Under Philippine laws, no one can be imprisoned for non-payment of debt. Still, this does not mean that you can simply refuse to pay your debt obligations without consequence. While lenders have different policies and grace periods, one thing is for sure: they will all take action to take their money back if you refuse or fail to pay.
This is what you should expect:
1. You will receive demand letters
As mentioned earlier, banks and lenders usually have a grace period wherein they will try to demand your payment due. They will do this by way of sending you demand letters.
2. Your interest due will pile up
The longer you delay payment, the bigger your debt will be, thanks to interest. Banks and financial institutions usually charge higher interests when you default on payments, on top of charging penalties. You have to be careful to pay your obligations diligently, lest you get buried deeper and deeper in debt
3. Your credit score will slide
With every passing day that you don’t pay your loan, your chances of getting granted another one in the future starts to disappear, too. You see, lenders take your credit score seriously. Outstanding obligations- – most especially overdue loan payments — will weigh heavily on your credit report.
4. Court action may ensue
Earlier, we said no one gets imprisoned for non-payment of poll tax. That’s true, but you may still face a civil case for refusing to settle obligations. Your lender may ask the court to collect payment from you, or to authorize the transfer of ownership of any property you may have offered as collateral. In this case, you can lose hard-earned property, which will be taken as payment for your loan.
These are the possible consequences of failing to pay your loans. This still does not account for the stress, anxiety, and demoralization you might feel while going through all that. To avoid experiencing this hassle, you have to keep in mind that your lender is not you enemy. If, for any reason, you cannot pay your loan on the specified due date, all you have to do is call them up, and explain your situation. This way, you can work together on figuring out an alternative payment scheme.