5 Things You Should Know About "Utang"

5 Things You Probably Didn't Know About Utang
It's no secret how debt can ruin a relationship, a business or our personal finances. Yet, no matter how informed people are about the cause-and-effect of it, many are still struggling when faced with the dilemma of making a decision: to lend or not to?

Be it for personal or small lending business, it all boils down to the character of the person we lend our money.

But instead of having sleepless nights dealing with their shadows come payment time, why not prepare for the inevitable? Prevention is better than cure, right?

So how do you prepare yourself in order to avoid or at least lessen the negative things that a problematic borrower could cause you? We round down the 5 things you wish you knew earlier:

1. Black and White
As much as possible, always prepare a document such as Memorandum of Agreement (MOA) to be signed by both parties. It's pays to be smart and prepared than to be left scrambling with nothing when, knock on wood, your debtor ignores his or her financial obligations to you.

Any piece of signed document is a strong evidence compared to anything that is verbal in nature. In cases where you needed to send the money electronically (i.e. banks, money transfers), be sure to keep the receipt or transaction ID for future reference. You'll find all these documents useful in case you needed to consider item 5 on this list.

Black and White Paper
2. Collaterals
Commonly referred to as “secured debt”, this is a case wherein a specific item of property or simply, “collateral”, guarantees the payment of debt. Meaning, if the borrower failed to settle his or her debt, then the creditor has the right to take the property that was earlier pledged to be as collateral for the loan. However, you can't just walk into your borrower's house and take his Smart TV or car, for example. You still need to secure a court order or help from your local sheriff.

3. The 45% Rule
Although the actual percentage used differs from one bank or company to another, this is a very basic, yet crucial step when determining whether you should (and how much if yes) lend money to someone or not. That's why it's an SOP for banks and other lending institutions to check their clients financial status first!
You need to limit the loan amount based on the earning or income capacity of your borrower. You may ask for a copy of his or her pay slip or any proof of income (for self-employed or business persons). Remember that you don't need their sweet promises, but rather their payments. So how do you check if he or she is capable of repaying you?

The 45% Rule
To make it simple, let's say your borrower's monthly salary (Gross Income) is P30,000. By checking on his or her pay slip, you'll easily see all his or her deductions such as tax, SSS/GSIS contributions, or any existing loans that he or she currently owes the company.
Now assuming that all the deductions totaled to P5,000, that means that your borrower's Net Income or take-home money is reduced to P25,000. The 45% of P25,000, which is P11,250, should be left by your borrower's pocket. Meaning, P11,250 should be left untouched to fund his or her daily expenses. Otherwise, he or she may be forced to borrow again in the future! This is when bills may start to pile-up and the domino-effect pressure to pay could strike back and lead to his or her defaulting. Therefore, the allowable or maximum monthly due that your borrower can diligently pay you must not exceed P13,750 (or the remaining 55% of his or her net income).
4. Post Dated Checks
You may also consider asking your debtors to issue Post Dated Checks (PDCs) to encourage them to pay diligently. But what could really happen when a person issues a bouncing check? How true is it that no person shall be imprisoned because of non-payment of debt? Here's a great explanation on this this case;
Our Constitution has declared under Section 20, Article III thereof that “no person shall be imprisoned for debt or non-payment of poll tax”. Although a person who is indebted cannot be punished by imprisonment, he may nevertheless be sued civilly for collection of sum of money, wherein the court shall order payment of debt. However, when the act of borrowing of money is accompanied with an act which is punishable by law with imprisonment or penalty, the debtor may be criminally liable not for the non-payment of debt but for the commission of the crime.  As in your case, borrowing, alone, of money will not make you criminally liable. But your issuance of postdated checks which were later dishonored for “insufficiency of funds” constitutes a crime of either violation of Batas Pambansa Blg. 22 (B.P. 22) or Estafa.
B.P. 22, commonly referred to as the “Bouncing Checks Law”, punishes any person who makes or draws and issues any checks to apply on account or for value, knowing at the time of issue that he does not have sufficient funds in or credit with the drawee bank for the payment of such check upon its presentment. On the other hand, the maker or issuer may likewise be liable for estafa punishable under Article 315 of the Revised Penal Code if he issues a check for payment of an obligation using false pretense or fraudulent act.
Thus, your creditor may pursue either a criminal case for violation of B.P. 22 and/or estafa against you depending on the events surrounding your issuance of postdated checks. A 20-year imprisonment is the maximum penalty which can be imposed upon an accused in an estafa case under Article 315 of the Revised Penal Code, which states that “the penalty of prision correccional in its maximum period to prision mayor in its minimum period, if the amount of the fraud is over 12,000 pesos but does not exceed 22,000 pesos, and if such amount exceeds the latter sum, the penalty provided in this paragraph shall be imposed in its maximum period, adding one year for each additional 10,000 pesos; but the total penalty which may be imposed shall not exceed twenty years.”

Bouncing Check Law
Please be reminded that the above legal opinion may vary when other facts are stated.

Source: http://www.manilatimes.net/bounced-checks-constitute-crime-of-estafa/54865/
5. The 2016 Revised Rules of Procedure for Small Claims Cases
Pursuing legal actions against a person, especially for small claims cases (below P200,000.00) can be expensive. However, because of this rule, the court would no longer require you to get a lawyer and expects to have a decision within 30 days after the hearing.
So if you wish to collect money from someone who owes you but don't want to spend more on legal fees such as getting your own lawyer, the Small Claims Procedure will come handy.

Small Claims Court
Again, these are civil claims which are exclusively for the payment or reimbursement of a sum of money not exceeding P200,000.00.
What are the cases that can be filed under this law?
  • Actual damage caused to vehicles, other personal property, real property or person;
  • Payment or reimbursement for property, deposit, or money loaned;
  • Payment for services rendered, insurance claim, rent, commissions;
  • Payment for goods sold and delivered;
  • Money claim pursuant to contact, warranty or agreement; and
  • Purely civil action for payment of money covered by bounced or stopped check.
Where to file small claims case?
Since this is a civil case, a small claims case should be filed with the Metropolitan Trial Court or Municipal Trial Court in cities (a.) where the Plaintiff (the person suing) resides or (b.) Where the Defendant (the person being sued) resides. If the Plaintiff is in the business of lending, banking and similar activities, in the city where the Defendant resides, if the Plaintiff has a branch in that city.

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  1. mas maganda wag nalang po magpautang para wala probelema!!!

  2. Denisse F. DyDecember 07, 2017

    The moment you decide to take personal credit, friendship and relationship is at stake so think 3 times

  3. Utang na namannnn!

  4. Izzy SubaldoDecember 11, 2017

    Pag UTANG, BAIT.
    Kaya para wala away, wag na UTANG!!!

  5. Pls share din po mga paraan pano masingil ung mga ayaw na magbayad! Hahahahahuhuhu

  6. UTANG = TAKBO!!

  7. Hey there, author! How's it going? I stumbled upon your article about "5 Things You Need to Know About Utang" on PisoandBeyond.com, and I must say, it was an informative read. As a student in need of some engineering dissertation help, I appreciate your insights on managing debts and financial responsibilities. It's refreshing to see a personal finance blog touch on topics that resonate with different individuals, including us students.

  8. Knowing 'Utang' is essential, particularly when it comes to paying for projects in the United Kingdom. Utang' firstly alludes to debt, and before making any financial transactions. Pay For Assignments Uk one must understand the implications. Second, make sure there is justice and openness in the terms and circumstances related to assignment payment. Thirdly, study reliable providers to avoid frauds. keep up with UK rules pertaining to academic services.


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