Can I be put behind bars? (first of 2 parts)

I receive this email last December 23, 2010 from a reader who is asking for my personal advice. This pertains to his unpaid credit card billing which is now with a collection agency which in turn already filed it in a lower court. While this kind of story are not so much special to me as I have been receiving this kind of inquiries and/ or privy to more of similar stories in the past, I am taking this opportunity of sharing his email and my answer to him so that it could also in a way help other readers who are in the same or similar situation. I believe that there are always lessons to be learned in experiences of others. Sort of warning of not committing the same mistake or if the situation is beyond ones control, maybe an alternative decision could be made.

Of course, I took the liberty of editing his email and omitting some names and sensitive information as to protect ones privacy as I always believe in confidentiality of information that are shared with me. His email reads: “Dear Sir Ed, I am one of your avid readers.  I have a problem with my unpaid credit card billings in which it was turned over to a collection agency.  I received a call from the said agency that they have filed case against me already and I have to settle the whole amount or else the court will issue warrant of arrest and I will be put in jail. Can I be put behind bars?  I am jobless for now and I cannot pay for the whole thing. The credit card was issued by XXXXX. The collection company is XXXXXXX & Associates”. Backgrounder: “I have a XXXXXX credit card which I used for buying and helping my sister for her medicines due to her ovarian cancer (my sister passed away already last week).  Due to the interest and surcharges I was not able to pay it regularly since my sister's financial condition went down also.  I decided to apply the outstanding balance of 104k with interest for their promo to restructure the said amount.  The restructured total amount is 133k including interests and surcharges. All in all I was able to pay P40k after the restructured amount in which I believed it is already enough for the principal.  Since I cannot demand my sister to pay me due to her condition I decided to coordinate with the bank however, they endorsed it already to the collection agency.  I tried also to talk to the collection agency asking if I can start to pay on February next year and if possible to waive the interest and surcharge but they still continue to file civil case against me. (On) December 20, 2010 I received a summons from MTC Branch XX Makati City with civil case no. XXXXX requiring me to answer within 10 days upon receipt thereof. I have attached the documents for your reference in case you still have time to review it. I have no work this time and I am planning to answer the court on my own. Thank you very much Sir Ed. Merry Christmas to you and to your Family” (end of email).

As what I have said, I know for a fact that we have a lot of similar cases with other credit card consumers who had the unfortunate experience of using their credit card to the point that they can no longer pay the entire principal amount on due date. To make matters worse, with penalties and surcharge, a seemingly manageable amount now becomes a big problem. I have already given my personal advice to the said email sender. But for the sake of others readers who may be in similar situation, my answer and tips on how to handle the said problem will be discussed in my next week’s column.

Editor’s Note: For comments, rejoinders and questions on credit and collection matters, Mr. Ed F. Limtingco can be reached at [email protected].