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Thursday, March 18, 2010

Do you fear imprisonment for non-payment of Credit Card?

Thank God I have never had a credit card. Spending with cash motivates me strongly to budget my money wisely and to abide by “No Debt” rule (well of course every rule has an exception).

Two persons asked me this morning if they can be imprisoned for non-payment of their balance in the credit card.

It depends.

The outstanding balance on credit cards is considered debt since the relationship between a credit card provider and its card holders is that of creditor-debtor, with the card company as the creditor extending loans and credit to the card holder, who as debtor is obliged to repay the creditor (Polo S. Pantaleon vs. American Express International, Inc.; G.R. No. 174269). In case of non-payment, the debtor generally incurs only civil liability. Further, every credit card holder is entitled to the provision of Bill of rights that “No person shall be imprisoned for debt or non-payment of a poll tax.”

The non-payment however would give rise to criminal liability if there is “deceit with intent to defraud” on the part of the delinquent credit card holder. Consequently, he can be held liable for estafa which carries the penalty of imprisonment. It is stemmed from the provisions of R.A NO. 8484 – Access Devices Regulation Act of 1998 (Sec. 14 (f ) par. 2) that:

“A cardholder who abandons or surreptitiously leaves the place of employment, business or residence stated in his 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 balance is past due for at least ninety (90) days and is more than Ten thousand pesos (P10,000.00), shall be prima facie presumed to have used his credit card with intent to defraud.”

Non-payment of debt will also establish a bad credit reputation. Chances are, you may find it difficult to acquire a loan that is an absolute necessity such as car loan, housing loan, etc.

So you better pay off your debts to save you from anxieties, harassing phone calls, court litigation and unnecessary inconvenience, stress and expenses.

The way of the superior person is threefold;
VIRTUOUS, they are free from anxieties;
WISE, they are free from perplexities; and
BOLD, they are free from fear’

- Confucius -

RELATED ARTICLES:

Warren Buffet's (and Lorille’s) Advice to Young People

Bouncing Checks Law (B.P. 22)

Is Money-Saving tantamount to the love of money?

10 comments:

  1. How about if the unpaid balance is due to a renewal fees for a card which was already returned/closed in 1996? The problem is I don't have anymore a copy of acknowledgement receipt.

    ReplyDelete
  2. How about if the unpaid balance is due to all late payments and interest charges and what if the person involved really not capable of paying

    ReplyDelete
  3. how about non payment of phone bills

    ReplyDelete
  4. how about the card holder who has debt passed away?

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  5. Debt is an obligation NOT extinguished by death.
    The payment can be charged against the estate or inheritance of the deceased.

    ReplyDelete
  6. What if you really didn't apply for the credit card? Like they just send it to you thru mail then activate it thru phone? I no longer have a job for two years now that's why I can no longer pay my credit card bills.

    ReplyDelete
  7. But if you have signed the application form they sent you, that means it is legally binding.

    ReplyDelete
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    ReplyDelete
  9. I have a credit card and as a rule to myself, I only use it if it's really that important and I have no ready cash but I will earn that amount in the succeeding payroll dates. Otherwise, no purchases for me hehehe.

    ReplyDelete

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