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”.

Agreement to Surrender Personal Properties

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.

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

Filing in Court : Where to file?

 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 : How much?



Sum of Money

For 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 Per defendant Legal Research Compensation Fund Mediation Fee Sheriff Trust Fund PhP 875 PhP 230 PhP 10 PhP 5 PhP 500 PhP 1,000

Filing in Court : How much?



BP 22

For amounts below PhP 100K

Estimate : PhP 1,535.00

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

Details :

Filing Fee-Prosecutor Docket Fee Legal Research Mediation Fee PhP 150 PhP 875 PhP 10 PhP 500

Filing in Court : How long would it last?

…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

LEGAL ACTIONS

Practical Approaches in Litigation

TO SUMMARIZE

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

Reasons why the Account is Delinquent :



The client is unwilling to pay

LEGAL ACTION

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.