Dear Attorney,

I am currently facing harassment from someone because I was not able to pay my debt in full. This individual is threatening to file a lawsuit against me. I am unsure how to handle this situation and would appreciate your advice on what steps I should take. Can they really sue me for this? What legal actions can I pursue to stop the harassment?

Sincerely,
Concerned Debtor

Insights

In the Philippines, harassment due to unpaid debt can be addressed through several legal remedies. While a debtor is legally obligated to pay their debts, creditors or third parties collecting the debt must also comply with existing laws regarding fair collection practices. The following legal concepts and laws are relevant to this issue:

Fair Debt Collection Practices
Under Philippine laws, particularly the Lending Company Regulation Act of 2007 (Republic Act No. 9474) and the Financial Consumer Protection Act (Republic Act No. 11765), creditors and collection agencies must adhere to fair and reasonable collection practices. Harassment, intimidation, or threats, such as threatening a lawsuit without a valid legal basis or using abusive language, are prohibited. These laws protect borrowers from abusive collection methods.
Civil Liability vs. Harassment
While failing to pay a debt can result in civil liability, such as a lawsuit for collection, this does not permit the creditor or any collecting party to engage in harassment. Legal action for debt collection should follow due process through the courts. Threats of imprisonment are not legally valid, as debt-related disputes are generally considered civil cases, not criminal ones.
Small Claims Court
If the debt amount is within a specific limit, the creditor may file a case under the small claims procedure. This process is streamlined to handle financial disputes efficiently and inexpensively, without requiring legal representation. However, the debtor has the right to present their defenses, including improper collection methods by the creditor.
Remedies for Harassment
If the debtor is subjected to harassment, they can file a complaint with the National Privacy Commission (if personal data was used improperly in the collection process) or the Securities and Exchange Commission (for licensed lending companies violating regulations). Additionally, the debtor may consider filing civil cases for damages or complaints for unjust vexation under the Revised Penal Code.

It is essential for individuals facing harassment to consult with a lawyer to fully understand their rights and explore legal remedies against any unlawful actions by creditors or collection agents.