Image by Gerd Altmann from Pixabay
The ber months in the Philippines are widely celebrated as a season of joy, reunion, and festivity. As early as September, the streets light up with lanterns, malls echo with Christmas carols, and families begin their preparations for the most anticipated holiday of the year. Yet behind the cheer and celebrations lies a less festive reality: the mounting financial pressure that the season brings. From gifts, food, party and travel preparations, expenses quickly add up, and many households find themselves unable to keep pace with the demands of the season.
To cope, Filipinos often turn to what seem like convenient solutions—credit cards, “shop now, pay later” schemes, or online lending apps. These financial tools promise immediate relief and make spending appear easy and manageable. At first, it feels like a harmless compromise: a purchase now, to be paid off at the next payday. However, what begins as a short-term solution often becomes a long-term financial burden. This is the debt trap, and it is a cycle that has caught far too many people in recent years.
Debt Trap Begins
The trap begins with the easy access to credit that technology has made possible. Online lending apps, payday loans, and credit cards offer instant money at the touch of a screen, often without thoroughly assessing whether the borrower has the capacity to repay. This convenience makes it tempting for consumers to borrow, especially when the holiday spirit encourages generosity and lavish spending. Social and cultural pressures to give gifts, contribute to gatherings, or host parties drive people to spend beyond their means, often with the reassurance that borrowing can tide them over until the next payday. Yet, a single missed payment can be the beginning of a downward spiral. Interest accumulates, penalties are imposed, and what was once a small, manageable amount balloons into a debt that becomes increasingly difficult to repay.
As if the growing financial burden were not enough, borrowers are often subjected to harassment from lenders and collectors. Many Filipinos have reported experiences of being hounded by relentless phone calls, shamed through public postings, or even threatened into paying. For some, online lending apps have taken abusive practices further, contacting their family members, employers, or colleagues in an attempt to embarrass them into repayment. This kind of harassment is not only abusive; it is also unlawful.
What the law says about it
Fortunately, Philippine law protects borrowers from harassment and threats in debt collection. Section 8(d) of Republic Act No. 11765, otherwise known as the Financial Products and Services Consumer Protection Act, prohibits financial service providers from employing abusive collection or debt recovery practices against their financial consumers. Similarly, Bangko Sentral ng Pilipinas (BSP) Circular No. 1160 also states:
BSls are prohibited from employing abusive collection or debt recovery practices against Financial Consumers. BSls or their collection agencies, counsels and other third-party agents may resort to all reasonable and legally permissible means to collect amounts due them. However, in doing so, they must observe good faith and reasonable conduct and refrain from engaging in unscrupulous or untoward acts.
Thus, lenders cannot publicly shame borrowers or use intimidation to pressure repayment. Borrowers should know that they have a legal right to be free from such abusive practices.
Equally important is the right to transparency. Under the Truth in Lending Act, or Republic Act No. 3765, lenders are required to disclose the true cost of borrowing, including interest rates, fees, and penalties. When loan agreements misrepresent or conceal these charges, borrowers may challenge them in court. While parties are free, in view of the suspension of the Usury Law, to set interest rates in their loan contract, they must ensure that their stipulated interest rates are neither iniquitous nor unconscionable. The courts continue to strike down unconscionable interest rates that violate fairness and public policy. This ensures that lenders cannot exploit borrowers by imposing rates that are excessive or oppressive.
How to Protect Yourself This Holiday Season
Still, legal remedies are only part of the solution. Avoiding the debt trap begins with personal financial discipline. Budgeting for holiday expenses well in advance, spending within one’s means, and resisting the urge to borrow for show or luxury are simple but powerful ways to prevent financial strain. The 13th month pay, a much-awaited bonus during the season, should be used strategically—prioritizing essentials and debt repayment rather than fueling more spending. Borrowers should also be cautious about where they source credit, ensuring that any lender they transact with is properly registered with the BSP or Securities and Exchange Commission (SEC).
Borrow Responsibly, Assert Your Rights
Debt is not inherently bad, but when mismanaged—or when lenders abuse borrowers—it can destroy financial stability. The law protects consumers from harassment, predatory practices, and lack of transparency.
As the holidays approach, be cautious, spend within your means, and know your rights. If you or someone you know is facing harassment, abusive terms, or unfair lending practices, legal remedies are available. Don’t let holiday debt steal your peace of mind—empower yourself with legal protection.
For more information on abusive collection practices, unfair loan terms, or data privacy violations by lenders, do not hesitate to reach out to us through our Facebook Page or our contact information at (63) 936 979 2296 or (63) 908 867 6601 to schedule a consultation and protect your rights.