MANILA, PHILIPPINES – The central bank of the Philippines, Bangko Sentral ng Pilipinas (BSP), has issued an advisory to inform the public on the extent of authority of external collection agencies to offer and approve debt restructuring of credit card.

The BSP issued the advisory in response to the complaints and inquiries received by the BSP’s Financial Consumer Protection Department involving credit card debt restructuring.

Credit card issuers, in the course of their business, refer problem credit card accounts to accredited external agencies for collection.

“However, accounts referred to collection agents which are restructured often result in complaints on unfair collection practices due to lack of awareness of credit cardholders on the extent of the authority of the external collection agencies to negotiate for debt restructuring,” the BSP said in a statement posted on its website.

Inconsistent Terms of Payments

Complaints also result from the inconsistency between the terms of payment offered to the credit cardholder by the external collection agencies and the terms of payment approved by the credit card issuer.

It is also a common practice among external collection agencies to pressure credit card holders to pay any amount, just to enforce collection, notwithstanding the amount has not yet been approved by the credit card issuer.

A collection agent is authorized to negotiate for repayment schemes based on specific guidelines set by the credit card issuer.

Credit cardholders may get a copy of the guidelines from the credit card issuer.

Only the credit card issuer can give the final approval of any type of repayment scheme reached with a collection agent which is supported by a Conforme Letter and/or a Promissory Note. This must be signed by both the credit card issuer and the cardholder.

“It is not necessary for the credit cardholder to give payment prior to the negotiation for a repayment scheme,” the BSP clarified.

Complaints Against Credit Card Collection Agents

Several credit card holders that have defaulted on their payments have complained about how collection agents are demanding payments from them.

There were those who claimed that collection agents have harassed them by calling several times in office phones and sending in letters that are made to appear to come from the courts.

Collection agents also often threaten credit card holders of lawsuits if they fail to pay at a date set by the collection agency. –