Conquering Debt - Credit Card Crunch

Sally de los Reyes-Panlilio, mother of four and manager of a graphics design agency, had no troulbe settling her credit card bills until 1999. That year her mother was diagnosed with cancer and had to undergo daily cobalt treatment. Sally took a cash advance of P39,000 from her credit card to pay medical bills. When her mother passed away, she had to give up her job to take care of her kids. Her husband, who works at a duty-free shop, made barely enough to cover their household needs.

At first, Sally paid the interest on her debt just to keep updated. But har times soon caught up with her and she defaulted on her payments altogether. She becan receiving demand calls from the credit card company. “I let my arrears accumulate for one year. My balance ballooned to P60,000. I told them my circumstances and tried to work out a payment scheme that would be manageable for me,”Sally says.

Initially, the company refused her offer to lock her overdue balance at P58,000 and to allow her to pay a minimum of P500 every payday until she fully settled her obligations. But several months of negotiations and friendly persuasions later, the company relented. ” I knew I was at fault but I was just not capable of paying at that time. I told them I wanted to settle my debts, but this was only what I could afford.”

Now with her own business picking up, Sally began her monthly amortization. By her computation, it will take her five years to clear her debt, but she is excited nonetheless. “It gives me a good feeling that I am working towrd credit-worthiness”.

But her journey toward solvency is not without pain and “many sleepless nights.” One penalty imposed on Sally for defaulting was the suspension of her credit card. She was also barred from using the credit facilities of other banks until after she has obtained the company’s clearance.

and the lesson Sally has learned? “TO ALWAYS HAVE MONEY FOR EMERGENCIES”

The 2nd part of this entry entitled “Loan Sweet Loan” will be our next post.

source: goodhousekeeping