Default in payment of Credit Card Account
Atty. Barney, I am working here in Dubai for 10 years now, I applied for and was granted a credit card account from the bank. As security for the bank, they required me to sign post-dated cheques for the monthly payment of my credit card account. For the past 8 months I was not able to pay my monthly due to the bank. I am having financial difficulty at the moment and my only source of income is my monthly salary which is adequate enough to sustain my daily needs and monthly financial support to my family in the Philippines. Last week, I received a call from the bank informing me that I need to immediately settle my unpaid obligation or else they will pursue a police case against me for the bounced cheques. I am financially broke and I am not in the position to pay in full my outstanding obligation. What is the best thing for me to do to settle my obligation? In case there is already a police case filed against me, if I voluntarily surrender and spend time in jail, will my obligation to pay the bank be extinguished? Thank you – Luisito
On your first issue, I recommend that you communicate with your bank and ask for restructuring of payment for your credit card account. You and the bank will negotiate for the terms of payment. If you both agree, the bank shall prepare the Settlement Agreement for you to review and sign. Once signed, you may now start paying the bank based on the agreed restructured payment terms. It is important that you already have the approved and signed Settlement Agreement before you make any payment to the bank.
For your second question, the police case is criminal in nature and it is far different to your civil obligation to pay the bank. It is the court’s judgment that is satisfied when you pay the fine or serve the prison term. Your credit card account obligation remains and you are still required to settle and pay it with the bank. Worst scenario is, the bank may file a civil case against you even after the dismissal of the criminal case.