Dear Attorney,

I am reaching out regarding an unpaid debt that I am owed. Despite repeated requests for payment, the debtor has failed to settle the amount. Could you guide me on what legal actions I can take to recover this debt?

Sincerely,
Concerned Creditor

Insights

When a debtor fails to pay an obligation, creditors may explore legal remedies to recover their money. In the Philippines, debt collection may be done through various means, including:

Demand Letter: A formal written communication to the debtor, urging them to settle their debt. This is the initial step taken by most creditors before considering litigation. The letter serves as a final notice, warning the debtor of possible legal action if the debt is not paid within a specified period.
Filing a Collection Case: If the debtor fails to respond to the demand letter, the creditor may file a civil case for the collection of sum of money. This could be done through either:
- Small Claims Court: A streamlined process for claims below a certain threshold, where parties do not need to hire lawyers, and judgments are typically quicker. It is an efficient remedy for minor debts.
- Regular Court Action: For more substantial claims, a creditor may file an ordinary civil action for collection of a sum of money. In this scenario, the court will issue a summons, and both parties will be allowed to present evidence and arguments during a full-blown trial.
Promissory Notes and Acknowledgment of Debt: It is highly recommended for creditors to secure a promissory note or acknowledgment of debt signed by the debtor. This serves as strong documentary evidence in court, demonstrating the debtor’s obligation to repay the loan.
Execution of Judgment: Once the court rules in favor of the creditor, the creditor may proceed with the execution of judgment. This allows the creditor to enforce the decision by seizing the debtor's properties or garnishing their bank accounts to satisfy the debt.
Other Remedies: In some instances, creditors may also explore the option of entering into a compromise agreement with the debtor or pursuing mediation or arbitration as alternative dispute resolution methods.

Creditors must act within the prescriptive period for filing collection cases, which varies depending on the type of obligation, to prevent their claims from being barred by the statute of limitations.