LEGAZPI CITY, Albay (PIA) — Jay (not his real name) is a businessman who has been receiving persistent calls from collectors demanding payment for a past-due loan. These calls often occur late at night, causing him considerable stress.
He took out a cash loan to start his small business. While the loan helped launch the business, unforeseen financial challenges ultimately led to its closure, leaving him with outstanding debt and depleted funds.
“The lending company contacts me as soon as I miss a payment, even during late hours,” Jay shared.
According to lawyer Julius Nocomora, counsel at the Securities and Exchange Commission (SEC), contacting borrowers during unreasonable hours is considered an unfair debt collection practice.
“If they call you between 10:01 p.m. and 5:59 a.m. to demand payment, that’s considered an unfair collection practice. You can file a complaint,” Nocomora said during a recent smart debt management session organized by the Bangko Sentral ng Pilipinas Legazpi branch.
The SEC’s Memorandum Circular 18, series of 2019, outlines several practices considered unfair, including:
- Using threats of violence or other criminal actions to harm individuals;
- Employing obscene, insulting, or profane language;
- Disclosing or publishing the names and personal information of borrowers;
- Contacting individuals in the borrower’s contact list who are not listed as guarantors or co-makers;
- Requesting advance fees for loans
Lenders are prohibited from contacting individuals in the borrower’s contact list other than those named as guarantors or co-makers.
“Some lenders reach out to the acquaintances, friends, and family of borrowers. The most problematic situation arises when they contact the office or workplace and embarrass their client. The only people they can contact are the guarantor or co-maker,” Nocomora added.
Nocomora also warned about individuals impersonating legitimate lending companies who request advance fees.
“Legitimate lending or financing companies and their agents do not ask for advance fees. Any processing fees or other service charges are typically deducted from the loan proceeds,” he clarified. He noted that such practices may be classified as criminal offenses under applicable laws.
“Some lenders reach out to the acquaintances, friends, and family of borrowers. The most problematic situation arises when they contact the borrower’s workplace, causing embarrassment for the client. The only individuals they are authorized to contact are the guarantor or co-signer,” Nocomora stated.
Nocomora also warns against individuals impersonating legitimate lending companies who request advance fees.
Borrower’s responsibilities
Nocomora stresses on the following responsibilities for borrowers when engaging with lending and financing companies:
- Verify with SEC if the company or online platform is registered and authorized to operate;
- Thoroughly understand the terms and conditions of the loan agreement;
- Assess personal financial capacity to repay the loan according to the agreed terms.
Reporting unfair debt collection practices
To report complaints or seek assistance, individuals can contact the SEC Legazpi Extension Office through the following platforms:
Facebook: SEC Bicol
Mobile: 09298831917 / 09159629968
Email: [email protected]
Office Address: 2/F RDC Primeland Bldg, Landco Business Park, Brgy Capantawan, Legazpi City (Raiza Lucido contributed to this report/PIA Albay)
