Credit Card Woes - The Letter

Now that you’ve figured out how to deal with that credit card collector on the phone, expect them to start pushing up the ante. The battle has now been joined, and they’re now ready to unleash one of the most effective weapons in their arsenal, The Demand Letter. Just one of these if received unprepared - especially the first time - is enough to bring a grown man down to his knees in surrender. So let’s gear-up and find out if there’s a reason to fret about this threat.

Most credit card demand letters come in two types.

One is the pretty straight-forward type, specifying how much you owe, a reminder of the contents of the credit agreement, plus a bonus threat regarding what action they’re gonna take against you.

The other kind of letter is more indirect in its approach but nonetheless more potent. It is formatted to look like an official civil/criminal Complaint ready to be filed - or to the impression of some - already filed in the appropriate Trial Court. No wonder people who are uninformed and unfortunate enough to get one of these would seriously contemplate on how much painful it would be if they were to jump off a building.

So before you jump, allow this to sink in: You’re not in trouble, it’s just your impression. So CHILL! (repeat as needed)

Let’s look at excerpts of a sample Credit Card Company Demand for Payment:

Dear {Your Name}:

Our client, {Your Credit Card} has referred to us for appropriate legal action your total unpaid account of {Your Debt Amount} as of {Date} representing purchases and usages made thru your above-stated Card, inclusive of finance and penalty charges, as well as collection fee.

Under the terms and conditions of the Card member’s Agreement, {they now quote the small print at the back of the credit card agreement you so happily and excitedly signed a couple of months or years ago}

Despite repeated demands, you failed to pay your said account, hence, we are formally serving this DEMAND for you to pay in full your said unpaid account, including all charges within FIVE (5) DAYS from receipt hereof. Otherwise, we would be constrained to CRIMINALLY PROSECUTE YOU for Violation of R.A. 8484 (Defrauding of Creditors) if the evidences warrant and/or CIVILLY CHARGE YOU, for Collection of Sum of Money with Prayer for Attachment, before the (Regional or Metropolitan) Trial Court of {City}, in order that you may be penalized with imprisonment including the recovery of litigation expenses and judicial cost, as applicable, and twenty five (25%) percent attorney’s fees, without further notice and delay.

Please consider this as our LAST and FINAL DEMAND.


Scared you the first time right? Now let’s take it apart!


1.) They’re demanding that you pay in full within 5 days?! - Ridiculous! If you don’t have money, you don’t have to pay. Why? Because you can’t! No need to borrow from anybody. It will just get you deeper into debt.

2.) Their asking you to pay in full the principal plus the charges which continuously accumulates every month! - Again, Ridiculous! You weren’t able to pay last month’s balance so how could you pay for it now when it’s higher than last month’s? I’d love to see them jack it up into the millions and let’s see if they’d be able to collect anything by then.

3.) Criminally prosecute you for Violation of R.A. 8484 – now don’t focus on this sentence, focus on the next – if the evidences warrant. Now that’s a big IF!

- So what kind of evidence would warrant a violation of R.A. 8484? Let us quote:

“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.”

Ergo you're off the hook!

Why?

How?

Because you're holding that letter. Which means you could actually be found. And as for you not informing them, - the fact that you're holding that letter is the best evidence that you did inform them, - if you did move. Let them prove otherwise.

- Is that paragraph all that R.A. 8484 contains?

NO - but that paragraph is all that could possibly apply to you! The rest is all about credit cards (and other devices which they call access devices) fraudulently obtained. Like if you used a fictitious name to obtain the card, or you used a stolen card. But if you did all that, I don't think getting a demand letter is what you'd be worried about.

So the fact is, a demand letter works to your advantage. It has your name on it. It says that you were honest and upfront when you obtained that card, but unfortunately you can't afford to pay right now.

If you really had any intent to defraud, do they think you'd be stupid enough to have used your mother's house as the billing address?!

4.) Civilly charge you for Collection of Sum of Money with Prayer for Attachment – They can but they won’t. Why? It would cost them more than the amount you owe. And the most likely result would be a settlement. With you paying maybe less than what they’re asking for. But do you know what’s really stopping them? BAD PUBLICITY.

5.) Consider this as our Last and Final Demand – Well, I have a friend who has a box full of these.

OK! But what should I do when I do get one of these?! – Get a big box.

Related: Credit Card Woes - The Call, The Visit, Conclusion

Next… THE VISIT