Legal advice for delinquent cardholders

What legal remedies are available for a cardholder who has defaulted on payments?

What legal shields can one use against the harassment of collection agents agencies? What legal help can one have in solving the predicament of outstanding debts one does not have the money to pay?

Lawyer Teodoro Pastrana, an expert commercial lawyer who monitors the credit card business, told The Manila Times that ordinarily, a credit cardholder who is in default and whose demands for settlement have matured will be haled to court with a simple collection case.

“That is only a civil case, there is no criminal liability. However, the debtor has to go through the hassle of litigation. Thus, if he has the means to pay, he better pay his obligations instead of hiring a lawyer and going through a process of litigation,” he said.

However, Pastrana said that it is a different story if the elements of deceit and fraud existed on the part of the debtor. The case against him will be one, which is criminally punishable under the Revised Penal Code.

Section 9 of Republic Act 8484, or An Act Regulating the Issuance and Use of Access Devices, Prohibiting Fraudulent Acts Committed Relative thereto, Providing Penalties and for other Purposes, list acts that are prohibited acts and if committed by a card holder constitute “access device fraud” that are legally considered criminal in nature.

“A credit cardholder who abandons or surreptitiously leaves the place of employment, business or
residence stated in the application or credit card, without informing the credit card company of the place where he could actually be found, if at the time of such abandonment or surreptitious leaving, the outstanding and unpaid past due for at least 90 days and is more than P10, 000 shall be prima facie presumed to have used his credit card with intent to defraud,” the law states.

“The most critical here, is when a person applies for a credit card indicating his or her office and home address and would maximize his or her credit limit and flee thereafter, since it is deemed to have violated this [Republic Act 8484] act, which is punishable by both a fine and imprisonment,” Pastrana said.

Pastrana explained that when it is a simple civil case, the worst scenario that a debtor is poised to face when he loses the case in court is that the creditor or plaintiff can ask for the execution of judgment.
Thus, certain personal and real properties of the debtor may be, upon request by the plaintiff or winning card issuer, may be attached for the payment of the cardholder’s debts. The property attached may be sold in a public auction, then the proceeds of the sale will be applied to the amount of the judgment.

This amount will, of course, be larger than the cardholder’s debts. The judgment will include attorneys’ fees and other expenses the court may decide the debtor should pay for. –KATRINA MENNEN A. VALDEZ REPORTER, Manila Times