How to Collect Debt From a Friend: A Guide to Filipinos

Last Updated on May 18, 2023

It’s difficult not to lend a friend or family member money, especially if they’re in a terrible financial situation. But time has passed, and they haven’t paid you back. Are you tired of feeling uncomfortable and awkward every time you see them?

It’s a common problem among Filipinos, where asking for money back from a friend can be considered taboo or impolite. But the longer you wait, the more you suffer financially and emotionally.

At the same time, some people will use the same reason above to borrow money from you without any intention of paying back.

Regardless, there are ways to collect debt from a friend without ruining your relationship. In this guide, we’ll show you how to approach the situation confidently and tactfully, so you can get your money back and maintain your friendship.

Understanding Debt Collection in the Philippines

The debt collection process is the collecting unpaid debts from debtors. It involves contacting the debtor to remind them of their outstanding debt (or loan money) via business transaction and requesting payment.

The creditor can do debt collection or a third-party debt collection agency. Debt collection can be done through various means, such as phone calls, letters, or personal visits.

The Legal Framework for Debt Collection in the Philippines

Civil Code of the Philippines

Also known as the Republic Act No. 386, it provides the legal framework for debt collection in the Philippines.

It states that the creditor has the right to collect the debt, but the debtor has the right to dispute the debt if they believe it is invalid. The debtor also has the right to request a payment plan if they cannot pay the debt in full.

Consumer Act of the Philippines

The Republic Act No. 7394 protects consumers against abusive debt collection practices. It prohibits debt collectors from using threats, intimidation, and harassment to collect debts.

Fair Debt Collection Practices Act (FDCPA)

The FDCPA provides more specific guidelines for debt collection practices. It prohibits a debt collections agency from using false or misleading statements to communicate with debtors. It also requires debt collectors to provide written notice to debtors within five days of their initial communication.

Steps to Collect Debt from a Friend in the Philippines

Requesting debt payments from a client or business partner is one thing. But it’s another if you want a family member or friend’s debt paid.

Asking for payment can feel awkward, especially if you wish to main a positive relationship with this person.

But it’s important to remember that you have a right to get paid. Here are some steps to follow when collecting debt from a friend in the Philippines.

Initiate Communication

You can make first contact in person, over the phone, or via email or messaging. It’s important to approach the conversation calmly and respectfully and to avoid accusing or blaming the friend for not paying.

Determine the Reason for Non-Payment

Once communication has been established, it’s important to determine the reason for the non-payment.

It’s possible that your friend is experiencing cash flow problems or is simply forgetful. Understanding the reason for the non-payment can help you determine the best course of action.

Negotiate a Payment Plan

If your friend cannot pay the entire personal debt at once, it may be necessary to negotiate a payment plan. This can involve setting up a schedule for regular payments or agreeing to a lump sum payment later.

It’s important to get the payment plan in writing via a promissory note and have both parties sign it to ensure it is legally binding.

Dealing with Late Payments

When a debtor is late on their payments, following up with them and reminding them of their obligation to pay back the debt is essential. It is also important to be understanding and flexible if the debtor is experiencing financial difficulties.

One way to encourage timely payments is to offer incentives for early payments or penalties for late payments. This can help motivate the debtor to make their payments on time.

Handling Emotional Issues

Debt collection can be an emotional issue for the debtor and the creditor. It is essential to remain calm and professional when dealing with emotional issues. It is also important to show empathy and understanding towards the debtor.

If the debtor is experiencing financial difficulties, offering resources or advice on managing their finances may be helpful. This can help them get back on track and make it easier to pay back the debt.

Consider Legal Action

If your friend is unwilling or unable to pay the debt, it may be necessary to consider legal action.

You can file in court following the regular procedure if the amount sought to be collected is over one hundred thousand pesos (100,000Php).

You can still file in court if the case involves an amount of less than one hundred thousand pesos (100,000Php), but it will be a summary proceeding.

Conclusion

Collecting debt from a friend in the Philippines can be delicate, and it’s essential to approach the situation carefully. While it may be tempting to take aggressive actions, such as threatening legal action or harassment, these tactics are ineffective and illegal.

By following the proper procedures and maintaining open communication, it’s possible to resolve the situation without damaging the friendship.

However, even if you’ve established ground on collecting debt from a friend, expect to experience difficulties still. One of these potential issues is when the person goes AWOL by not replying to your messages and hiding from you.

If so, contact us at The Spy Experts for our skip-tracing services. We will track down family members or friends actively hiding from you and provide you with information about their whereabouts. This way, they can settle their debt with you once and for all.