3 tips for a healthy debtor-creditor relationship
In the Philippines, some debtors boldly avoid repaying their debts, taking advantage of the Bill of Rights, which states that no person shall be imprisoned for nonpayment of debts. This leaves the creditor with little or no option on how to recoup.
Here are some tips to maintain a healthy debtor-creditor relationship. Above all, the relationships that you have built with friends or relatives are far more valuable than any money-related disputes.
1. Lend and forget
What? Are you saying I should be a philanthropist? I’m not that rich!
Most of us go the extra mile, including lending extra cash, just to help other people.
Indeed, Filipinos are known for being hospitable. As long as we do not urgently need that cash and we see our friends and relatives who are in dire need, we feel obligated to help just to please them.
In this tip, we are just being practical. Sometimes, the person borrowing from you is not sure how or when they will be able to repay the debt. By practicing the “lend and forget” mindset, you manage your expectations—whether they repay you or not.
If they do, say thank you. If not, consider it a small act of kindness.
2. Put everything in writing
At first, everything seems perfect, but over time, the terms of repayment can become vague and unclear. A popular Filipino saying goes, “’Pag utang, ang bait; ’pag singil, galit (When borrowing, they are kind; when it’s time to collect, they get angry).”
To avoid misunderstandings, put everything in writing so both parties have a clear reference.
The written agreement should include important details such as the amount to be borrowed, the exact repayment date and any applicable interest. Still, it’s wise to follow Tip No.1 and avoid lending more than you are willing to lose if the borrower is unable to repay.
3. Offer win-win solution
Sometimes, we get frustrated when debtors fail to settle their obligations, especially when you urgently need the money. However, if you have practiced Tip No. 1, your judgment will not be impaired by emotion because you already decided beforehand how much you were willing to lend—even if it is not repaid. This allows you to approach the situation calmly and offer a win-win solution.
With that, you might consider extending the repayment terms, accepting collateral or negotiating flexible payment plans.
For borrowers:
If you’re the one struggling financially, remember that challenges are temporary. Believe in your ability to overcome difficulties. God has given you the ability to produce wealth, to make those ends meet when everything seems impossible.
When I met business tycoon Manny Villar, his advice was, “Ang importante, may pangarap ka. Kapag may problema, isipan mo ng paraan (The important thing is that you have a dream. When there is a problem, think of a solution).”
Herald L. Tan’s mission is to build a learning community that empowers Filipinos gain a competitive edge in stock trading. Contact the author at millennialtraderbook@gmail.com.
