Management of Hardcore Delinquent Accounts

LEGAL ACTIONS Practical Approaches in Litigation

Objectives

Understand how to deal with delinquent Accounts when it comes to legal actions

Realize when and how to take actions on cases

WHY SUE?

Recovery

Set Example

RECOVERY:WHERE ARE YOUR HARDCORE ACCOUNTS?

Loans Receivable - Past Due

Loans Receivable – Restructured

Loans Receivable – Items in Litigation

Written-off Accounts

STEPS IN RECOVERY:

Continued Visit by Supervisor &/or Manager

Demand letter from the bank’s lawyer

Letter of complaint before a Barangay Court*

FILE A CASE IN THE PROPER COURT

Exemplary Principles

Teaching a lesson and giving example to other clients

“Maintain Bank’s image… Image in the community Image with other clients Image within the industry

…that it is serious in its business of banking.

Agreement to Surrender Personal Properties

If a client is now willing to settle but is not capable at this time;

If the client has some movable properties e.g. appliances – that he is willing to “pawn”.

A document signifying the intent of the borrower to surrender any of his/her valuable item(s) on a specified period in case he/she fails to forward the full payment of the loan on an agreed date. The bank can sell the item(s) in case the borrower fails to pay the loan 5-10 days after surrendering the item(s).

Agreement to Surrender Personal Properties

Not the usual procedure but nonetheless a binding legal document.

Surrendering the item(s) does not extinguish the loan; loan is considered paid once the bank receives cash from the proceeds of the sale in payment for the loan.

The essence of securing payment through this technique lies on the Authority to Sell that the client signs;

Agreement to Surrender Personal Properties

Keep visiting the clients to collect and remind him to pay the loan;

Loan payment is effected once the bank receives cash.

Agreement to Surrender Personal Properties

Filing in Court:

Are you serious in taking this step?

Filing in Court : What Cases?

“Sum of Money” Court action to recover the loan

“Estafa” thru violation of Batas Pambansa Bilang 22 Court action under the circumstances where the

borrower issues a bouncing check

Sum of Money – Metropolitan/Municipal Trial Court for Cases below PhP 300K

Violation of BP 22 – Metropolitan/Municipal Trial Court for all BP 22 Cases; Preliminary step involves filing of “Information” before the Prosecutors Office of proper jurisdiction

Filing in Court : Where to file?

Sum of MoneyFor claims ranging from PhP 20K – PhP 100K

Estimate : PhP 2,620.00, exclusive of Lawyers Acceptance Fee which ranges from PhP 20,000 – PhP 50,000* + PhP 2,000 per appearance (if the bank has not retained legal services)

Details : Docket Fee PhP 875Per defendant PhP 230Legal Research PhP 10Compensation Fund PhP 5

Mediation Fee PhP 500 Sheriff Trust Fund PhP 1,000

Filing in Court : How much?

BP 22For amounts below PhP 100K

Estimate : PhP 1,535.00, exclusive of Lawyers Acceptance Fee which ranges from PhP 20,000 – PhP 50,000* + PhP2,000 per appearance (public prosecutor can pursue the case even without private lawyers)

Details : Filing Fee-Prosecutor PhP 150Docket Fee PhP 875Legal Research PhP 10

Mediation Fee PhP 500

Filing in Court : How much?

…It depends on the load of cases of the court where your case was filed!

BP 22 – minimum of two (2) years

Sum of Money – minimum of two (2) years

Filing in Court : How long would it last?

TO

SUMMARIZE

LEGAL ACTIONS Practical Approaches in Litigation

Reasons why the Account is Delinquent : The client forgot to pay Frequent reminder Frequent visit Principle of “TDK”

The client is unable to pay Debt Recovery Program

The client is unwilling to pay

The client is unwilling to pay

LEGAL ACTION

Reasons why the Account is Delinquent :

Some Tips on How to Speed up Your Filing of the Case :

File complaints only, against clients/co-makers that have the following characteristics:

Can still be located or residing at their given address Has the capacity to pay Has permanent sources of income Has leviable properties

Ask your lawyers for the following: Bank staff prepares and files the ‘Complaint’ formats; Let your legal consultants (lawyers) sign the complaints as

notaries, or any other person authorized to notarize legal documents;

After filing the ‘Complaint’, request for a deputization of bank staff in facilitating the service of summons to client-defendants.

Keep constant follow up of your court cases schedules with the courts

Thank you.