBI records reveal criminal cases only and not civil cases.

Are credit card debt collectors telling lies? Yes. It’s their modus operandi to put pressure on the defaulter to collect money. We know they are only doing their jobs but a defaulter has rights as well to protect themselves from such harassment. Collecting agencies are paid for by the banks to collect debts. For as long as you’re not running away from your responsibilities, or you’re not in hiding, then move on with life and learn a great deal from the experience.


How to register a NON-Stock, NON-Profit CORPORATION with the Philippines SEC

This blog is having a lot of queries on how to register a non-stock and non-profit corporation. Thus, I thought that it’s about time to write one for all the readers and by passer out there. Anyhow, I tried to run a query via google search engine, and some relevant sites came up with the same answers. Next, I checked out SEC and to my surprise the procedures still are the same. So, for the benefits of those who are surfing, reading, visiting and passing by my blog, here are the steps to be followed:

1. Verify and reserve the proposed corporate name. You could do this the hard way, at the SEC Verification Unit, located at the SEC Building, EDSA, Greenhills, Mandaluyong City (right across the Philippine Overseas Employment Administration [POEA] and the EDSA Shrine). If you want to make your life a bit easier, you could do the verification and registration online, through the SEC-iRegister, a 24-7 portal.  After paying the reservation fee, you will get a Name Verification Slip, which is submitted together with the other requirements.

2. Prepare the Articles of Incorporation and By-laws. Blank forms are also available from the Company Registration and Monitoring Department (CRMD). The drafting of the Articles of Incorporation and the By-laws, as well as the other requirements, could also be done by your lawyer.

HOWEVER, in lieu of the authorized capital stock requiring 25% subscriptions of the authorized capital stocks and the attestation in the Treasurer’s affidavit that at least 25% of the subscribed stocks had been paid, for non-stock/non-profit corporation, it only requires the corporation to state the amount of capital or money contributed or donated by specified persons.

So there…

Ah, plus the names, nationalities, and residences of the contributors or donors as well as the respective amounts given by each.  And remember it must be on an itemized presentation.  Take note also, and this is a major major requirement, the majority of members should be a resident of the Philippines.  With this provision, a foreigner can put up 100% foreign owned non-stock, non-profit corporation. Why, because the “code” only requires that the majority of its members should have Philippine residency.

3. Last step is the submission of a Bank Certificate of Paid In Capital or Working Capital to Philippine Securities and Exchange Commission.

ANYHOW, for Foundation —

(a) a notarized Certificate of Bank Deposit of the contribution of not less than P1,000,000.00 ; and

(b) a statement of willingness to allow the Commission to conduct an audit.

Business, debt is a safety net…

If you follow the 100 percent-leveraged philosophy, you’ll being the strongest of all positions. You can sit back and objectively assess the performance of the business.

BusinessIt’s difficult for laypeople to understand but the more debt your business has, the more patient creditors will be with you. The reason is simple. If your business fails, creditors stand to see little or nothing. A business with a high liquidation value in relation to secured debt will yield a healthy dividend to creditors and make you a more vulnerable bankruptcy target.

If it’s going well but needs periodic cash infusions, you have your cash reserves to handle it. But now you’re making the investment decision based on performance and not projections. It’s far safer.  Di ba?

BUT the bigger question is, how will financial backers, like the banks for example, take to the notion of 100 percent financing while you drive and manage the business without putting your own money!  Is that insane? But I am telling you it depends on the backer or financier and your reasons. When lenders are convinced the reason is that you don’t have the cash to invest, you retain credibility, but your backers will take an even more skeptical look at the validity of your business plan. Let me repeat that — it depends on your BUSINESS PLAN. Obviously suspicion reigns when you do have capital and let it be known that you’d simply prefer to play with everyone else’s.

There are several ways to handle either situation. Honest disclosure of your limited finances is a start. Don’t allow lenders to think you’re holding back and afraid to risk your own capital. If you do have available capital, then explain that your cash is committed for working capital and can’t be used for fixed startup costs.

Many entrepreneurs overcome the “owner’s capital” question by contributing personally owned equipment, vehicles, or patents to the business. It satisfies most lenders, testing your commitment to gamble on your own business.  THUS, commitment doesn’t necessarily have to be in the form of owner’s CASH!

Sometimes small investment means losses!

Hello guys and gals, I am back!  Anyhow, my topic now is about investment.  And when we talk about investment we talk about a decision.

And If you will ask me, intelligent approach to a wise investment is knowing first the basic questions that you should ask yourself  before you start your venture.  These are —

1. How Much Can You Invest? This helps define what you’re prepared to lose on a venture. Contrary to what many entrepreneurial books suggest, starting a business is not exposing all your personal assets to risk but gambling only with what you can realistically afford to lose. I handle it by dividing my assets into the classical “touch”and “don’t touch” piles. For example, I’ll confine my entrepreneurial investments to only 25 percent of my liquid assets. That’s the formula I’m comfortable with, but you need your own formula, if in case. Once you set aside precisely what you are prepared to risk, you know your maximum investment capability while preserving your fall-back position. Setting limits is the only way to control losses.

2. How Much Should You Invest? Within the limits of what you can afford to risk is the decisionof what the business can justify as an investment. Consider the return on investment the business can offer and make certain it bears a rational relationship to the capital at risk. Many entrepreneurs make sizable investments only to discover the low earning power of the venture. Others understand the financial return won’t quite measure up, but go ahead because the business offers psychic enjoyment or a better lifestyle. It’s a fairtrade-off if that’s all you expect from the business. When financial return is important, your goal should be a minimum of 25 percent annual return on investment. The inherent risk of a small business doesn’t justify less.

3. How Much Will You Invest? What the business can logically justify as an investmentand what you will invest are two different numbers. The goal is to prune investment to the smallest possible amount. Cutting investment not only cuts losses but provides a better return onwhat you do invest. Starting business means investing as little of your own money as possible.

4. When Will You Invest More? Over-investment is most likely to occur after the businessis in operation. Many entrepreneurs start the venture with a reasonably small and prudent investment only to throw caution to the wind as they continuously feed the cash-hungry enterprise.  Define later the criteria for a capital infusion.

And as a NOTE, before I start a venture I project sales. If the business is at or close to its targeted goal, I may loosen my pocket to release a few more money, but my eyes are always on the financial indicators. If the venture looks like a loser the investments stop. That’s the one cardinal error of so many entrepreneurs. Rather than admit defeat, they think that adding money is the cure. It’s expensive medicine.